The Market Is Down

Welcome back to Communication Breakdown, a new podcast from the Observatory on Corporate Reputation. Thanks for joining us. I'm Steve Dowling in Silicon Valley. And I'm Craig Carroll in New York City. Each week Steve and I take a look at strategies companies are using to shape headlines and sometimes save their skins. It's a post game show for PR Pros. This week, how to talk about tariffs as the market takes a tumble?

After soaring to record levels in the post election, Trump bump, the S&P 500 and other major indices have been plummeting. The S&P at one point this week was off nearly 10% from its all time high, set just three weeks prior. And market forecasters have been furiously revising their growth targets downward, talking more and more about the chances of an economic recession this year.

It's all a reaction to President Trump's aggressive and unpredictable trade policy, plus nagging inflation and consumers getting jittery, the Dow's 478 point drop on Tuesday coincided with a meeting at the White House where Trump came face to face with more than 100 CEOs in town for the business round table. And did they give them an air fill? Apparently not.

Steve, there was plenty of reporting this week that CEOs are privately appalled by the whipsaltair policies, but in public, they're still keeping them. Will the sharp market declines, prompt any change in behavior? This is one of the persistent questions we've been asking on this podcast since November, which is what will it take, at what point does some policy become too much for business to stay quiet? And we've found out this week we're not the only ones asking that question.

Alongside the business round table, Yale School of Management this week had a similar gathering of CEOs in Washington and as a Wall Street Journal reported, they took a straw poll, would they ask, how much more do stock markets need to collapse before CEOs need to speak out collectively? And a 20% decline got the strongest result, 24%, 22%, it would take a 30% decline, 10% set of 50% decline. And 24% of CEOs said it's not our role, which I took to mean never.

I think I understand two of these answers a little bit. The 44% saying it would take a 20% decline and 24% saying it's not our role. I ignore the 30% and 50% options because there are kind of variations on a theme. But if it takes a 20% further decline in the stock markets for CEOs to speak out, I think that's really representing the first hypothetical opportunity they're being given. And that's a pretty healthy response, 44%.

I think it reflects that CEOs recognize what trajectory we're on is not good and their patience is being tested because they see very clearly what's causing this volatility.

You know, CEOs know that they're going to have to speak up eventually. The question is when, not if, they're watching the volatility and they see the impact on their companies. And I mentioned they're just calculating the right moment to step in. The straw poll tells us that for nearly half of them, a 20% mark is the tipping point. That's not just theoretical. That's a signal. It tells us that they recognize that silence is a shelf life.

But here's the bigger issue by the time the market drops 20% the stories are to have been written. So business leaders wait until the damage is fully visible. The words won't shape the debate. They're just going to be a reaction to it. And the absence of clear credible voices, I'd say, you know, people are going to fill the gaps with whatever explanations fit the worldview. Yeah, I think that's why the 30 and 50% decline answers don't really matter.

Yeah, it's that it needs to be a drop that people recognize is significant and then, you know, for them to weigh in the, the not our role answers, though, I think are almost as interesting. That was one in four CEOs at this straw poll. And while I disagree, I think I know where it comes from. It's a pretty basic and, you know, safe and useful corporate communications policy, which is we don't comment on day to day movements of the stock or the stock market.

And executives have been sticking to that with the exception of some financial services CEOs because, you know, that's their business. And I think that's fine. You know, why borrow trouble? But if the market volatility continues, if the indices keep dropping or they start swinging wildly up and down, I think there is a role for business leaders to play here. And that's as educators. Yeah. You don't really need to sound the alarm anymore.

People already hear it, especially, you know, if you get down to the 20, 30% drop. And people are going to be seeing it in their 401Ks to your point. But so far, all they're hearing by way of explanation is these sort of euphemistic language from the administration like there's going to be a period of transition or, you know, Trump famously said a little disruption we talked about last week. Businesses can be specific about the impact on pricing, on their supply chains.

