Good day everyone, welcome and thank you for joining today's edition of Teneo Insights, our final edition of 2024. I'm Kevin Kajuara in New York City. This week Teneo issued its third annual CEO and Investor Outlook Survey — VIS 2025: Where Is the World Going in 2025 and Beyond. Its findings are the aggregated responses of some 700 global public company CEOs and institutional investors representing about a trillion dollars of company and portfolio value. The survey was conducted over the three weeks immediately following the election. The headline finding: CEOs and investors are bullish about prospects for growth in 2025 and anticipate strong M&A activity, increased levels of domestic and international investment, accelerated hiring, and advancements in technology and innovation. But geopolitical risk, investor activism, trade tensions, and a new administration that while promising to unleash the animal spirits also brings a significant element of uncertainty. Here to discuss the findings and what they mean, I'm joined by two colleagues. Ursula Burns is the chairwoman of Teneo. She is also on the boards of Uber, Endeavor Group, and TSMC, as well as a number of educational and nonprofit boards including MIT, the Ford Foundation, and the Metropolitan Museum of Art. Paul Keir is the CEO and a co-founder of Teneo, leading this firm of 1,700 people and its five business lines spread around the world in over 40 offices and maintaining a direct trusted advisor role with many key CEO clients across industries and geographies. Ursula and Paul, thank you very much for joining us.
So Paul, maybe I can start with you, with the sort of big picture takeaways from the survey, which as I said at the top showed sort of overwhelming optimism on the part of CEOs and investors alike for the growth prospects at least for the early part of this administration and this coming year. But what were the key takeaways for you and how are you interpreting it?
This was year three of our survey. We started this because we wanted to mine the views of public company CEOs around the world — people who run those businesses — and then also talk to the men and women who invest in those companies and those industry sectors, initially to see was there any major divergence of views on the year ahead, but also to think about what are the big themes and topics. This is a particularly important year because we had elections all over the world — about half of the world's population went to the polls this year, obviously here in the US as well. So it was really important to get the pulse of CEOs and investors after the conclusion of the US elections. Big takeaways, I think we would all probably agree, would be: a soaring confidence in the global economy and the domestic US economy, its likely performance next year, particularly the first six months. There is definitely a correlation with Trump's election victory here in the US, called out by CEOs and investors as a primary driver of that optimism. And third, CEOs and investors are not blind to the challenges of tariffs, of trade, of big geopolitical challenges in China, in the Middle East, in Europe. But despite those challenges, they're really marking 2025 to be a year of growth.
So Ursula, we're going to dig into some of what Paul was just talking about, some of the more granular details that emerged in the survey. But what were your kind of big takeaways so far?
Well, I think I agree with Paul that this has turned out to be, as you would expect, a boon for business. It's a boon for business confidence. It's a boon for the richest people in the world, the richest economies in the world, because this is a friendly-to-trade, a friendly-to-growth administration. It's also one where it seems like there'll be a little bit less attention on the details and a lot more like the shiny object in front. So businesses know how to play in that world very, very well, and you can see it already — people lining up to kind of meet with the man and figure out how they fit. As a past CEO, I would be doing unfortunately the same thing, which is to figure out where you can actually optimize and maximize your operations given the reality of the day that we now have — I call it a Republican Prime administration. I think they're doing what they expect. I think they're going to get caught a little bit if they don't pay attention to their employees, around their employees, and around these kind of hidden things that have already been planted and already growing — around ESG, around equality and inclusion, these areas they're going to have to pay attention to. But for the first six months, January to June, is going to be, you know, buckle up, hold on to the doors, we're going to open it up and see just how fast we can run.
And do you think — does that explain — because one of the most remarkable findings at the headline level on this was that some 77% of global CEOs felt optimistic that the global economy was going to improve in the first half of this year, and that was a 32-point improvement over the same question asked of them last year. What was interesting was that last year a majority of large-cap CEOs thought that the first half of 2024 was going to be a deterioration in the global economy — they were wrong about that. But Wall Street, the investors who participated in our survey, got it right. Now both, this time around, both seem to be basically equally optimistic. But is it that — would you say it's what Ursula just explained right there kind of explains that delta, that kind of 32-point jump in views on the economy?
