Top JP Morgan Banker Says CEOs Tell Him They Are Worried About 2020; Asia Expert Stephen Roach Warns

A top JP Morgan banker says CEOs tell him they are worried about 2020 despite stocks’ record highs

  • The stock market has been hitting record high levels day after day, but that doesn’t mean corporate CEOs are bullish about next year, according to J.P. Morgan Chase regional investment banking head John Richert.
  • “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 said.
  • CEO anxiety over the future has translated into a record level of engagements from corporate clients, and the pipeline for potential deals in his group was the highest it’s ever been, Richert said.

The stock market has been hitting record high levels day after day, but that doesn’t mean corporate CEOs are bullish about next year, according to J.P. Morgan Chase regional investment banking head John Richert.

Instead, CEOs are worried about delivering earnings growth amid increasingly uncertain times, thanks to slowing growth around the world, the U.S.-China trade dispute and upcoming U.S. presidential election. As a result, most of the CEOs Richert speaks with are reining in capital spending for 2020 and modeling how a possible recession will impact their business, he said.

“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 said. “There is an increased worry about their ability to deliver results amid prolonged periods of uncertainty next year.”

 

US-China trade optimism is overdone, Asia expert Stephen Roach warns

Wall Street is overestimating the benefits of a U.S.-China trade agreement, according to one of the world’s leading authorities on Asia.

Stephen Roach, who lived in China from 2007 until 2012 during his tenure as chairman of Morgan Stanley Asia, is warning investors the ultimate deal won’t deliver, and stocks will sell off.

“To the extent that ‘phase one’ is a big event that the markets are looking at, I think the news will be far more disappointing than the rumor of a deal,” the Yale University senior fellow told CNBC’s “Trading Nation” on Monday.” “It may be a classic case of buying on the rumor.”

The DowS&P 500 and Nasdaq locked in another round of record high closes on Monday, and a major driver was speculation the U.S. and China were closing in on the first part of a trade deal.

Roach is confident Washington and Beijing will sign a “phase one” agreement. However, he predicts it will be a one-and-done deal.

“There is a strong political incentive on both sides to cut a deal. I think we’ll look back on ‘phase one’ and wonder why we called it ‘phase one’ because we’re unlikely to see phases two, three four and anything else,” he said. “This deal will be cosmetic [and] will accomplish very little for the American worker.”