Money Talk: CEO expectations mixed over next six months, project GDP growth of 2% in 2017

by Talk Business & Politics staff ([email protected]) 196 views 

Editor’s note: Each Monday, Talk Business & Politics provides “Money Talk,” a wrap-up of banking and financial news.

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CEO EXPECTATIONS MIXED OVER NEXT SIX MONTHS, PROJECT GDP GROWTH OF 2% IN 2017
CEOs report higher expectations for sales and hiring over the next six months, but lower expectations for capital investment, according to the Business Roundtable fourth quarter 2016 CEO Economic Outlook Survey. For the fifth straight year, CEOs cited regulation as the top cost pressure facing their companies.

In their first GDP estimate for 2017, CEOs projected 2% growth next year. While the outlook for hiring is positive, the overall results suggest continued economic growth, albeit at a slow pace. The Business Roundtable CEO Economic Outlook Index — a composite of CEO projections for sales and plans for capital spending and hiring over the next six months — rose by 4.6 points, from 69.6 in the third quarter to 74.2 in the fourth quarter.

The Index remains below its historical average of 79.6. CEO expectations for sales over the next six months increased by 4.5 points, and expectations for hiring increased by a more robust 14.8 points over last quarter. However, CEO plans for capital expenditures fell by 5.4 points relative to last quarter.

WELLS FARGO SCANDAL GROWS, SHAM ACCOUNTS NOW LINKED TO PRUDENTIAL LIFE INSURANCE SALES
In the wake of Wells Fargo’s recent scandal where two million sham accounts were created by company employees, the banking giant also appeared to have signed up customers for Prudential insurance without the customers’ knowledge or permission, the New York Times reported on Friday (Dec. 9).

According to the article, in some cases, Wells Fargo employees even arranged for monthly premium fees to be withdrawn from their customers’ accounts. When investigators reviewed tapes of calls to Prudential’s customer service line, they found complaints from Wells Fargo customers about policies they did not remember buying. Many of the customers did not speak English and needed a Spanish interpreter, the Times article said, citing a lawsuit by three former managers in Prudential’s corporate investigation division.

Separately, the Financial Industry Regulatory Authority (FINRA) also on Friday asked former Wells Fargo bank employees whose securities registrations were terminated to contact FINRA if they have concerns about the notice filed by Wells Fargo. FINRA, which regulates all securities firms doing business in the U.S., said it wants to review the facts and circumstances surrounding these allegations and has created a dedicated phone line and email address for use by former registered Wells Fargo bank employees to report their concerns.

COCA-COLA ANNOUNCES SUCCESSION PLAN, NEW CEO TO TAKE REINS IN MAY
The Coca-Cola Company announced on Sunday (Dec. 11) that its Board of Directors has approved unanimously the recommendation of Chairman and Chief Executive Officer Muhtar Kent for an evolution of the company’s senior leadership structure. Under the new structure, company veteran James Quincey, current president and COO, will succeed Kent as CEO, effective May 1, 2017. Kent will continue as chairman of the board of directors.

Quincey, 51, was promoted to his current role in August 2015. Earlier this year, he put in place a new international operating structure and leadership team to make the company more efficient and effective at the local levels, helping operating units become faster and more agile.

Berkshire Hathaway Inc. Chairman and CEO Warren Buffett, a major Coke shareholder, applauded the Atlanta-based beverage giant’s succession plan. “I know James and like him, and believe the company has made a smart investment in its future with his selection,” Buffett said.