Looking at the CFO Prediction Market’s results for the month-end value of the Dow Jones Industrial Average, you would think finance executives believe the recent market rally will hold up: the average forecast is 9,030, about 30 points below where it was on Monday morning. But many bettors believe the market is poised to give back its gains in the future, even if that doesn’t happen before July 31. “It’s a short burst of enthusiasm,” says one. “Profit takers will push the market back down.”
In commodities, CFOs aren’t expecting any huge movement in the price of light crude oil by next week, with an average forecast of $66.70, plus or minus $5. The one-month forward contract for light crude hovered in the $68 range Monday morning. Again, though, finance executives don’t see the price as stable, at least long term. “After the summer driving season, watch for the price to tank,” says one, suggesting that investors should bet on a downward trend starting in a few weeks. “Short oil mid-August.”
One area where CFOs see some stability is their own job; they are not expecting a huge amount of turnover among CFOs at Fortune 1,000 companies. Heidrick & Struggles will be publishing CFO turnover figures for the second quarter this week. “Outside of regular changes at banks, most large companies won’t want to rock an already shaky boat with CFO changes unless necessary, especially since CFO ousters are often leading indicators of CEO ousters,” says one participant. And most see CFOs being cautious about switching jobs in this economic climate. “I see movement. But the opportunities will have to be wonderful,” says one executive. “[You] could be moving into a whole new mess. Who wants that?”
In other forecasts on the CFO Prediction Market, there is a 64% chance the Senate will pass a bill this year creating a cap-and-trade market for carbon emissions; and a 75% likelihood that Vikram Pandit will retain the CEO spot at Citigroup through September 1; and, on average, finance executives predict Bank of America will not be able to repay the money it received under the government’s Troubled Asset Relief Program for a while yet — February 2011, to be exact.