offshore44
September 16, 2010, 15:05
Interesting article on Corporate liquidity on the Global Economic Trends site.
Link (http://globaleconomicanalysis.blogspot.com/)
It seems that Corporate CFO's are keeping cash on the balance sheets and in the bank instead of reinvesting in the company.
{snip from site}
SUMMARY OF FINDINGS -- CFO optimism about the U.S. economy has fallen to 49 on a zero-to-100 scale, well below the rating of 58 from the last quarter. Pessimists outnumber optimists four-to-one. European CFOs' optimism rate is 58; Asian CFOs' rate is 70. -- Half of CFOs say they will cling tightly to cash due to economic uncertainty and as a liquidity buffer. The other half will spend some cash reserves in the next year, primarily for investment, to pay down debt and to make acquisitions. -- Earnings are expected to rise 12 percent and capital spending almost 7 percent in the next 12 months. However, nearly half of CFOs say unless the overall economy improves, there is only a six-month window during which they can maintain this level of growth.
{snip}
The article says that CFO"s are sitting on about $1.8 trillion in cash that they will use to pay down debt, buy back stocks and invest. Only about 28%, give or take, will be used for capital expenditures in the next six to twelve months. Very few are expecting the capital investments that they plan to make to increase staffing levels.
Interesting stuff that points to a Japanese style lost decade or more...along with all of the other signs pointing in that direction.
It's a pretty good article with a lot more content than I have quoted...
Here is a link to the detailed survey quoted in the article. Link (http://www.cfosurvey.org/)
Lots of meat and potatoes in the original survey data.
Link (http://globaleconomicanalysis.blogspot.com/)
It seems that Corporate CFO's are keeping cash on the balance sheets and in the bank instead of reinvesting in the company.
{snip from site}
SUMMARY OF FINDINGS -- CFO optimism about the U.S. economy has fallen to 49 on a zero-to-100 scale, well below the rating of 58 from the last quarter. Pessimists outnumber optimists four-to-one. European CFOs' optimism rate is 58; Asian CFOs' rate is 70. -- Half of CFOs say they will cling tightly to cash due to economic uncertainty and as a liquidity buffer. The other half will spend some cash reserves in the next year, primarily for investment, to pay down debt and to make acquisitions. -- Earnings are expected to rise 12 percent and capital spending almost 7 percent in the next 12 months. However, nearly half of CFOs say unless the overall economy improves, there is only a six-month window during which they can maintain this level of growth.
{snip}
The article says that CFO"s are sitting on about $1.8 trillion in cash that they will use to pay down debt, buy back stocks and invest. Only about 28%, give or take, will be used for capital expenditures in the next six to twelve months. Very few are expecting the capital investments that they plan to make to increase staffing levels.
Interesting stuff that points to a Japanese style lost decade or more...along with all of the other signs pointing in that direction.
It's a pretty good article with a lot more content than I have quoted...
Here is a link to the detailed survey quoted in the article. Link (http://www.cfosurvey.org/)
Lots of meat and potatoes in the original survey data.