And they've got the data on customer behavior, which we've been seeing. So it's a very authoritative position to be in and in a period of economic uncertainty, I've got to believe that people are going to be looking for reliable information like that. Yeah. You know, you're absolutely right. You know, this isn't just about seeing a setting, the alarm, the alarm started gone off in real time on earnings calls and board meetings.

And just about every 401K statement, you know, the, I think the real role for business leaders now is it to warn, it's to translate. Yeah. Then it moved beyond vague economic abstractions and give people some clear practical understanding of what's happening. Yeah. Yeah. Yeah. Because let's, let's be honest, the message right now is weak. You mentioned a little disruption, a little, you know, a transition period. Yeah. You know, the thing is that's not an explanation. That's an evasion.

What does that, what does that even mean? Yeah. I mean, it's, it's almost worse than saying nothing because you're saying something vague that people can interpret in their own ways. And people's imaginations can be a lot worse than reality if they, if they're worried. Consumers don't need to hear it's going to be bumpy. They need to know how high the toll is going to be at the next exit. Yeah.

Employees don't need reassurance about long term resilience. They need to know if their jobs are going to be at risk between now and the next quarter. Business leaders sit at an incredible wealth of data, pricing, supply chains, consumer behavior. And when people don't get straight talk from the folks who actually have the numbers, don't get explanations from political spin, social media rumors and get reactions. And that's how volatility turns into panic.

So, you know, if CEOs wants stability, they're going to have to start providing a little bit of clarity here. Yeah. I think I'll take it a step further. The public concern about the markets gives more weight and urgency to what business says. I noticed on, on other networks, we started seeing more clips from CNBC and Fox business. The volatility if it persists or becomes a crisis. That's a long term opportunity for business to reassert some leadership.

And I say opportunity because the business leaders are not the ones causing it. Right. They don't need to point fingers, but I don't think they need to wait for another 20% here to start speaking up. And we're seeing some of that starting to happen because it has to because it's unavoidable. We talked last week about the spate of retail earnings, target and best buy, talking about prices going up because of tariffs.

This week it was Delta's CEO who revised their guidance downward saying both corporate and consumer spending started to stall in February. My point is that this is going to become unavoidable. So, corporate leaders have an opportunity to get ahead of it and they don't have to put their thumb in Trump's eye. Just give people a straightforward explanation of what's going on.

Yeah. Look, you know, for the past two months, our audience has been noting that chaos may be a crisis management, but it may be very soon. Right. If we don't get this right, that this could have turned into crisis management. But here's the challenge. CEOs have got to generate clarity without overstepping their bounds. They have to say something that's still going to be true six weeks from now and still quite relevant next quarter. They're not policy makers.

They're not traders calling daily market swings. What they are is the connective tissue between what's happening in Washington and what's happening in the economy. They can't afford to be reckless, but they also can't afford to be absent. So, I think the job is that it isn't just explaining what's happening now. It's helping people understand what signals actually matter. You know, what's temporary noise and what's a real shift?

And that's, I think, where business leaders can add some real value. They don't have to pick political fights and they don't have to make predictions. But if they don't start shaping the conversation somewhat, they're always going to be reacting to someone else's version of the reality. Yeah. You said a minute ago that employees want to know if they're still going to have jobs. That's a tough position for a business leader to be in because they can't make promises.

Nobody knows what the next twist in this saga will be. But to your point, business leaders can talk about the factors, the impact that these wild swings have, the triggers, you know, perhaps. And I think that Ford's CEO, we've talked about his comments a lot, Jim Farley, when he said I think was a month ago, that, you know, these jobs will be at risk if the policy continues in this direction. And it's not a threat. It's really just playing out, you know, what he's seeing from these policies.

And I think people took that seriously, you know, to his credit. Yeah. You know, one of the things we always talked about in crisis is how crisis creates opportunities and you fit on that a little bit here. Yeah. I'll say a couple things. One, the crisis is always going to create some type of opening. The question is who's driving the narrative inside of that opening because, you know, business isn't speaking up. Someone else is going to take the wheel.

