CFOs: Recession to Last Another Year
CFOs — more circumspect, and less likely to cheerlead than their CEO colleagues — are as negative as they have been in the history of the Duke Optimisim survey, falling to 71.5%.
Highlights include:
• A record 81 percent of U.S. CFOs are more pessimistic about the economy this quarter (twice as many as last quarter), and 85 percent of European and Asian CFOs are more pessimistic.
• Nearly 60 percent of CFOs say the U.S. economic recovery will be delayed until the fourth quarter of 2009 or later, while 71 percent of European CFOs expect Europe’s recovery to be delayed until at least the fourth quarter of 2009
• Employment is expected to fall by 5 percent in the U.S. and Europe in 2009, and by 0.5 percent in Asia. Capital spending is expected to fall by about 10 percent in all regions
• Weak consumer demand and financial market woes are major concerns for CFOs around the world. More than 70 percent of U.S. and European firms are concerned about the state of their financial institutions. Among users of financial derivatives, 75 percent are concerned about the risk of default
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CFO Optimism Index: Quarterly History
CFO Optimism Index: Key Measures
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Sources:
CFO Survey: Historic Recession to Last Another Year
Wednesday, December 10, 2008
http://news.duke.edu/2008/12/cfo.html
CFO Magazine Survey
Survey Director, John Graham, Finance Professor, Duke University
http://www.cfosurvey.org/
The ‘Six Months From Now’ Fallacy
David Gaffen
WSJ Market Beat, December 15, 2008, 1:42 pm
http://blogs.wsj.com/marketbeat/2008/12/15/the-six-months-from-now-fallacy/
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December 16th, 2008 at 9:24 am
Hooray! GS lost under $5 a share!!!! Time to buy the markets… turn that CFO frown upside down!
December 16th, 2008 at 9:27 am
With all due respect to these guys, nobody can see a year into the future with 20-20 clarity. Perhaps a better headline would be that they expect the “recession” to last at least another year, based on what they are able to see in their sphere of business operations.
It could be two years, or five, or twenty. Their view of their business does not go out far enough to tell.
December 16th, 2008 at 9:36 am
How is recovery defined? K. Richebacher is correct. The best that can be hoped for is a leveling out at pre bubble levels. Then comes a long flatline as our culture changes to accomodate new dynamics.
December 16th, 2008 at 9:37 am
as a former cfo, its merely a guess
December 16th, 2008 at 9:40 am
its also how the survey questions are phrased–normally there are 3-5 choices–so they cannot say “at a minimum it goes on for another year, probably more.
December 16th, 2008 at 9:40 am
I think Kedrosky hit it on the head when he said if these guys didn’t see this downturn coming, they shouldn’t be relied upon to see it going.
The Greek
December 16th, 2008 at 9:57 am
Accountants have about as much insight into the economy as your dentist does to your hairstyle.
December 16th, 2008 at 10:07 am
Venn,
these cats aren’t ‘bookkeepers’, a decentAccountant can tell you more about yourself than you’d care to admit..
see: http://www.forensicaccounting.com/
and open another window..
December 16th, 2008 at 10:17 am
Anyone like today’s rally??
I, for one, do not feel confident that today’s rally will hold through the last hour of trading.
December 16th, 2008 at 10:21 am
I think the most fascinating part of that table is the “company” bias. These guys always see their own company in a rosier light than the broader economy. It’s humorous and predictable. It hits on a point we were making yesterday about “share buybacks.” These companies always think their companies are undervalued compared to the market. Ha. By definition, at least 50% of them MUST be WRONG.
December 16th, 2008 at 10:22 am
CFO doesn’t mean much to me. Most CFO’s are nothing more than cost watchers. They have about as much insight as anyone else about where the economy is headed.
I am not sure any CFO ever sees any good reason to invest in new technology or better resources anymore. Is is all cost and all cost are bad in their minds. Listening to idiots like most CFO’s are is just one more reason that we are in the shape we are in financially in this country.
December 16th, 2008 at 10:23 am
No worries. Rate cut coming. It’s worked so well the last one hundred times. Why not one more try? Problem solved.
December 16th, 2008 at 10:25 am
@lb: I don’t think this rally will hold through mid-morning, actually, but what do I know, it seems to want to go only up in the face of some truly awful news just about every day of the week lately. Santa’s (Ben & Hank) pretty stubborn.
