DealZone

Chin up, guys, NYSE boss tells other CEOs

December 11, 2008

nyse

Speaking at his alma mater Goldman Sachs’s Financial Service Conference on Thursday, NYSE Euronext CEO Duncan Niederauer said he was struck by the gloom and doom that seems to have come over other CEOs.

“I was at a dinner hosted by (Bank of America CEO) Ken Lewis,” he said, of a recent soirée that brought together about a dozen or so unidentified CEOs. “Everyone was pessimistic.”

They were pessimistic about the state of the economy, the stock markets, and just about everything else, he said. The last to speak when Lewis went around the table to gauge guests’ feelings about the economy, Niederauer said he was the only optimistic one.

“I don’t think unemployment is going up to 10-11 percent,” he said, though most of his dinner companions seemed to think so.

“I am optimistic- we have a new president who’s optimistic,” he said. “The market is trading on psychology and it makes no sense.”

Compared to many CEO’s, he indeed has reason to be optimistic. For one, other CEO’s in the financial sector have had to turn down eight-figure bonuses and contend with being public enemy #1. Meanwhile, his exchange created a stir this weekend after apparent discussions with Deutsche Börse about a potential merger sent its stock soaring.

What’s more the market’s volatility has spiked trading volumes of late, and NYSE ‘s floor-trading specialist-based market making system, recently considered obsolete, proved popular during the worst days of the crisis.

But his optimism might be tempered by the expected slowdown in trading volumes next year. And he said he is concerned that the U.S. Securities and Exchange Commission might overreact to the market troubles and over-regulate the potentially lucrative exchange-traded market for credit default swaps (CDS) NYSE and other leading exchanges are eyeing.

Comments
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Let’s face it. Many of these companies and CEOs are using this “financial crisis” as an opportunity to cut cost (aka…people) to boost their profitability. Everyone knows it’s easier to cut costs than it is to increase sales, because cutting costs is a dollar for dollar increase, while increasing sales revenue isn’t. It’s a quick bang for the buck. Unfortunately, long term, short-sighted management never learns how to invest in a business for strategic growth, and that’s an opportunity for their competition to catch up, or surpass the market. It’s a much tougher decision to invest and grow, particularly in tough economic times, than it is to turn to the CFO and the other “bean counters” and just cut people. And that’s what a lot of American business is doing right now. Easy to be the economic “hero” when all you have to do is cut jobs…as long as it’s not their own. Look at a true business…Southwest Airlines. They aren’t cutting, and they know how to run a business in a tough industry in tough economic times.

Posted by JBC | Report as abusive
 

“The market is trading on psychology and it makes no sense.”

It’s a system that doesn’t have any feedback, positive or negative. For a system to be balanced it needs negative feedback (critique so it can correct itself) and positive push (stimulus to move forward).
Current system does not have any so it oscillates. Today is up tomorrow is down.

But that’s our investment bankers (and their CEO’s) wanted but only for them. They wanted to speculate not to invest. So there’s no value being invested in. Adding value means investing in INNOVATION and WORK. This are novel notions in the rarefied world of leveraged CEO’s.
For market players it’s the only way to make money without investing.

Posted by Brian Dade | Report as abusive
 

One has to wonder how these guys have made it to CEO-level!
These are the very same guys who saw only blue skies 2-3 years ago, and tried to computer-model human behavior into their businesses … All I can say, instead of corporate bureaucrats, we need real life entrepreneurs with hands-on experience in real life and street smarts.

They should get unemployment insurance instead of exit packages and golden parachutes a la Nardelli, ex-GE, ex-Home Depot, and now Chrysler-Cerberus guy …

Posted by cody | Report as abusive
 

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