All those elections and the conclusion of the elections is helpful for everyone. You know what the regulatory and legislative regime is in India, you know what Keir Starmer's priorities are likely to be in the UK. The European elections have presented some data which makes it easier to plan against that. In the US we discussed — so post-electoral stability and conclusion gives confidence. I think there's a lot of data from the Trump administration's first four years, the four years him pretty much always campaigning as to what his priorities were going to be — lower regulation to support business growth, potentially lower taxes. Couple that conclusion to the elections, the Trump orthodoxy around lower regulation and lower taxes, coupled with there's just a lot of capital that has to get deployed and all roads are leading to the US. It's not as surprising I think that the confidence level is high — maybe the 32-point jump is definitely surprising — but access to capital, about a trillion dollars alone in private equity has to be unleashed on the markets. There's a lot of reason to be hopeful and there's a lot of reason to think that the US market's going to be a net beneficiary of all this hope and optimism.
So what do you think — I mean, the survey was conducted in the three weeks immediately following the election. And so I get this point that amongst other things people were probably euphoric over the notion that we knew what the outcome was going to be, we weren't going to have a January 6th, there was not going to be any question as we headed toward the handover of power, and that ended of itself gave people confidence to start thinking forward. But do you think that there's an element of pricing for perfection here? To a certain degree you point out lower taxes and lower regulations, Paul, and there seems to be looking through the data in the survey this kind of feeling that yes, the Trump administration and its supporters in Congress are going to follow through to the letter on those campaign pledges. But on other campaign pledges — say maximalism on the tariff front, maximalism on the immigration front, potentially interfering with the independence of the Fed — that he is not going to go down the maximalist route on that. And I'm just wondering, are we being too Pollyannaish about that when we don't really know what's going to emerge yet? And I would just point out that just last night, the president-elect is not yet in office, but we have now kind of blown up the continuing resolution deal and it's unclear — we may have a government shutdown as early as this weekend. That sort of chaos is already starting to emerge. The Fed indicated yesterday as well that they are probably going to be slowing the rate of cuts — the swaps market is pricing in only two rate cuts next year. And we've given up all the post-election stock market gains. So do you think that they are too Pollyannaish here and we ought to apply the brakes here a little bit, or do you cut through all of that?
Yeah, I don't think that it's too Pollyannaish at all. No matter how we look at it, there were two choices on the table in November. There was a choice of high regulation, speaking to the masses, bringing the many different classes closer together and closer to the middle — and the other side, which is what won, which is big business is good for America, it's good for economies around the world, CEOs and business leaders kind of know what to do, leave them alone, forget all this other social stuff that you guys are talking about. Those are two choices, and the choice that businesses are living in now after that was made is one that is definitely easier for them to operate in. That is literally: let's go for growth, let's do it in a way that is okay, but we're not going to over-regulate you, we're not going to overwatch you, literally do your thing, make as much money as you possibly can. And the one place where I think there's a big gap that's going to show up more and more — you say lower taxes, except for if you happen to buy something that comes from one of these high-tariff countries, we're going to pay for it, the consumers are going to pay for it. If he does go through on tariffs, it's going to be hard to reconcile lower taxes and the higher reality of just about everything you buy costing a little bit more money. But I think for business this is not a bad time at all. The overarching story is you don't have to really worry about these guys in Washington slowing you down as much as you would have had to worry if we had a Harris-Walz administration. And whether I like it — it almost doesn't matter, right? For business, it's literally right in their wheelhouse how to manage this kind of dichotomy. They know how to do it.
Yeah, and I think CEOs also have a new muscle that they've had to develop, which is having been disruption-proof or been disruption-resilient. As I mentioned, they've had four years of President Trump. There's a lot of data available as to which is rhetoric, which is likely policy — his worldview on business and economic issues. So that is a known disruptive set of outcomes or challenges in the next four years. Since President Trump was last in office, we've had the emergence of AI as one of the great disruptive technology transformations in all of our professional lives, at least in the last 20 or so years. And CEOs have now embraced and realized and understood how to move through that technology disruption. And we've had for the first time in the CEO suites, I think, life in senior management positions — we've had deglobalization. So the new CEO class coming in and the current CEO class are majors now in disruption management. So I think some of this confidence is as a consequence of we've done it before, we'll manage through it, we actually potentially know how to find advantage in this disruption. It's a new class of CEO even if it's the same men and women in those seats — there's a new muscle that they have that a previous generation didn't have to have.
