Greetings,

CFOs are optimistic about the economy but surprisingly downbeat on White House policy and President Donald Trump's potential Federal Reserve chair appointment, according to the latest CNBC CFO survey. Nearly three-quarters of CFOs say the president's performance so far is "fair" or "poor," with many citing immigration and trade policy as key negatives. Treasury Secretary Scott Bessent is viewed more positively, with nearly two-thirds describing his performance as "good" or "excellent." What do you think? Let us know. 

Also in this edition:

• Megadeals test US bond market's risk appetite 🎲
• Companies, banks ramp up preparations as IPO activity rises 🔊
• US tax revenue up but still low compared with OECD peers 🧾
• Finance leaders expect modest revenue, profit growth in 2026 💸
• AI investment driven by growth, not job cuts, EY says 🤖

CFOs anticipate elevated inflation to continue, remaining above the Federal Reserve's 2% target through at least 2027, according to the Q4 CNBC CFO Council Survey. CFOs are upbeat on the broader economy, with two-thirds optimistic about where the economy is heading and 59% saying the US will avoid a recession next year. However, finance chiefs cite consumer demand as a primary business risk, followed by Fed policy and overregulation, and are wary of White House policy.

A surge in lending across corporate-bond, syndicated-loan, and private-credit markets is enabling a wave of large, highly leveraged deals, including Paramount's hostile bid for Warner Bros. Discovery and the earlier buyout of Electronic Arts. The simultaneous strength of all three financing channels is giving acquirers more options than ever, delivering big payouts to shareholders while increasing risks for bond investors as credit markets may be showing signs of overheating.

The Federal Reserve's upcoming policy decision is expected to influence how investors position for 2026, with rate expectations likely to shape equity sentiment ahead of year-end. Markets are also monitoring the potential nomination of National Economic Council Director Kevin Hassett as the next Fed chair, with President Donald Trump set to conduct final candidate interviews.

President Donald Trump has confirmed that he is considering reducing tariffs on some goods while maintaining or increasing tariffs that have attracted investment and revitalized industries such as automotive and semiconductor manufacturing. Roughly $18 trillion in investment pledges are reportedly linked to tariff relief.

Dealmakers are preparing for a surge in US initial public offerings in 2026, as companies are encouraged by near-record stock markets. Medline's upcoming IPO is expected to raise $5.37 billion, making it the biggest global debut this year. Potential high-profile IPOs from companies such as SpaceX could further boost the market, although investor caution remains due to the mixed performance of recent IPOs.

Finance leaders foresee modest gains in revenue and profit in 2026, with a 2% increase in revenue and a 0.8% rise in profit, according to a survey by the AICPA and CIMA. The revenue uptick marks an improvement from the previous quarter's 1.5% expectation, reflecting a cautious but positive outlook for company earnings despite broader economic uncertainties. Optimism about the broader US economy has declined, with only 28% expressing optimism, but 41% reported optimism related to their own companies.

Companies investing in AI are prioritizing growth and productivity over job cuts, with only 17% of businesses reporting reduced head count because of AI-driven productivity gains, according to a survey by EY. Most companies are reinvesting gains into new AI capabilities, cybersecurity and employee training. "Leaders are realizing that the real value of productivity gains is in reinvestment versus a one-time cash out," says Dan Diasio, EY's global consulting AI leader.

Private credit defaults in the US are projected to decline in 2026, with Bank of America forecasting a drop in the default rate to 4.5% from 5% in 2025. This improvement is attributed to anticipated interest rate cuts by the Federal Reserve, which should ease repayment pressures for borrowers. Despite the expected decrease, BofA notes the sector remains fragile due to opaque lending structures and involvement with vulnerable industries.

The US remains a low-tax country compared with other members of the Organization for Economic Cooperation and Development, collecting 25.6% of gross domestic product in tax revenue in 2024, according to the OECD. The OECD average increased to a record 34.1%, with Denmark, France and Austria collecting more than 43% of GDP as tax revenue. The US does not have a value-added tax, making it unique among developed countries; however, its tax revenue as a share of the economy exceeds that of Chile, Colombia and South Korea.

The US job market remained steady despite a slight increase in layoffs, according to the Labor Department's latest Job Openings and Labor Turnover Survey. Job openings increased by more than 400,000 to 7.67 million in October, the highest in five months. Hiring declined by 218,000, and layoffs increased to 1.85 million, the most since early 2023. The layoff rate rose to 1.2% in October, up from 1.1% in August, while the quit rate dropped to 1.8%, indicating cautious worker sentiment.

CEOs are expressing strong optimism about AI, with 85% viewing the technology as entering a phase of healthy growth rather than a speculative bubble, according to a Stagwell survey of CEOs from large US companies. Nearly all respondents regard AI as transformative, reflecting what Stagwell CEO Mark Penn characterizes as "unbridled enthusiasm" for the technology's future impact on productivity and economic competitiveness.