Press "Enter" to skip to content

CEOs Anticipate Recession. Will It Be A 1929 Style Disaster?

CEOs all over the world anticipate recessions. They’re saying so on their quarterly calls. 

James S. Tisch, CEO at Loews Corporation, the hotel, insurance and industrial conglomerate, said on an earnings call last week that he expected recession, but none so “cataclysmic” as The Great Recession. 

Starbucks interim Chief Executive, Howard Schultz, said, “We’re highly concerned and humbled by the environment.” 

William J. Hornbuckle, CEO of the casino operator MGM Resorts International, said that he and his executives are “not blind,” and that they “remain keenly aware of the impact of inflation.”

As Federal Reserve officials made a fourth supersize interest rate increase to stamp down inflation, 88 chief executives cited on Q3 conferences calls the Fed’s raising of interest rates to fight inflation as a major reason for the slowing in their businesses, according to Sentieo. 

Steven Roth, the real estate developer and chief executive of Vornado Realty Trust, told analysts the Fed was “deadly serious” in fighting inflation. “The economy is clearly slowing.”

2,122 companies’ conference calls mentioned recession in the past three months out of the 9,000 companies Sentieo tracks worldwide. Last year, 193 companies mentioned recession. 

Earnings have slowed, and profits have increased just 2 percent on average for reporting S&P 500 companies. That’s down from 6 percent growth one quarter ago, according to FactSet, a market tracking website. 

What’s going on? 

Bloomberg Intelligence Macro Strategist Mike McGlone says the Federal Reserve is tamping down inflation and bringing on recession. 

“The Fed Sledgehammer is what’s happening,” McGlone said on The GoldSilverBitcoin Show. “It is pounding out an enduring foundation for gold and Bitcoin right now.” 

McGlone believes those markets are in the maximum pain state. “To me, that’s forward looking and I see us heading towards one of the most significant global recessions of our lifetimes.”

McGlone doesn’t think that is particularly profound. 

“We have the Federal Reserve, leading interest rate hikes, the most central banks on the planet hiking rates, as financial assets deflate, and the world tilts towards a recession,” said McGlone. “That’s essentially a 1929 type scenario. Yes, they’re fighting inflation, but all the forward looking indicators, and almost all my forward looking indicators for inflation are it’s going to absolutely collapse and then stay down for a long time.”