So one of the things — and I could just continue with you, Paul — one of the things you've been talking about as we headed into this next administration is that this was going to unleash M&A. And indeed the survey bears that out, that sentiment out as well. I think 80% of CEOs expect a major return of M&A, a lot of that due to greater ease of access to capital but also the animal spirits unleashed by this Trump administration. So talk about how you see that kind of manifesting itself. And is it kind of an across-the-board thing? I mean, Trump won — he did block or attempt to block some mergers, so it's not just an across-the-board unleashing. But how do you — what are you looking at?
Well, last year interestingly, the study also — not to the same extent — but CEOs were expecting and investors particularly were expecting 2024 to be a bumper M&A year. I think what the market broadly hadn't factored in was potentially how challenging the regulatory environment would be and how disruptive the political electoral process around the world would be, where a lot of capital stayed on the sidelines until we understood what was likely to be the new political regime across the world. So I think that held back M&A in ways that people hadn't expected because the capital was available and the capital remains available today. So I think M&A will see a boon because of the regulatory environment reality that Ursula referenced, because there's way more capital — it's just continued to stockpile in the interim period. And I also think on the basis that certain industries have been boxed out or felt boxed out — some of the big regulated industries like banking, healthcare, pharma — have been boxed out by the Biden administration from a regulatory perspective, which feels that there's going to be an unleashing of deal flow in that space. And there's been historically low levels of M&A in technology, in healthcare, in media as well. So the law of big numbers suggests that we're going to have a blockbuster M&A year. But that's more importantly than what I think — it's what CEOs and investors around the world think.
Do you think — I mean, one of the betes noires of corporate America in the last four years has been Lina Khan. Obviously, but JD Vance, the vice president-elect, has expressed sympathetic views to some of her positions, even if he comes at it from a slightly different angle, particularly with regards to big tech. Do we have a view on where tech is going to — and particularly the big platforms? And clearly we've seen the CEOs making the pilgrimage to Southern Florida just in the last few weeks.
I think we have a little bit of a wild card in Mr. Musk in this whole conversation and how he influences this whole space. It's not really his remit, but I think he will have a lot more influence than we think and are factoring in. I think M&A — I'm generally, and this is not a personal — I'm generally for across-the-board combinations if they can drive efficiency in a way that would not seem to be consumer-advantaged. Having an inefficient platform out in the marketplace just so that we can have two platforms doesn't make a lot of sense to me, and nor does it to many business people. So I think M&A has been held back for sure — part of my business is here, it's definitely been a hard row. And I think we're going to unleash a lot of potential deals that I think in the long run will be better for us, better for the economy, better for the consumers. So I'm not really that afraid of it, and I think done well by good-meaning CEOs, it'll be okay in the long run. But there is this thing about what Musk thinks is reasonable or not and whether he starts to actually play the game in such a way that's leaning towards his interest versus the nation's interest. I don't know enough about it to know what he's going to do, but I don't feel really comfortable about it.
So Paul, a few minutes ago you said all roads lead to the US, and for the reasons we've just been talking about here why the US will be the single most attractive investment destination — and that's borne out also by the survey. Talk a little bit about, because the survey was conducted to global CEOs and global investors, talking about rest of world and opportunity there as well and what you're seeing on that front.
Yeah, the majority of both cohorts — CEOs and investors — felt that the USA was the most attractive investment destination, hence the all-roads-lead-to-the-USA comment. In APAC, India interestingly year-over-year has emerged as the most attractive destination for investors within the APAC region. That is not surprising perhaps when you consider the reality that CEOs have had to diversify their supply chain, diversify some of their market exposure, and India has been a net beneficiary of that deglobalization. I think Europe has faced significant challenges — well documented. In Germany there's some economic challenges, in France you've got some political challenges, and in the UK you've got an emerging industrial policy from a strong new mandate from the Labour government, so change is expected there. As a consequence of all this, I think the US presents itself with a known set of potential economic outcomes, a regulatory environment — to say it again — that is likely to be easy to invest behind, and an advantageous tax structure. The US has been probably the net beneficiary of the AI movement over the last number of years for those reasons. The US perspective was not a regulate-first perspective, it was to welcome IP, to welcome capital that was going to tackle the big AI issues. And as a consequence, some of the smartest men and women in the world are in the US trying to solve those issues, but they came from different markets around the world. So this primacy position that the USA enjoys is not just a financial metric — it's a great place to do business. The regulatory environment is not absent, it's just supportive of capitalism and entrepreneurs. And there's an excitement in the market right now, independent of who's in office. There's an excitement about USA's position, and the America First economic agenda I think plays into it rather than has driven that.
