The big issues in 2024: elections, antitrust and shadow banking.

Andrew here. As we look ahead to the new year, the DealBook team has identified around a dozen themes that are likely to become recurring narratives that could define the business and policy ecosystem over the next 12 months.

Of course, the presidential election, perhaps one of the most polarizing in history, is going to infect all sectors of the business world. Keep an eye on which CEOs and other financiers are backing candidates (and, more importantly, which are silent) and how companies treat outspoken employees. Also: Look for some wealthy executives to avoid donating directly to candidates and instead donate to PACs as a sort of shield against public scrutiny.

Another argument that will likely continue to be part of the water cooler conversation (i.e., Slack and X) in business is the backlash against environmental, social and governance, or ESG, principles. This struggle has manifested itself in a political battle and has increasingly found its way. last year in a debate about free speech on campuses (another issue that isn’t going away).

Here’s a little more detail on what we’re looking for this year.

The United States presidential elections. The race appears headed for a repeat of 2020, with Donald Trump leading opinion polls to be the Republican nominee despite his mounting legal battles. The big question is how business leaders will respond. Will they rally around (and direct their money toward) a candidate other than Trump? Nikki Haley, the former governor of South Carolina, is leading that race, but she has a long way to go to catch up with Trump. President Biden, who has made a series of important decisions on the economy, hopes that voters will begin to feel an economic rebound that will reverse the decline in his popularity ratings in the polls.

Private credit could be affected by a wave of defaults. Just as 1980s-style leveraged buyouts have been rebranded as “private equity,” so too has “shadow banking” been rebranded as “private credit” and “direct lending” in time for the business to catch up. highest so far. Direct loans made by investment firms and hedge funds have become a $1.5 trillion titan, with dozens of companies turning to the likes of Apollo and Ares for loans rather than, say, JPMorgan Chase.

But the industry may face a test in 2024: Indebted borrowers, facing looming debt maturities and high interest rates, are already turning to private credit for even more loans, raising concerns that lenders could face a wave of delinquent clients. Skeptics fear that a series of bankruptcies could hit these lenders hard, leaving pension funds, insurers and other private credit fund sponsors to blame.

Mania for media deals? Reports that David Zaslav, chief executive of Warner Bros. Discovery, held talks last month about a possible merger with Paramount set off a wave of speculation that 2024 would be a year of media consolidation. The industry has been transformed in recent years by the growth of streaming, changes in the way people consume media and the invasion of Big Tech into sectors typically dominated by old-school media companies. Now, the industry is on the cusp of the next big change with the rise of artificial intelligence.

A date to mark in your diary: April 8, 2024, the second anniversary of the merger of Warner Media and Discovery to create Warner Bros. Discovery, and the first day the new company can be sold without risking paying a big tax bill. .

Will unions maintain their momentum? Unions had a banner year in 2023, with big victories in fights with Hollywood studios and the auto industry. Whether that signals a permanent change for the union movement is up for debate. But the elections are most likely a key factor. Both Biden and Trump tried to court striking auto workers this year, so expect more efforts to win over blue-collar voters.

Middle Eastern money will continue to flow. Tensions with China and economic sanctions have made it increasingly difficult for companies to raise money in a place that used to be at the top of the list. Middle Eastern investors have taken over. Saudi Arabia, the United Arab Emirates, Qatar and others are spending money as they seek to diversify their fossil fuel-dependent economies. The sectors are varied and include sports, technology companies, luxury, retail and media. Critics say petrostates with dubious human rights records are trying to whitewash their reputations, but that hasn’t stopped Western companies from seeking their profits.

One trend to watch: the growing ties between China and Middle Eastern money. Beijing is trying to deepen ties with countries outside Washington’s orbit, or at least those willing to play both sides.

More antitrust fights. A difficult year for regulators (like the FTC’s Lina Khan and the Justice Department’s Jonathan Kanter) ended with two victories after Illumina and Adobe canceled multibillion-dollar acquisitions under government pressure. Law enforcement could already boast some success in forcing negotiators to weigh whether a major deal is worth pursuing, given the potential risk that they will have to spend months in court defending it. Don’t expect Khan to ease the pressure; She expects more antitrust fights.

New climate disclosure rules. Public companies have been preparing for years for the SEC’s new climate-related disclosure rules. In 2021, the agency noted that climate change would be one of its priorities. About a year later, SEC Chairman Gary Gensler proposed new rules. The most controversial aspect of the draft regulation was the requirement that large companies disclose the greenhouse gases emitted throughout their value chain. The new rules are scheduled to be finalized in the spring. But the likely lawsuits could reach the Supreme Court.

Another election to follow: that of India. India, the world’s largest democracy and a rising superpower, will go to the polls in April and May. Prime Minister Narendra Modi is benefiting from the West’s search for a regional bulwark to counter China. Companies are looking for opportunities in India, as companies work to diversify their supply chains and take advantage of a rapidly growing economy. The elections will also be a crucial early test of how AI can influence the spread of (mis)information during an election.

Reorganization of the workplace. In late 2022, the launch of ChatGPT propelled AI into the public consciousness. In 2023, companies experimented with new ways to incorporate technology into their operations, but few had yet to review their procedures to deal with it. It’s still unclear exactly what AI will mean for jobs, but in 2024 we may see more companies making decisions about its use in ways that will have consequences for workers.

The other big issue facing workplaces is the response to the war in Gaza. Some companies are already considering changes to their workplace diversity, equity and inclusion programs, and executives face some of the same pressures as college presidents when it comes to how to handle their statements and responses to workplace incidents. war.

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