ON FURTHER FLEWS ON FEDERAL
MONETARY TIGHTENING POLICY WHEN
MINUTES ARE RELEASED LATER
TODAY.
JOINING ME RIGHT NOW ERNST&YOUNG
CARMINE, THANK YOU VERY MUCH FOR
BEING HERE.
WELL, LET ME GET YOUR TAKE ON
YOUR CLIENTS AND ON BUSINESS
TODAY BECAUSE THERE’S CERTAINLY
NO SHORTAGE OF THINGS TO WORRY
ABOUT FROM THE SUPPLY CHAIN
ISSUES, THE FEDERAL RESERVE
RAISING INTEREST RATES, WORRIES
ABOUT RECESSION AND THEN ADD
ONTO THAT, THE MARKET’S
VOLATILITY, WHAT ARE YOU HEARING
FROM BUSINESS RIGHT NOW IN TERMS
OF HOW THEY ARE DEALING WITH ALL
OF THIS?
>> MARIA, FIRST OF ALL, THANK
YOU FOR HAVING ME ON.
WE MISS YOU HERE IN DAVOS,
BELIEVE IT OR NOT, NO SNOW.
LOOK AT THE BACKGROUND.
IT’S DIFFERENT HERE IN MAY.
MARIA: I’M SORRY I’M NOT THERE.
>> IT’S ALL GOOD.
HERE IN DAVO THERE’S A NEGATIVE
TONE TO THE ECONOMY AND
EVERYTHING GOING FORWARD.
FOUR BIG ISSUES THAT ARE BEING
TALKED ABOUT, ONE IS THE
ECONOMY, TWO IS RUSSIA-UKRAINE,
THERE’S A LOT OF CONVERSATION
HERE IN TERMS OF WHAT’S
HAPPENING THERE.
THERE ARE A LOT OF
PARLIAMENTARIAN PEOPLE FROM
UKRAINE EXPLAINING WHAT’S NEEDED
GOING FORWARD AND THAT’S BEEN
VERY INTERESTING.
AND THEN THE THIRD IS CHINA.
EVERYTHING AROUND CHINA, WHAT
NEEDS TO BE DONE, WHAT WILL
HAPPEN IN THE FUTURE AND THE
FOUR IS SUSTAINABILITY AND HUH
DOES BUSINESS REALLY HELP IN
TERMS OF GETTING TO A
SUSTAINABLE OUTCOME FOR
COMPANIES GOING FORWARD.
I SAY THOSE ARE THE BIG FOUR
AREAS BUT PROBABLY THE ECONOMY
IS A BIG DOMINANT CONVERSATION,
MARIA, AND MOST PEOPLE FEEL THAT
WE WILL GO INTO A SLOWDOWN, YOU
KNOW, 35%, ECONOMISTS ARE
PREDICTING A RECESSION.
TO BE HONEST WITH YOU AT EY, WE
ARE NOT SEEING THAT.
OUR BUSINESS CONTINUES TO SEE
STRONG BOARD ACROSS THE BOARD
AND CONSULTING, AUDIT TAX
DIVISIONS AND WE CONTINUE --
NOW, DEAL BUYINGS, WE DO A LOT
OF DEAL WORK, MARIA, THEY ARE
STILL OUT THERE AND THERE’S
STILL A LOT OF CASH OUT THERE ON
CORPORATE BALANCE SHEETS AND
PRIVATE EQUITY AND SO THINGS ARE
BEING ANALYZED BUT IT’S VERY
DIFFICULT TO PUSH A BUTTON TO GO
PUBLIC OR DO ANYTHING LIKE THAT
IN THIS ENVIRONMENT.
MARIA: YEAH, SURE.
>> THERE’S A BIT OF A LAG
SHOWING UP THERE.
MARIA: DAGEN.
DAGEN: CARMINE, IT’S DAGEN
MCDOWELL, TALK ABOUT THE
COMPENSATION PROBLEMS THAT A LOT
OF FIRMS MIGHT BE HAVING IN
TERMS OF WHEN YOU HAVE A
COLLAPSE, I’M THINKING A LOT OF
THE NEWER COMPANIES THAT GOT
REALLY HOT DURING PANDEMIC, WHEN
YOU HAVE A COLLAPSE FROM A STOCK
LIKE TELEDOCD AS, AS ONE EXAMPLE
THE PAY THAT THEY WERE EXPECTING
DISAPPEARS AND TURNS THE VALUE
OF ANY COMPENSATION OR OPTIONS
COMPENSATION, HOW DO COMPANIES
GRAPPLE WITH THAT?
>> THAT’S A FAIR POINT, DAGEN.
THIS IS ONE TO HAVE THINGS THAT
THERE’S STILL A LABOR SHORTAGE
OUT THERE.
WE ARE LOOKING TO HIGHER A LOT
OF PEOPLE.
IT’S DIFFICULT TO FIND PEOPLE.
THAT’S ACROSS THE BOARD.
BUT THERE IS EXPECTATION FROM
PEOPLE THAT THEY ARE GOING TO
GET PAID A CERTAIN AMOUNT OF
MONEY.
MINIMUM WAGES ARE GOING UP
EVERYWHERE.
I DO THINK THIS HAS TO GET
BALANCED OUT.