Politicians will certainly seize the moment to push longstanding agendas. Regulators are going to tighten their grip. Activists are going to mobilize. But right now it just seems like business is stuck playing defensive. Yeah. So I would say, you know, to your point about opportunity, companies have a choice right now. They can either treat this as a crisis that they're just trying to survive or they can use it as an opportunity to lead. That doesn't mean exploiting uncertainty.

It means defining what stability actually looks like. It means providing a roadmap for what's next rather than waiting for washing to impose one because if they don't step up, they're just going to let a crisis go to waste. They're going to let somebody else decide what comes after them. I have some sympathy for the corporate spokespeople and the business leaders in this episode. With you have these on again, off again, tariffs. I think it's hard to know what you're even commenting on.

So like, your instinct is why, why wait in are the tariffs about long term job creation? Sometimes apparently, and who would argue, you know, with that, other times they're about border security or stopping traffic like that's the messaging that's coming from the White House. And changing every time Trump has a photo op. Yeah, but I think there's a mindset shift here that could also help with this, right? When you don't know what direction things are going to go.

You know, in any crisis, there's going to be a fundamental shift in how people think about freedom. At first, it's all about freedom from instability, freedom from market chaos or freedom from bad policy decisions. And that, I think, right now, so a lot of business leaders are stuck right now. They're focused on escaping the turbulence, minimizing risk and keeping their heads down.

But I think the real opportunity, the leadership moment is about shifting from freedom from to freedom to, and what I mean by that is the freedom to define the next stage of economic

growth, the freedom to reset industry norms or the freedom to lead the conversation rather than reacting to it. And if businesses don't make that shift, they're not just letting a crisis go to waste. They're letting somebody else define what the post-crisis world is going to look like. And if history tells us anything, it's that the people who shape what comes next aren't always going to understand how the economy actually works. The question for CEOs, isn't just how do we survive this?

It's, what do we want to build on on the other side? And tied to that, it's, how can we do it in a way that's still true six days from now? Six weeks from now. I mean, we can certainly think about next quarter, next year, but right now we just need the clarity and confidence so we can say something that is still true six days from now. Well, and that's why the White House, I think, is making the situation all the more complicated for business leaders.

If you took one day this week, it was six hours between when Trump was doubling whatever tariffs and then walked that back. So I think when you talk about the freedom from as you outlined earlier, I think that's where these market gyrations are really sort of forcing the issue of making it and so urgent that CEOs don't have the luxury of avoiding this topic. Is there an opportunity? I think so.

But yeah, it's really hard to weigh in when you don't know, you know, if there is, if there is actually a consistent policy to position yourself against or for or at least commenting in a relevant way, if the ground is always shifting beneath you. I think that one good example this week was after the business round table meeting, we heard David Solomon, CEO of Goldman Sachs, and he said the business community understands what the president is trying to do with tariffs.

I think understands and trying the operative words there, but he also said that business will always want lower tariffs and certainty on the policy agenda, right? And I thought it was a good bit of messaging on his part, hopefully telegraphing to the White House, what business community needs to hear. Steve Schwarzman of the Blackstone Group had similar comments that were picked up.

And we see some of the White House surrogates, notably I think the Treasury Secretary on Thursday trying to focus the message on that long term goal. And again, if your long term goal is job creation, who's going to argue against that? How they're doing it, how they seem to be getting there is really all over the chart right now. And importantly, I think when you're talking about that as a message, getting that kind of message disciplined from Trump that just feels like too tall of an order.