December 16th, 2008 at 10:36 am
CA,
I hear your point, though, you’re talking about ‘Cost Accounts/-ancy’
see: Goldratt once argued that cost accounting was the number one enemy of productivity (Goldratt: 1983). He later softened that stand and said cost rather than accounting was the culprit (Jayson, 1987, p. 18). Nevertheless, Goldratt maintains that the cost measurements in use today are sending the wrong signals to managers, who are trying to control inventories, operating expenses, and throughput (Cheatham, 1993).Siegel and Shim (1995) note that cost accountants use a system of recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate as well as in detail.
http://www.cpafinder.com/accounting/cost-accountant-cost-accounting.html
Cost Accountants are, truly, the lunatics running the asylum that is our, current, Financial Pachinko Parlor pretending to be an Economy..
December 16th, 2008 at 10:57 am
Way off topic:
Nancy Grace must be to the legal community what Cramer is to the investing community. I caught 15 mins (all I could take) of her show for the first time last night. She’s jaw-droppingly unbearable.
December 16th, 2008 at 11:00 am
Bonghi, add Glenn Beck too
December 16th, 2008 at 11:07 am
For those that haven’t gotten enough of the Madoff affair:
http://www.bernard-madoff-scam.blogspot.com/
December 16th, 2008 at 11:16 am
Gee, thanks Karen. I feel much better now after reading that. I think I’ll now go jump out of my basement office window.
December 16th, 2008 at 11:38 am
Jeff, yes, it is depressing, isn’t it… on too many levels.
December 16th, 2008 at 11:42 am
@karen: Time to go to the gym and work it off! There’s a silver lining for you. We could always work on our health.
To add to the “depression”, it was -3 degrees when I got up this morning (was -17 yesterday early a.m.) and it’s not even technically winter yet!
December 16th, 2008 at 11:59 am
Ah, sentiment analysis. I have a funny feeling that this just might be the first time in which sentiment bottoms before the market does! Uncertainty breeds fear and fear leads to selling; so, as long as the pavlovian stock jocks have been conditioned to expect the data to be worse than expected , they will just keep buying… Is there any precedent for that?
December 16th, 2008 at 12:00 pm
Karen:
Can you give me a web site that is current on the number of months of excess housing on a national basis? I am sure I have it around, but would like to put it where I can find it easily..
TIA
December 16th, 2008 at 12:04 pm
@karen: Brilliant site. F***ing hilarious. I must stop by and see Bernie on the way home for a Schnapps. I wonder how long it will be before the first mob action. Everyone knows where Fuld, Madoff, Sullivan live…
I vote for water-boarding for Bernie and the FoF feeder funds managers as well. Bernie could also share a cell somewhere especially friendly like Rikers Island. Since Bernie liked receiving deposits so much I am sure he would enjoy some company. BTW, if someone steals $10 from a store to buy milk, they go to jail. WHY IS MADOFF ON BAIL? Who is protecting him and why? Because he stole money and gave to charity?
It looks as though SIPC will do a bailout. Just $100,000 maximum in my book, and only for Grammy who lost her life savings please and none at all for anyone with inherited wealth, the European bank chumps, Nicola Horlick or anyone who lives in Darien, CT. Irwin Kellner, sorry mate, you are a chump too.
@ Jeff: Don’t jump out the window, you’ll just get frostbite, mate.
Dinna worry, a wee sell-off tomorrow will warm ye up….
December 16th, 2008 at 12:10 pm
@lb: Hate to say it but I predicted the bailout for Madoff’s victims. They’re obviously “too big to fail too”. What a country. When do the pitchforks come out or is the U.S. just biding their time until “American Idol” starts in January? I know I am.
December 16th, 2008 at 12:14 pm
Jeff M.
To add to the “depression”, it was -3 degrees when I got up this morning (was -17 yesterday early a.m.) and it’s not even technically winter yet!
“The thermometer will plummet overnight and into Tuesday in Winnipeg, where the overnight low is expected to be -32 C.
CBC meteorologist John Sauder said it could be worse as the record cold for Dec. 15 was -37 C, set in the 1800s. But Sauder said there is no let-up to the cold snap in the immediate future.
Tow-truck operators were busy Monday, with motorists waiting hours for a tow or a boost.
In North Dakota on the weekend, a storm closed highways and stranded motorists.
Leo Ledohowski, CEO of Canad Inns, was at the company’s Grand Forks, N.D., location, where he was stuck along with other Canadians visiting the state for holiday shopping.
“It’s brutal out there,” said Ledohowski. “Absolutely totally brutal. It’s been a long time since I’ve seen something like this. You can’t see far, the wind’s blowing, the snow’s falling.
http://ca.news.yahoo.com/s/cbc/081215/canada/winnipeg_prairie_cold
‘Brutal’ Prairie cold snap to continue until Christmas
LSS: get used to it.
