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CFOs Express Diminished Optimism for North American and European Economies Looking a Year Out and Cite Geopolitical Tensions and Inflation as Top External Concerns: Deloitte CFO Signals™ Survey 1Q 2022

CFOs Express Diminished Optimism for North American and European Economies Looking a Year Out and Cite Geopolitical Tensions and Inflation as Top External Concerns: Deloitte CFO Signals™ Survey 1Q 2022
PR Newswire
NEW YORK, March 29, 2022

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CFOs Express Diminished Optimism for North American and European Economies Looking a Year Out and Cite Geopolitical Tensions and Inflation as Top External Concerns: Deloitte CFO Signals™ Survey 1Q 2022

PR Newswire

NEW YORK, March 29, 2022 /PRNewswire/ --

Key takeaways

  • Slightly more than one-third (36%) of CFOs expect North America's economy to be better or much better a year from now, down from 45% in 4Q21.
  • Twenty-six percent of CFOs believe Europe's economy will be better in 12 months, a decline from 40% in 4Q21.
  • Thirty-eight percent of CFOs are more optimistic about their companies' financial prospects, down from 49% in 4Q21.
  • Inflation, geopolitical tensions, and policies and regulation top CFOs' external concerns, with some citing concerns over new COVID-19 variants.
  • More than one-quarter (28%) of surveyed CFOs reported they have direct oversight over their organizations' IT leader, while 7% said their IT leader reports to them indirectly.
  • On average, CFOs estimate that their organizations' overall IT spend was 3.1% of its annual revenue. Fifty-two percent of that spend goes toward maintaining day-to-day operations.
  • Surveyed CFOs consider the top three challenges to realizing value from the IT function to be talent, complexity and non-standardization, and business partnering and alignment. 

Why it matters to CFOs?
Each quarter, CFO Signals™ tracks the thinking and actions of leading CFOs representing North America's largest and most influential companies. Since 2010, the survey has provided key insights into the business environment, company priorities and expectations, finance priorities, and CFOs' personal priorities. Overall, participating CFOs represent diversified, large companies, with the vast majority reporting revenue in excess of $1 billion. More than one-quarter are from companies with greater than $10 billion in revenue.

Note: The survey closed end-of-day on Feb. 25, 2022 — the day after Russia invaded Ukraine.  

Economic outlook and own-company financial prospects
Sixty-four percent of CFOs view the current North American economy as good or very good, a decrease from 4Q21's 72%. Thirty-six percent of finance leaders expect economic conditions in North America to improve in a year, down from 45% last quarter. Additionally, 31% and 29% of CFOs view the current European and Chinese regional economies as good or very good, respectively. Looking forward, 26% of CFOs expect Europe's economy to be better, down from 40% in 4Q21, and 31% expect China's economy to be better in a year, an increase from 28% in the prior quarter.

Slightly more than one-third (38%) of CFOs see their own companies' financial prospects as being better compared to the three months prior to participating in the survey, a decline from 49% in 4Q21.

Key operating metrics
CFOs have higher year-over-year (YOY) growth expectations for revenue and dividends, compared to the prior quarter, with revenue growth at 9.1%, up from 7.8% in 4Q21, and dividend growth at 3.9%, up slightly from 3.7%.

As for the other key metrics CFO Signals tracks — CFOs have lower YOY growth expectations for earnings, capital spending, domestic hiring, and wages and salaries. Expectations for earnings growth decreased slightly from 9.6% in 4Q21 to 9.2%. Capital spending growth expectations also dipped slightly from 11.5% to 11.3%. Domestic hiring growth expectations decreased to 5.3% from 5.8%, while expectations for domestic wages dropped slightly to 5.1% from 5.2% in 4Q21.

Overall, 47% of CFOs indicated now is a good time to be taking greater risks, down from last quarter's 57%. Eighty-five percent of CFOs considered debt financing attractive, and more than one-third (37%) of CFOs regard equity financing as attractive.

Persistent talent and policy concerns
This quarter, talent/labor concerns remained a top priority for CFOs, with a specific focus on retention. Externally, CFOs indicated inflation, geopolitical instability, and policies and regulation are their top worries. Other concerns include supply chain issues, rising interest rates, and the state of the economy. Some CFOs also cited new variants of COVID-19 and cybersecurity risks.

Views on the IT function and IT spend 
CFOs' responses on the top three challenges to realizing value from their IT function fell into several categories, foremost being talent; complexity and non-standardization; business partnering and alignment; technology debt; prioritization and execution; and time to value. When asked about the actions their organizations have taken to enhance the value derived from the IT function CFOs noted most frequently changing IT leadership, improving governance, and increasing investment.

On average, CFOs indicated that their organizations' overall IT spend was 3.1% of annual revenue. Fifty-two percent of CFOs' organizations' IT spend goes toward maintaining day-to-day operations, while the remainder is split between enhancing existing capabilities and operations (26%) and creating new capabilities (22%). On average, 23.7% of CFOs said their organizations' IT spend goes to Agile initiatives. Thirty-five percent of surveyed CFOs have direct or indirect oversight over their organizations' IT leader; the remaining 65% do not.

