The Trial Balance is CFO’s weekly preview of stories, stats, and events to help you prepare.
Part 1: Secrets of Rockstar CFOs Podcast
A new podcast from the CFO Leadership Council’s Jack McCullough, titled "The Secrets of Rockstar CFOs," features familiar faces from recent CFO coverage, including Chipotle’s Jack Hartung, L’Oreal’s Yoana Land, and General Electric’s Carolina Dybeck Happe. Reporter Adam Zaki excerpts the most notable comments from these leaders. (12/22)
The Q&A this week is with senior reporter-at-large Vincent Ryan and Philip Fracassa, CFO of The Timken Company, a 120-year-old engineered product manufacturer. Fracassa, who has spent 18 years at Timken, talks about acquisition strategy, desirable characteristics of M&A targets, and the company’s pivot away from the automotive parts market. (12/21)
Part 2: This Week
Welcome to De-Merger Monday. Coming out of the weekend, we get news of two more transactions blocked by regulators. First, biotech Illumina announced it would be spinning off or selling Grail, which it acquired in 2021 for $7 billion. The European Commission ordered the deal unwound a couple of months ago, and a U.S. court ruling last week effectively ended any possibility of Illumina holding onto the startup developing an early cancer screening test.
Second, Adobe and Figma ended plans to combine after European regulators pushed back on the $20 billion deal. The deal was announced in September 2022, but the fact that Adobe was taking over a rival cloud-based design tool drew intense interest from the U.S. Department of Justice and the UK Competition and Markets Authority.
Economic data is not taking an early holiday, as data releases on U.S. housing starts, building permits, existing home sales, new home sales, durable goods orders, and personal income and spending are all on the docket this week before Christmas.
The highlight comes on Friday with the release of the personal consumption expenditures (PCE) price index for November. Most economists expect the inflation measure preferred by the Fed, core PCE, to reduce to a monthly increase of one-tenth or two-tenths of a percent. The 12-month rate is projected to fall to between 3.2% and 3.4%, down from 5.09% in December 2022. The Fed's Summary of Economic Projections released last week predicted core PCE declining to 2.4% next year, not quite at the 2% target range.
Yet the markets and economists are fully pricing in an easing of interest rates in 2024. In a note this morning, Bank of America Securities said it expects 100 basis points of Fed funds rate cuts next year. However, it sees “services inflation falling more slowly than the market expects, leading the Fed to be more cautious as it cuts.”
With 30-year mortgage rates dropping below 7% last week, the U.S. could start to see some melting in the frozen U.S. housing market. But the numbers on existing and new home sales, which represent November activity, will probably be flat to down slightly, according to economists. Home prices are still rising, and the housing supply is still tight. The National Association of Realtors said inventory was at a 3.6-month supply in October.
Earnings this week: FedEx, Accenture, FactSet, General Mills, Micron Technology, Winnebago, CarMax, Paychex, Carnival, Nike, Worthington Industries, and Toro.
Part 3: Data Unlocks the Power of AI
Harnessing the power of AI is reliant upon quality data at the ready. As much as AI-driven solutions like large language models (LLMs) appear to mimic human intelligence, they are only as good as the data on which they’re trained and the people who make the decisions based on the tool’s output.
Katie Rooney, CFO and chief operating officer of cloud-based benefits and human capital solutions Alight, discusses how data fuels the emerging AI age. With the right data infrastructure, organizations can move forward much faster. (12/19)