Stocks: Deloitte’s CFO Signals Survey

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Stock markets and corporate leaders

Deloitte Touche Tohmatsu Limited, known as Deloitte, released the CFO Signals Survey. As part of the survey, Deloitte surveyed 147 Chief Financial Officer’s (CFO) from U.S. Canada and Mexico. Most of the companies that have more than $3 billion in annual revenue. Corporate leaders from the North American countries stated that there is a high risk of an economic slowdown. One of the major reasons why the economy may slowdown is the overvalued stock market.

The leaders surveyed by Deloitte see consumer and business spending slowing. Moreover, 82% of the participants anticipate taking more defensive actions. For example, to stabilize the situation, it is possible to cut discretionary spending and to reduce the number of employees.

Another interesting information is connected with a slowdown in Europe and China. For example, only 18% of respondents described the conditions as good when it comes to China’s economy. Meanwhile, participants are even more skeptical regarding economic activities in Europe.

For example, 69% of respondents are confident that the conditions in North America are good. In comparison with previous surveys, China’s results fell to a three-year low as the country’s economy became more consumer-oriented. Moreover, the trade war with the U.S. had a negative effect on economic growth.

Stocks and major challengesStock markets and U.S. economy

There is some good news as well. The expectations for an outright recession fell to 3% in the fourth-quarter survey. This is, without a doubt a sign of progress for the stocks.

In the first-quarter 2019 survey, 15% of respondents identified the risk of recession as a serious problem.

Nevertheless, the vast majority of corporate leaders, 97% of them said a slowdown already started or will start in 2020.

Respondents are skeptical regarding the future of markets, as 77% said stocks are overvalued. This is the worst result in nearly two years. Hopefully, only 4% of participants identified equities as undervalued.

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