CEO Confidence in the Dumps

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Business Roundtable got its 160 CEOs together to commiserate last month. We suspect they have been greatly saddened by public scrutiny over executive pay, and secondarily troubled by the impact of economic slide on their individual firms, which again impacts pay. Let's face it, it's all about the money!

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Being a banking CEO is rough these days... Just look at poor old Lloyd Blankfein, the CEO of Goldman Sachs (NYSE: GS), the most admired of Wall Street survivors (if not recently overtaken by J.P. Morgan Chase (NYSE: JPM) a.k.a. We Buy Your Assets Cheap). Mr. Blankfein spoke today before the Council of Institutional Investors, which we suspect will be renamed "The Casualties of..."

Likely advised by top-notch and well-paid security personnel and public relations representatives, Mr. Blanfein was humble beyond belief, to a near sickening degree. He was sweet even! As we listened to him on Bloomberg Radio, we realized there's no way you rise to the rank of CEO of a Wall Street giant with such a soft shell. Trust me on that one... The wolves would eat you alive.

Still, you know, with former executives of RBS (NYSE: RBS) having their homes trashed, and AIG (NYSE: AIG) bosses receiving death threats, everyone wearing a suit in downtown Manhattan carries a jogging outfit in their briefcase these days. You need them for those short hops from the office to the private helicopter, and from the copter pad to the house in the Hamptons. Otherwise, forget about it!

The genius PR work was clearly evident as Mr. Blankfein retreated like a sweet kitty cat when a little girl climbed the podium and asked for "our money back." Actually, his voice even shook a bit, perhaps out of concern even the sweetest of American taxpayers might turn into suicide bombers given their level of frustration, or is it awareness now that they're losing their jobs and have time to read...

Business Roundtable takes a regular survey of CEO sentiment, and believe or not, this is usually a cheery bunch. Has a lot to do with scotch and golf I'm sure. In any event, the group consists of 160 top dogs representing the most important corporations. These chums have an aggregate of 10 million employees under their thumbs and $5 trillion in annual revenues under their control. Update: make that 9.8 million and $4.75 trillion... Update Update: rather 8.2 million and $4.11 trillion. Check that: 7.8 million and $3.91 trillion... Ah, I can't keep track... we need a real-time stream for this... You get the picture though. They boss a lot of people around and generate a lot of money... These are important guys, though apparently not so hard for a harmless young girl to get a close seat nearby.

So Business Roundtable measures CEO confidence... Their survey was filled out between March 16 and the 27th of the month, just after the nascent rally started. The results of the query were scary, because these are guys who supposedly have a bead on their businesses. Therefore, in aggregate, they should be capable of providing an illustration of the economy, and in this case, the economic outlook.

Two-thirds of them expect the corporate revenues they oversee to decrease over the next six months. What's worse is that in areas they fully control, employment and capital spending, again two-thirds of them expect to cut workforce further and to investment less in their operations. These are not good signs for the economy.

The group's composite economic outlook index, which measures the CEOs' outlook for revenues, capital spending and employment over the next six months, dropped into negative territory for the first time since the series began in 2002. At negative 5.0 for the first quarter of 2009, it compared against a reading of 16.5 in Q4 2008 and 78.8 in Q3. Wow! So CEOs are suicidal then?

Well, a reading between 50 and 150 signifies economic expansion, whereas a measure short of 50 characterizes economic contraction. Negative territory therefore must have these guys on suicide watch!!! Who can blame them though, with all these little girls assaulting them at speaking engagements.

Suggested Greek Reading: "CEO Compensation, Excessive or Deserved?"


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