Business prospects will improve in the second half of the year, says EY CEO
2024 will be a “mixed year” for investments, with the situation improving in the second half of the year, EY CEO Carmine Di Sibio told CNBC in Davos, Switzerland.
“We expect things to improve in the second half of the year,” he said, stressing that “things will continue to be difficult until June.”
In the same tone, he downplayed a supposed breakout toward the end of 2023, noting that “some stock markets were a little exuberant right before Christmas because I think there's still some time ahead of us.”
The macroeconomic outlook continues to be dominated by uncertainty over when central banks will begin cutting interest rates after several months of rate hikes in response to rising inflation. Di Sibio signaled that the company's clients would return to higher investments once the much-anticipated interest rate cuts were “final” and predicted that “things are going to change around the world.”
He also recognized that geopolitics has an impact on the business landscape, including supply chain concerns.
— Ruxandra Iordache
There are “signals” of rate cuts, but “the question is when they would start,” Nasdaq CEO says
Nasdaq CEO Adena Friedman said markets had predicted there would be interest rate cuts, adding she was “a little worried” that it would happen too soon, speaking on a panel discussion in Davos moderated by CNBC spoke.
The Federal Reserve Bank will likely want to reach a state of stability before making any significant moves, Friedman added.
The UAE is keeping an eye on its ambitious growth target
UAE Minister of Economy Abdullah bin Touq al Marri reiterated Abu Dhabi's intentions to target economic growth of 7% of national GDP in 2024, with a focus on expanding the country's revenue sources.
“In terms of non-oil GDP, we are really above 5% and really diversifying our economy,” he told CNBC in Davos, Switzerland. The UAE, which has traditionally relied on the sale of crude oil and oil products, has embarked on an ambitious path to boost its economy and reach a GDP of 3 trillion dirhams ($817 billion) by 2030.
Al Marri pointed to Abu Dhabi's efforts over the past three years to deregulate corporate law and give 100% ownership to foreign shareholders, as well as overhaul the country's visa regime to appeal to global investors.
— Ruxandra Iordache
Private company valuations are going “into madness again,” says Cisco CEO
Cisco CEO Chuck Robbins attends the World Economic Forum in Davos, Switzerland, on January 18, 2023.
Hollie Adams | Bloomberg | Getty Images
According to Cisco's boss, the valuations of some private companies are “going crazy again.”
Chuck Robbins said valuations of companies focused on new technologies such as artificial intelligence (AI) have returned to their peak during the low interest rate environment of the pandemic.
“When you come in [generative] AI and some of these other things, we're seeing some of the private valuations go crazy again,” he said during a panel event moderated by CNBC at the World Economic Forum in Davos, Switzerland.
“It is ironic to me that we are doing this so quickly after what we experienced 48 months ago. It’s just incredible,” he said.
—Karen Gilchrist
The IPO market could reopen in the second quarter, says Nasdaq CEO
Adena Friedman, CEO of Nasdaq, at the WEF in Davos, Switzerland, on May 24, 2022.
Adam Galica | CNBC
Adena Friedman, chairman and CEO of Nasdaq, said the market for initial public offerings (IPOs) could “reopen” as investors gain confidence in the second half of the year.
“What's happening in the markets – because of the idea that there could be a lower cost of capital over the course of the year – is that investors can start thinking again about how they model corporate earnings,” she said in her speech on a panel moderated by CNBC .
While market performance has been “top heavy” over the past year, valuations of the broader market, including small-cap companies, are starting to improve, Friedman added.
“You know the cost of capital is likely to remain stable or fall in the future, and I think that will also attract interest from investors who want to deploy venture capital, which means IPOs… we could actually open an IPO market again.” back,” she said.
About 85 companies have filed for an initial public offering on the Nasdaq and are looking to go public, with activity concentrated in the second quarter, Friedman added.
–Lucy Handley
The IMF expects interest rates to fall in the second half of the year
Gita Gopinath, first deputy managing director of the International Monetary Fund (IMF), spoke to CNBC at the ECB Forum in Portugal.
Bloomberg | Bloomberg | Getty Images
It is “premature” to conclude that central banks will cut interest rates “aggressively” this year, said Gita Gopinath, first deputy managing director of the IMF, speaking on CNBC's “The High Rate Reality.” in Davos.
While inflation has fallen, “the work is not done,” she added, as labor markets in the U.S. and Europe are tight. The IMF expects interest rates to fall in the second half of the year.
Compared to the period after the global financial crisis in 2008, Gopinath expects interest rates to be higher in the next three to four years.
–Lucy Handley
ECB member de Galhau: We are not calendar-driven, we are data-driven
Francois Villeroy de Galhau, Governor of the Bank of France.
Bloomberg | Bloomberg | Getty Images
The head of the French Central Bank, François Villeroy de Galhau, stressed that it was impossible to say in which season the European Central Bank might cut interest rates this year.
“About the season, why don’t I say anything? I said it should be this year unless there are any big surprises. But … we're not calendar-driven, we're data-driven,” he said during a CNBC-moderated panel event at the World Economic Forum in Davos, Switzerland.
On the inflation path, he added: “It is too early to declare victory… the job is not done yet. However, the interest rate increase has been quite successful so far, more successful than we even thought in Davos a year ago.”
“So far, what we can see on both sides of the Atlantic is something of a soft landing.”
The European Central Bank's centeno underlines the progress in inflation in the euro zone
Inflation in the euro zone is on a “very positive” path, Portugal's central bank governor Mario Centeno said on Tuesday, even as his colleagues on the ECB's Governing Council have adopted a more hawkish tone in recent days.
“We remain data-dependent, that's the way we make our decisions… One of the ECB's biggest successes of late is anchoring inflation expectations at 2% over the medium term, and that's because we have credibility to do that “We have to stay that way,” Centeno said.
Read the full story.
– Jenni Reid
World Leaders Discuss “The Reality of High Interest Rates”
Join CNBC at 7.15am UK time where host Steve Sedgwick will moderate a panel on “The High Rate Reality” with Nasdaq CEO Adena Friedman, International Monetary Fund (IMF) First Deputy Managing Director Gita Gopinath, Chuck Robbins, Chairman and CEO of Cisco and Francois Villeroy de Galhau, Governor of the Bank of France and Board Member of the European Central Bank (ECB).
The European Central Bank could delay the start of interest rate cuts in 2024, upending market expectations. ECB Governing Council member Robert Holzmann said on Monday that those hoping for interest rate cuts to begin in the spring would leave Davos “deeply disappointed.”
The panel will discuss whether high interest rates will become the “new normal” and what that means for markets.
Headline inflation rose to 2.9% in the euro zone in December, compared to 2.4% in the previous month. The ECB aims for inflation of 2%.
–Lucy Handley