PEOPLE ARE TALKING ABOUT
INFLATION, IF YOU GOOGLE
INFLATION THE FIRST THING IT
WILL TELL YOU IT’S HIGH
UNEMPLOYMENT.
UNEMPLOYMENT WILL HAVE TO GO UP
BUT IT’S NOT GOING UP SO FAST.
THERE’S STILL A LOT OF
SHORTAGES, COMPANIES ARE LOOKING
FOR TALENT EVERYWHERE INCLUDING
TECH, BUT TO YOUR POINT I DO
THINK THIS HAS TO EQUAL HERE.
SOME OF THE EXPECTATIONS THAT
WERE PEOPLE WERE DEMANDING TO BE
PAID WHETHER STOCK OPTIONS OR
CASH, HAS TO COME DOWN.
MARIA: THAT’S WHAT THE FEDERAL
RESERVE IS TRYING TO DO.
THE MANAGING DIRECTOR GEORGIVA
IN A NEW BLOG SAYS THE GLOBAL
ECONOMY IS FACING BIGGEST TEST
AND YOU MENTIONED ONE OF THE
BIGGEST ISSUES FOR BUSINESS,
TIGHT LABOR MARKET, HOW LONG DO
YOU THINK THIS IS GOING TO TAKE
IN TERMS OF LOOSENING THIS UP.
FEDERAL RESERVE ALREADY RAISED
RATES TWICE.
WE ARE EXPECTING A COUPLE 50
BASIS POINTS HIKE IN THE NEXT
COUPLE OF WEEKS BUT WE ALSO HAVE
THIS PUSHBACK FROM SOME OF OUR
PANELISTS.
STEPHANIE POMBOY SAYS MARKETS
ARE GOING TO BE SO DRAMATIC AND
THEY ARE NOT GOING TO BE ABLE TO
RAISE RATES AS MUCH AS THEY
THINK THEY ARE.
>> THIS IS A GOOD QUESTION.
THE FIRST THING I WOULD SAY THAT
IN ANY ECONOMIC CYCLE WHERE WE
USED TO THINK ECONOMIC CYCLES GO
ON FOR 2 YEARS, 5 YEARS, 10
YEARS, TODAY EVERYTHING IS MUCH
SHORTER.
THE TIME FRAME IS MUCH SHORTER.
THE AMOUNT OF DATA AND USE OF
TECHNOLOGY AND HOW WELL PEOPLE
CONNECTED GLOBALLY, IT FORCES
THE TIME TO BE MUCH SHORTER.
MARIA: YEAH.
>> A LOT OF HEADWINDS GOING ON
AND I DO THINK THE ECONOMY WON’T
COME DOWN, YOU KNOW, ACROSS THE
BOARD BUT WE WILL BE IN A
RECESSION, PERSONALLY I DON’T
THINK SO AND YOU KNOW WHAT, SOME
OF THIS IS NOT BAD FOR BUSINESS,
IT’S NOT BAD FOR THE OVERALL
ENVIRONMENT.
I DO THINK WE ARE RUNNING HOT.
THERE WAS TOO MUCH MONEY IN THE
ENVIRONMENT AND THAT NEEDS TO
COOL DOWN AND THEN WE CAN
REBUILD AND SO I PERSONALLY
THINK THIS IS A SIX-MONTH ISSUE
OR SO.
MARIA: YEAH.
>> AND THEN IT WILL START
REBOUNDING BACK.
MARIA: BEFORE YOU GO, YOU
MENTIONED CHINA, DO YOU THINK
CORPORATE AMERICA IS GETTING
MORE CAUTIOUS ON CHINA?
FOR THE LONGEST TIME IT WAS ALL
ABOUT GROWTH, GROWTH, GROWTH,
SELLING TO THE 1. 4 BILLION
PERSON POPULATION AND THE CCP IS
STILL STEALING INTELLECTUAL
PROPERTY, HUMAN RIGHTS ABUSES,
IS THERE A SHIFT AND CHANGE IN
THE WAY THAT AMERICA LOOKS AT
CHINA RIGHT NOW?
>> ABSOLUTELY.
TO ME IT’S BEEN A BIG SHIFT
INCLUDING CHINA’S REACTION WHEN
RUSSIA INVADED UKRAINE.
THAT WAS NOT A GOOD REACTION.
I THINK WE’VE SEEN CAPITAL FLOW
COMING OUT OF CHINA AND FRANKLY
CORPORATE AMERICA IS LOOKING AT
WHAT TO DO GOING FORWARD.
WHAT WE ARE SEEING IN TERMS OF
SUPPLY CHAIN, WHAT YOU MAKE IN
CHINA YOU SELL IN CHINA BUT IF
YOU MAKE THINGS YOU WANT TO MAKE
THEM SOMEWHERE ELSE.
SOMEWHERE WHERE YOU’RE
COMFORTABLE IN THE COUNTRY.
MARIA: IT’S ABOUT TIME.
ALL OF THIS RELIANCE ON CHINA
FOR CRITICAL ITEMS.
THAT’S A GOOD THING.
GREAT TO CATCH UP.
PLEASE COME BACK SOON.
GREAT TO TALK TO YOU, THANK YOU.