CEOs say political disruptions—like the 2024 presidential election—are the biggest business risks next year

—CEOs and investors are split on the macroeconomy. 53% of CEOs expect economic conditions to worsen. 94% of investors expect improvement. My guess is the latter group is betting on a reduction in interest rates next year. We will see.

—78% of CEOs say they are investing in AI. That’s up 20 points from last year. But 1 in 4 do not believe they have the right people in place to power their AI program. That suggests a continuing battle for talent.

—Deglobalization will continue. 80% of CEOs say they will continue to retool to improve supply chain resiliency and reduce geopolitically-sensitive dependencies. But interestingly, 55% of CEOs and 63% of investors report that China is important to their strategies over the next decade—up sharply from just 18% and 34% last year. Decoupling has its limits.

—M&A activity will rise. 68% of CEOs and investors expect a sizable M&A uptick in 2024, despite higher interest rates and a tougher regulatory environment.

—ESG will continue. Only 8% of CEOs say they are ramping down their ESG programs, while 92% say they will stay the course. But 72% say they have modified their approach, and are talking about it less (45%), listening more closely to stakeholders to decide when and where to engage (28%), and being more cautious in determining which topics to engage in (28%).

—Domestic politics is a big business story. The U.S.-based CEOs all reported some adjustment to their business plans based on the 2024 election, but their reactions varied. 20% said they were increasing investment in social and environmental causes, while 24% said they were decreasing such investment. 35% said they were increasing domestic investment as a result of the election, while the same percentage said they were decreasing domestic investment.

“With key elections around the world next year, including the U.S. presidential election,” Teneo CEO Paul Keary told me, “it is not surprising that CEOs see domestic political disruption as the top risk facing companies heading into 2024.”

The survey included 111 CEOs from global publicly-traded companies and 152 investors. More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

“We don’t know Nippon”

The U.S. steelworkers union is opposing a bid by Japanese steelmaker Nippon Steel to buy U.S. Steel for $14.1 billion. “We don’t know Nippon,” said David McCall, president of the union, which wants U.S. regulators to scrutinize the deal for national security risks. Some U.S. senators have also criticized the deal: “A foreign company should not be able to swoop in, ignore the voices of union workers, and buy a major American steel manufacturer behind closed doors,” said Sen. Sherrod Brown (D–Ohio). Bloomberg

Nio investment

CYVN, an investment company majority-owned by the Abu Dhabi government, is investing $2.2 billion in Chinese EV startup Nio. CYVN now has a 20% stake in Nio, and will get two seats on the company’s board. Nio reported a net loss of $624 million last quarter, or a loss of $11,300 for every car sold. Reuters

Korean succession

One of Korea’s largest conglomerates, or “chaebols,” is locked in a succession dispute. Koo Bon-moo, chair of LG, died in 2018 without leaving a will; his widow and two daughters now allege in a lawsuit that Koo’s adopted son and LG executives pressured them to sign away their share of the estate. While LG is not a party to the suit, the company is vigorously defending its tradition of only letting the eldest male heir take control. New York Times

AROUND THE WATERCOOLER

The CEO of the 12th largest U.S. retailer thinks self-checkout is worth it despite theft: ‘Savings on labor costs are higher than the potential downsides’ by Phil Wahba

Japan’s chipmaking companies can’t quit the China chip market, despite Washington and Tokyo’s controls by Lionel Lim

Dump the U.K. stock market for the U.S., major activist investor tells companies looking to increase their value by Ryan Hogg

Colleagues who film TikTok videos at work and brag about ‘cold water swimming’ are the new most annoying office trends by Orianna Rosa Royle

Commentary: Stressed-out employees are multitasking to survive virtual meetings–and bosses hate it by Gleb Tsipursky

The University of Michigan’s $17.9B endowment has trimmed down its private fund investments by Jessica Mathews

This edition of CEO Daily was curated by Nicholas Gordon.