Key quotes
"CFOs' drop in their outlook for the North American and European economies a year out and a decline in their YOY growth expectations for earnings and capital investment are indicative of the current business environment and the challenges they're up against, including talent retention, geopolitical tensions, inflation, and policies and regulations that will likely affect their strategy." - Steve Gallucci, national managing partner, Global and U.S. Chief Financial Officer Program, Deloitte LLP

"Investment in IT infrastructure is more important than ever. CFOs acknowledge the critical role IT plays in keeping day-to-day systems running smoothly and enhancing financial performance and managing cyberthreats." - Khalid Kark, managing director, US CIO Program, Deloitte LLP

Methodology
Every quarter, Deloitte's CFO Signals closely follows the thinking and priorities of leading CFOs that represent some of North America's largest and most impactful organizations. This report summarizes CFOs' opinions across four key areas: business environment, company expectations and priorities, financial priorities, and personal priorities.

The CFO Signals survey for the first quarter of 2022 was open from Feb. 7, 2022, through Feb. 25, 2022. A total of 97 CFOs participated in this quarter's survey. This survey seeks responses from CFOs across the United States, Canada, and Mexico, and the vast majority are from companies with more than $1 billion in annual revenue. Participation is open to all industries except public sector entities.

For more information about Deloitte CFO Signals or to inquire about participating in the survey, please contact NACFOSurvey@deloitte.com.

Download the complete findings from the 1Q22 CFO Signals survey here.

About Deloitte
Deloitte provides industry-leading audit, consulting, tax, and advisory services to many of the world's most admired brands, including nearly 90% of the Fortune 500® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today's marketplace—delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte's more than 345,000 people worldwide connect for impact at www.deloitte.com.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

 

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Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…

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Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.

(SARMDY/Shutterstock)

What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

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Government

Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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Government

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While “Waiting” For Deporation, Asylum

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several…

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The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several months we've pointed out that there has  been zero job creation for native-born workers since the summer of 2018...

... and that since Joe Biden was sworn into office, most of the post-pandemic job gains the administration continuously brags about have gone foreign-born (read immigrants, mostly illegal ones) workers.

And while the left might find this data almost as verboten as FBI crime statistics - as it directly supports the so-called "great replacement theory" we're not supposed to discuss - it also coincides with record numbers of illegal crossings into the United States under Biden.

In short, the Biden administration opened the floodgates, 10 million illegal immigrants poured into the country, and most of the post-pandemic "jobs recovery" went to foreign-born workers, of which illegal immigrants represent the largest chunk.

Asylum seekers from Venezuela await work permits on June 28, 2023 (via the Chicago Tribune)

'But Tyler, illegal immigrants can't possibly work in the United States whilst awaiting their asylum hearings,' one might hear from the peanut gallery. On the contrary: ever since Biden reversed a key aspect of Trump's labor policies, all illegal immigrants - even those awaiting deportation proceedings - have been given carte blanche to work while awaiting said proceedings for up to five years...

... something which even Elon Musk was shocked to learn.

Which leads us to another question: recall that the primary concern for the Biden admin for much of 2022 and 2023 was soaring prices, i.e., relentless inflation in general, and rising wages in particular, which in turn prompted even Goldman to admit two years ago that the diabolical wage-price spiral had been unleashed in the US (diabolical, because nothing absent a major economic shock, read recession or depression, can short-circuit it once it is in place).

Well, there is one other thing that can break the wage-price spiral loop: a flood of ultra-cheap illegal immigrant workers. But don't take our word for it: here is Fed Chair Jerome Powell himself during his February 60 Minutes interview:

PELLEY: Why was immigration important?

POWELL: Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger.

PELLEY: Why is immigration so important to the economy?

POWELL: Well, first of all, immigration policy is not the Fed's job. The immigration policy of the United States is really important and really much under discussion right now, and that's none of our business. We don't set immigration policy. We don't comment on it.

I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Translation: Immigrants work hard, and Americans are lazy. But much more importantly, since illegal immigrants will work for any pay, and since Biden's Department of Homeland Security, via its Citizenship and Immigration Services Agency, has made it so illegal immigrants can work in the US perfectly legally for up to 5 years (if not more), one can argue that the flood of illegals through the southern border has been the primary reason why inflation - or rather mostly wage inflation, that all too critical component of the wage-price spiral  - has moderated in in the past year, when the US labor market suddenly found itself flooded with millions of perfectly eligible workers, who just also happen to be illegal immigrants and thus have zero wage bargaining options.

None of this is to suggest that the relentless flood of immigrants into the US is not also driven by voting and census concerns - something Elon Musk has been pounding the table on in recent weeks, and has gone so far to call it "the biggest corruption of American democracy in the 21st century", but in retrospect, one can also argue that the only modest success the Biden admin has had in the past year - namely bringing inflation down from a torrid 9% annual rate to "only" 3% - has also been due to the millions of illegals he's imported into the country.

We would be remiss if we didn't also note that this so often carries catastrophic short-term consequences for the social fabric of the country (the Laken Riley fiasco being only the latest example), not to mention the far more dire long-term consequences for the future of the US - chief among them the trillions of dollars in debt the US will need to incur to pay for all those new illegal immigrants Democrat voters and low-paid workers. This is on top of the labor revolution that will kick in once AI leads to mass layoffs among high-paying, white-collar jobs, after which all those newly laid off native-born workers hoping to trade down to lower paying (if available) jobs will discover that hardened criminals from Honduras or Guatemala have already taken them, all thanks to Joe Biden.

Tyler Durden Sun, 03/10/2024 - 19:15

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