~~
Bruce N Tennessee Says:
Bruce,
imagine a line, starting in the lower left and making it’s way to the upper right..
saves on pixels..
December 16th, 2008 at 12:16 pm
@Hoffer: Thanks for the pick-me-up. Don’t get me wrong, I can handle a little cold weather but there are limits to everything. Wake me up in April when it’s spring and the Goldilocks economy is alive and well again. I’m going back to bed. Good night.
December 16th, 2008 at 12:22 pm
@ Bruce asked: Can you give me a web site that is current on the number of months of excess housing on a national basis? I am sure I have it around, but would like to put it where I can find it easily..
Calculated risk posts these on a regular basis. But in short, Leftback Asset Management can tell you that there is an “absolute shitload” of inventory, about 11 months worth. In Connecticut, you can see that one town after another is awash in houses for sale. Bridgeport and Waterbury were subprime central but now the mid-level towns like Norwalk are crumbling and there are For Sale signs all over Darien (24% of workers in FIRE economy). :-)
December 16th, 2008 at 12:29 pm
They’re still finishing some condos here in the Twin Cities. Others are half-built/half-occupied and bank-owned or in foreclosure. It’s a mess.
December 16th, 2008 at 12:30 pm
Thank you my good man. I bought some more callable cd’s today…but the interest rates are getting downright microscopic…thank goodness my real name is Gates…
December 16th, 2008 at 12:43 pm
I expect the Fed statement to tell the truth and the most people in the market won’t like it.
December 16th, 2008 at 12:49 pm
Bruce, your request concerns me. why was i singled out for your bidding?
i think calculated risk has good graphs… i can’t find my favorite one, which is a sales bar chart comparing the last 3 years. this one is good, but not what you wanted (sorry!)
http://www.calculatedriskblog.com/2008/12/housing-starts-decline-to-record-low.html
December 16th, 2008 at 12:52 pm
Karen:
I always ask my brainest friends first, then work my way down the line….
:)
(When my friends tell me I’m dumber than a bag of rocks, I wonder…would I be smarter if I was dumber than half a bag of rocks or two bags of rocks??)
December 16th, 2008 at 12:56 pm
brainiest…oh, well.
December 16th, 2008 at 1:06 pm
Oddly, this is the only national inventory chart i’ve found so far… (and i feel like i’ve seen so many!)
http://www.data360.org/dsg.aspx?Data_Set_Group_Id=1395
December 16th, 2008 at 1:10 pm
bruce! found it! and it was from calculated risk… scroll down to find the inventory chart:
http://calculatedrisk.blogspot.com/2008/11/existing-home-sales-in-october.html
now, if you need a cup of coffee, please ask your wife : )
December 16th, 2008 at 1:13 pm
wtf? both of those charts say exactly what I was pointing out…
are you people getting paid by the hour?
( note: I’m kidding around)
December 16th, 2008 at 1:16 pm
Thanks both of you.
December 16th, 2008 at 1:24 pm
By the way, I went to a birthday party for one of my partner’s wives Saturday night, and had a long talk with our banker that I have written about before. He is of the opinion that we are going to see a severe lack of spending after the first of the year, and this guy is well connected and well educated, and I usually listen carefully to what he has to say. I think I got it all, but was well into the Merlot, so some of the details are a little fuzzy. I do know that he is still making very conservative investments with the bank’s money…I’ll try to pick his brain again over the next few weeks.
December 16th, 2008 at 1:38 pm
Mark Hulbert throws cold water on the “Santa Claus rally”.
http://www.marketwatch.com/news/story/story.aspx?guid=%7B6F925365%2D70FF%2D484B%2D8CFF%2D54C203241B79%7D&siteid=rss
December 16th, 2008 at 1:44 pm
Anyone feel a reversal coming on this Fed decision…dollar’s been falling for days in front of this announcement…it feels like could get a peak in the euro and gold after the announcement…commodities and stocks get hit as well…this whole thing just feels like we’re setting up for a temporary reversal.
I wouldn’t be long the euro or gold or oil right now….
I see 139-140 as resistance on euro and I see 863-870 as resistance on gold.
Good luck.
- AT
December 16th, 2008 at 1:48 pm
A reversal probably, but a minor one.
I’m thinking of January 20th as a more important inflection point.
December 16th, 2008 at 2:02 pm
DL: It’s interesting that you keep mentioning Jan 20th as a possible big inflection point on the stock market. A good duration for this major fourth wave would take us to 2/H January. So, I’ve got some technical targets for duration that are inline with Inauguration. An accident? Coincidence?
As Master Oogway says in Kung Fu Panda (the best movie of 2008 according to my kids)…”There are no accidents….”
Should be interesting.