So quick follow-up question. Interestingly, 76% of the CEOs surveyed in here believe that the outcome of the 2024 elections — not just the US elections but the elections worldwide that you referenced a minute ago — improved global stability. And I gather some of that is an element of like, okay, now we've got some certainty in a lot of countries and we can now base decisions on that certainty. But I was interested because you've been spending a lot of time in the Middle East of late, as have others of our colleagues as well. And there's been a lot of enthusiasm, particularly in the Gulf States. Obviously we also have a lot of turmoil in the region. But one of the interesting findings in the survey was that only 12% of MENA-based CEOs felt positive about global stability in the survey. Do you feel that when you're in the region?
Yeah, overwhelmingly. The Middle East writ large is different from the GCC. The GCC are exporting and importing capital at levels haven't been seen historically. More closely aligned, I would say, in the GCC nations — more closely aligned with the expectation of global growth, of growth in the US market, and more aligned with the big technology trends than I would think the MENA region writ large. So those economies in the GCC are amazingly resilient despite big geopolitical shifts that are happening in their backyard, versus some of the other, I think, more regionally dependent economies in the MENA region. So I think that probably explains the 12% number.
You know, Ursula, as I mentioned in the introduction you sit on the board of TSMC, so you're acutely aware of the sort of trade and tariff balance between all countries. And one of the interesting divergences again in the survey was when it came to tariffs — 80% of mid-cap CEOs felt that the tariff regime was likely to have a positive impact for their businesses, whereas only 33% of large-cap CEOs did. Now presumably that's due to the more internationalized nature of large businesses and the like, but I wonder what it means. Do we get a sense of whether the respondents were thinking about a selective set of tariffs and doubling down on certain industries or certain products, or this more pervasive across-the-board — these sort of shots across the bow we've taken not just at China but Mexico and Canada and other places — and what's the anticipation of retaliation by the United States' trading partners?
So separate from TSMC — this is an answer that has nothing really to do with TSMC also, because I shouldn't be saying a lot about what has to happen with TSMC. You know, the fact of the matter is that there is a reality that some of the things that we are targeting — the United States is targeting, the Trump administration is targeting to tax — there are no options to get anywhere else. If you want an advanced chip, you can say all you like about whether these guys were good, bad, or indifferent — you can buy it from one source today, maybe one and a quarter sources, but that's it. So I think many CEOs, particularly large company CEOs, understand their supply chains well enough to actually — it's just part of the game, it's part of how we are going to have to operate in the future. And they will generally, because they use it in the supply chain not at the outcome, not at the end, they will generally be able to stand harmless from what's going to end up hitting the consumers of higher prices and the like. Mid-cap is where the smaller companies — where it's going to really hurt. They absolutely will require — they are next in line to the many of the consumers and have to deal with the pushback of what has to be, if it's implemented the way that President Trump talks about it, which will have to be higher prices at the pump, at the cash register, at whatever the heck it is. So the survey showed the reality of the two different types of businesses. If you're large and globalized already, you're kind of dealing with the reality of there may be some higher prices but you have no options. And if you're smaller and literally are dealing very locally, I think they're going to be disrupted a little bit more. At the end of the day, there's nothing we can do if President Trump decides to do what he said he's going to do — heavy taxes on things coming in from Canada and Mexico, I don't understand really why that would be the case, really heavy taxes on China, and really kind of an offensive move against places like Taiwan. I think American consumers are going to have to hold onto their pocketbooks because they're going to lose a large amount of money. There is no way to implement what he has said he's going to do in a price-neutral way to most consumers — it's impossible to do so. And by the way, we knew this before and people voted for it anyway, so I think they must be ready for it.
So what's fascinating about that to a certain degree is that the name of the game, particularly in the post-pandemic era, has been decoupling or de-risking manufacturing supply chains from China and reshoring, nearshoring, friendshoring — whatever the term of the day is. And if there's been one policy that's been bipartisan in nature in Washington in the last several years, it's been China hawkishness. And yet the survey shows that when the question is asked how important is China to your business now and in five years and in 10 years, that number since we started the survey three years ago has only gone up. Paul, how do you reconcile that sort of political impetus on China right now with this business reality?
