One JPMorgan Chase executive says that CEOs are a bit nervous about earnings growth next year.
According to J.P. Morgan Chase regional investment banking head John Richert, CEOs are expressing concerns about delivering earnings growth during increasingly uncertain times, which include slowing growth around the world, the U.S.-China trade war and the upcoming U.S. presidential election.
“Everybody looks at the stock market and sees share prices going through the roof right now, but few of the CEOs I talk to feel good about that,” Richert told CNBC. “There is an increased worry about their ability to deliver results amid prolonged periods of uncertainty next year.”
He added that one bonus is that the anxiety has led to a record level of engagements with corporate clients, with his group seeing the pipeline for potential deals at its highest level, while his bankers are being called to examine companies’ capital plans and offer strategic possibilities more than ever.
“There’s a lot of discussions among industry players to figure out the best way to put companies together,” he said.
One factor that has CEOs very worried is the upcoming election, which could offer up a variety of possibilities. There could be another four years of a pro-business environment under President Donald Trump, or the possibility of sweeping, structural changes to regulation and taxes if a Democrat, such as U.S. Sen. Elizabeth Warren of Oklahoma, were to win.
Richert also pointed out that corporate anxiety isn’t the same for all industries, with manufacturers, transportation and consumer retail companies currently dealing with harder times than technology and service firms.
“You talk to any industrial, old-line economy company here in the U.S., they’ll tell you we’re in a recession right now,” he said. “The service economy and tech is keeping the cycle going for now.”