Exactly, right? You can't counter policy when the policy itself is a moving target. And certainly that's what makes it so tougher CEOs right now. Because if they push back too hard, they risk looking like they're attacking an initiative that might shift again tomorrow. But if they stay silent, they look weak, they look complicit. And yet if they try to engage constructively, they're negotiating against the policy that

hasn't even settled on its own justification yet. That's what I think Solomon did a good job with these comments because the two points that he made, unfortunately, they were generally lower down in the coverage. But when he talks about always wanting lower tariffs and always wanting certainty, those are things that are not going to change. And that's the safe zone for commentary on a policy that's whipsawing all over the place. I agree, right?

That's where we're seeing the careful head statements that David Solomon is making where CEOs acknowledge understanding without endorsing a policy. That's the only safe putting right now. They can't attack the tear of directly because tomorrow they might be about something else entirely. So instead, they've got to find a way to anchor the conversation around certainty, consistency, lower tariffs as a principle. It's not about arguing the specifics of today's tariff announcement.

It's about reinforcing the idea that stability and policy is what business actually needs. And I think that's the real challenge. How do you push back on economic chaos without making yourself the target? The best approach isn't to simply argue about why tariffs are bad today. It's to keep emphasizing that the one thing market date more than bad policy is uncertainty. Right? So, you know, business can't plan when the goalposts are moving every 24 hours.

And that's the message that is needed to keep hammering. And frankly, it's a little message that holds up no matter what the White House decides to call the tariffs tomorrow. All right. Well, Craig, as we move towards wrapping up, let's talk about, you know, we certainly don't know what the next week or month, the next six hours, days, weeks hold as far as a tariff policy such as it is.

But how can communications leaders be preparing and applying, you know, what we've been talking about as far as navigating this period of uncertainty, especially as the market is whipsawing around? I've got to say that I look at this calendar and I see earnings season for most companies on the horizon.

And that has got to be a forcing function or it will be really soon because I can't think of a company of any size that's not going to get asked about the tariff policy or the, you know, the macroeconomic situation. And I'm sure they've each got their own point of view on how it's affecting their own company.

Yeah. But being prepared for that, and I think applying some of the ideas that we've been talking about this week is a is a good thing now that we're, you know, halfway through March and April's right around the corner. Yeah. I would say, you know, it's we looked towards wrapping up and you know, just being very clear, the real challenge here is that clarity isn't something that you wait for. It's something you generate. Correct.

And in times of uncertainty, too many leaders right now are currently thinking that their job is to interpret the chaos. But the ones who actually shape outcomes don't just interpret the imposed clarity where there is none. The real challenge there because it's generating clarity in a way that is still true six days from now, six weeks from now and that that certainly I think the idea to keep in mind is, you know, what, what has to be true.

I think, you know, the shift that business leaders need to make is understanding that this isn't crisis management. It's chaos management. Crisis have clear beginnings and endings and chaos doesn't, you know, chaos is overlapping. It's evolving. It's constant and it's a kind of environment where hesitation is a liability. So if you're waiting for certain, you're already behind. So what's the counter move?

Stabilization. And if Washington's introducing chaos, business has to be the one to generate clarity. And that means leaning into what we've talked about before the chaos triangle of principles, priorities and perspective here, principles, meaning stick to the fundamentals, your supply chain pricing, workforce stability. These are the non-negotiables, your priorities. Don't be chasing every headline, anchor decisions in terms of long term business needs, not policy whiplash.

And perspective respond, but respond with something that's still going to be true six days from now, six weeks from now, and if it won't hold up, it's probably not worth saying. Well put, that's our show for this week. We want to thank Shawn P. Neal and the People Forward Network for making our podcast possible. If you would like to tell us what you think or if you have a topic you'd like to suggest for our show, we'd love to hear from you. Our email address is podcast@ocrnetwork.com.

Communication breakdown is a production of the observatory on corporate reputation, I'm Steve Dowling. And that's great, Carol. Thanks for listening. We'll be back next week. [MUSIC] #tariffs #marketvolatility #CEO #communication #economicuncertainty #corporatereputation #crisismanagement #business leadership #tradepolicy #consumerbehavior #stockmarket #trump #musk #doge