21 November 2008

Equity Analysts Expect Revenue Growth Rebound in Q4 2009

Corporate Executive Board, 12 November 2008

This analysis provides a unique view into sector growth expectations by aggregating equity analyst estimates for companies within the S&P 500 nonfinancial universe to help companies refine their planning assumptions.

A Few Hundred Million More Reasons Exec Comp Will be Hot in 2009

The Wall Street Journal, 20 November 2008

Top executives at some floundering (or even failed) firms earned more than $100 million during the boom years, 2003–2007. In what is certain to add fuel to simmering congressional anger over executive pay, data show that some home-building executives made out better than their Wall Street counterparts.

Related News: A Duke University economist produced an interesting counterintuitive empirical study arguing large bonuses could actually lead to worse performance.

Work-Force Issues Relegated to Back Burner The Wall Street Journal, 20 November 2008 Crisis management and staying on course are at the top of executive agendas, while finding and developing qualified workers has declined in importance. However, an increasing number of business leaders say they are especially concerned about “speed, flexibility, and adaptability to change,” according to recent research featured in the Journal.

Our View: All executive teams will be called on in the coming year to make critical, in some cases ”bet-the-company,” decisions. The best will find structured ways to develop the high-potential managers they are going to need for executing on new strategies by actively engaging them in addressing issues presented by the economic crisis, looking for development opportunities that map against new strategies, and spending their money to support applicable learning experiences. The crisis management experience that this cadre gains now will pay off for decades. Related Teleconference: Register now for an upcoming call on executives' common "blind spots" and the essential information for making wise decisions.

Congress Mulls Pension Protection Rollback

New York Times, 20 November 2008
Faced with a lack of cash, some of the country’s largest companies are asking Congress to ease regulations requiring them to contribute certain amounts to their pension plans. The companies argue that the cash is needed to keep their businesses running in the current credit climate. Congress looks likely to pass some sort of pension relief legislation by January.

'Heard in the Suite' - Emerging Trends: Government Intervention Has Not Changed the Fundamental Health of Banks 
This feature highlights member quotes that represent 1) Emerging Trends, 2) Challenges to Conventional Wisdom, or 3) Under-Reported News
Capital-raising has not kept pace with write-downs and losses through Q3, and there are more and possibly larger write-downs yet to come. Organizations should not assume they can hold off on evaluating counterparty risk. In fact, they should add more financial rigor (beyond looking at credit default swaps) and increase the frequency of reporting to monthly or weekly reviews. One Treasury member put it best when he said, "Government support of banks really only delays the inevitable. More banks will fail, and it is now only becoming harder to tell which ones and when."

Current Volatility Prompts Citigroup Managers to Consider a Range of Scenarios

Wall Street Journal, 21 November 2008

In another example of how the world’s companies are using scenario tools to better understand decision making in the current volatility, the Journal reports that the recent fall in Citigroup’s share price has prompted managers to discuss a number of alternative futures, including one where they would need to auction pieces of the company or maybe even sell it outright. The Journal is at pains to point out that these are preliminary talks on corporate strategy and do not signal that the bank is worried about inadequate capital, funding, or strategic direction.

Pirates Force Shipping Lines to Redirect Routes

Bloomberg, 20 November 2008
The Suez Canal marks a spot to potentially avoid on the maps of the world’s largest shipping lines as they revise their routes to sail around South Africa to avoid the Somali coast. The circuitous nature of these routes may raise the price of delivering commodities, especially crude oil, and reduce supply. Since January, Somali pirates have attacked at least 88 ships in their area, and currently 250 crew members and 14 merchant vessels are being held hostage.

Daily Lift - The Likelihood of a 21st Century Bonnie and Clyde?

National Public Radio, 20 November 2008

Bonne and Clyde committed their infamous crimes against the backdrop of the Great Depression, and with it contributed to the widely held (and plausible) idea that bad economic times cause a crime to rise. The only problem with this? The Depression years had very little crime. In fact, evidence from the 1920’s, 50’s, and 60’s shows, it is a booming US economy that historically goes hand-in-hand with a rising crime rate.

Daily Capital Markets Review: Stocks Freefall to ’97 Levels

This summary includes news items regarding global liquidity, the TED spread, commercial paper and T-bill rates, currencies and commodities, and corporate debt spreads and new issuances.

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