In 2020, Investors Have Lost Their Bearings

January 9, 2020, 12:29 PM UTC

Good morning.

Confused about where the economy is headed this year? Take heart—you are not alone.

Fortune teamed up with Civis Analytics to poll the “smart money”—some 1300 investors—and this is what we found:

  • 58% of them think a recession is likely in 2020;
  • 76% think the stock market will rise in 2020. That’s after rising nearly 30%, as measured by the S&P 500, last year.

Got that? You don’t need to be a data scientist to figure out that roughly a third of investors think the market will go up, even though the economy is going down.

I think investors have lost their bearings. And most corporate CFOs seem to agree with me. Deloitte’s quarterly CFO Survey is out this morning, and 77% of the CFOs who responded said they believe the market is overvalued.

One company that certainly adds to that narrative is Tesla, which ended the day yesterday with a market cap of $89 billion—more than GM and Ford combined! No wonder Elon Musk is dancing (this is worth watching.)

But Musk was only the second-most-watched car executive in the news yesterday. The first was Carlos Ghosn, who gave a press conference after his dramatic escape from Japan’s criminal justice system in a box. Ghosn didn’t provide new details on his Mission Impossible journey; he just railed against the Japanese criminal justice system. He may have a case—his treatment seemed remarkably harsh, and the conviction rate in Japan seems unreasonably high. But it’s hard to believe Japanese authorities would have gone this far if they didn’t have a pretty good case, too. As Bloomberg’s Matt Levine wrote: “Surely almost everyone who has ever been convicted of a crime—certainly of a complicated nuanced financial crime—at trial anywhere in the world thinks that they have not gotten a fair trial.” Does that give them the right to sneak away in a giant box?

More news below.

Alan Murray



The U.S. and Iran appear to be backing down from outright conflict, after a press conference Wednesday by President Donald Trump signaled no new attacks on Iran, after missile strikes by the country on Iraqi airbases housing American forces produced no casualties. However, Trump said the U.S. would move ahead with "punishing economic sanctions." On Thursday morning, markets in Europe rallied on the news, while oil prices erased earlier gains. WSJ / FT 

IAG Chief Steps Down

Willie Walsh, the chief executive of the global airline group IAG, said he would step down after 15 years in the job. The Irishman will depart in March and be replaced by Luis Gallego, who heads Spain's Iberia carrier, part of IAG. The group recently saw its first ever pilot strike at British Airways in September. FT 

Boeing's 'Money Spinner'

The Boeing 737 disaster in Tehran is still drawing questions about what actually caused the Wednesday crash that killed everyone on board. But for Boeing, the crash hits at not just a tense time, but directly at a beloved brand: the 737 is the company's 'money spinner' plane, a workhorse of the skies. “It's the most successful plane in the history of aviation,” one expert said. Fortune

The U.S.-Iran Conflict Is Hitting Aramco

The recent tensions between the U.S. and Iran over the killing of Qassem Soleimani are putting one company in the cross hairs: Saudi Aramco. After listing in Saudi late last year, the oil giant has seen its shares fall sharply following the attack. The recent drone attack on its oil field and a refinery in September, which knocked out half the Kingdom's crude supply, is clearly fresh in investors' minds. Fortune 


China Gets Closer to Identifying Mysterious Illness 

Chinese researchers say they have identified a new "coronovirus", a pneumonia-like illness that has sickened dozens of people in the central city of Wuhan. It appears to be spread to humans via animals and seems less likely to spread between humans—but few other details are public. Memories of the SARS epidemic and its coverup have caused wariness about the cause of the illness—and the official government response. New York Times 

End of the 'Double Irish' 

This month marks the end of the so-called 'Double Irish'—a much-used tax avoidance strategy that involves setting up operations in Ireland to take advantage of its low corporate tax rates. Under pressure from the OECD, the EU, and the U.S., Ireland closed the loophole, while a similar one in the Netherlands—the 'Dutch sandwich'—has also shut. But with companies searching for new options to keep their taxes low, other countries or regions may just step in to fill the gap. Fortune 

ClassPass Hits Unicorn Status 

ClassPass, the workout class app, is the latest female-founded startup to reach a $1 billion valuation, after receiving $285 million in funding from backers that have also funded Peloton and Equinox. Founded in 2013 by Payal Kadakia, who now serves as executive chairman, and currently led by CEO Fritz Lanman, the company has expanded across Europe to 28 countries worldwide, and is working on expanding its offerings of wellness services like massages. Fortune 

'Financial Independence'  

Everyday people know what financial independence means. But what does it mean for a Royal, or for the 'former senior Royals' that Prince Harry and Meghan Markle will soon become? Most of their expenses will still be covered by the Duchy of Cornwall, a vast real-estate portfolio controlled by Prince Charles. The couple also have private wealth: Markle has a private fortune, and Harry has inherited shares of multi-million pound estates from both his great-grandmother, the Queen Mother, and his mother, Princess Diana. The Times 

A note from CEO Daily: The future of Fortune is coming. This month, we will be launching (deep breath) a new site and app, a new video hub, a new magazine, plus a subscription package that offers the best of business, all in one place: strategic insights, deep-dive stories, and exclusive access to what the C-suite is thinking. We'll keep you updated on the launch, and you can also tell your friends to keep tabs on developments by leaving their email addresses here.

But that's not all! Fortune is also getting ready to launch a raft of new newsletters, two of which you can sign up for in advance. Fans of the Sino Saturday edition of CEO Daily will be excited to learn that Clay Chandler and the Hong Kong team are preparing a daily newsletter on business in China, called Eastworld. And our Rome-based ace, Bernhard Warner, will write a daily newsletter on finance news, awesomely named Bull Sheet.

This edition of CEO Daily was edited by Katherine Dunn. 

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