Institutional Investor (September 17)
“As the global recession and financial crisis recede in the rearview mirror, companies have been acting more proactively in using their balance sheets in ways that enhance shareholder value. But we think they can do more…. By mid-2013, U.S. companies were sitting on cash that was equivalent to about 11 percent of their total assets, a three-decade high and earning almost nothing.” Fortunately, there are signs of change. Companies “have become more receptive to using debt to buy back shares, increase dividends and make acquisitions.”
Tags: Acquisitions, Assets, Balance sheets, Buybacks, Cash, Debt, Dividends, Financial Crisis, Recession, Shareholder value, Shares, U.S.
Detroit Free Press (July 19)
Detroit became the largest U.S. city to file for bankruptcy, hoping to escape nearly $20 billion in debt. “The word bankruptcy provokes an intense emotional response. Instinctively, many Detroiters feel the news is horrible and is synonymous with defeat. Fear kicks in as we envision our city being shut down and sold for scrap…. In fact, it is the exact lifeline we need to unshackle our town from the mismanagement, corruption and incompetence of the past in order to get on with the real work of rebuilding Detroit.”
Tags: Bankruptcy, Corruption, Debt, Detroit, Incompetence, Lifeline, Mismanagement, Rebuilding, U.S.
The Economist (March 16)
America’s “debt is rising, its population is ageing in a budget-threatening way, its schools are mediocre by international standards, its infrastructure rickety, its regulations dense, its tax code byzantine, its immigration system hare-brained—and it has fallen from first position in the World Economic Forum’s competitiveness rankings to seventh in just four years.” But “dysfunction in Washington is only one side of America’s story…. There is also another America, where things work.” The successful side of America can be seen in the improving performance of the real economy where “businesses and politicians are not waiting for the federal government to ride to their rescue.”
Tags: Businesses, Debt, Dysfunction, Government, Population, Real economy, Regulations, U.S., WEF
Euromoney (January issue)
“It won’t take much to improve on last year’s ECM and M&A revenue numbers. According to Dealogic’s preliminary full-year 2012 figures, ECM revenue fell to $13.3 billion last year—the lowest since 2003. M&A revenue was $17.3 billion in 2012—down 15% compared with 2011.” Debt capital markets, however, fared better in 2012 with DCM revenue at $21.1 billion, a 23% increase over 2011.
Washington Post (January 1)
“Congress’s feeble finish to the ‘fiscal cliff’ fiasco” is an imperfect solution. It will do “little to address the nation’s long-term debt problem. But for all its weaknesses, the bill’s enactment is far better than a failure by this Congress to act before it adjourns Thursday.”
Tags: Congress, Debt, Fiscal cliff, U.S., Weaknesses
Los Angeles Times (September 12)
In the U.S. a fiscal cliff is approaching when tax cuts expire on January 1, government spending is scheduled for automatic reduction and limits on government borrowing will be reached. “The message from the analysts at Moody’s and S&P is that lawmakers can’t keep putting off the day of reckoning. Moody’s set a reasonable condition for avoiding a downgrade: adopting policies that stabilize, then reduce the debt as a percentage of the U.S. economy over the next several years.”
Barron’s (June 11)
“The second half of the year promises to be an adventure.” The 10 financial wizards of Barron’s Roundtable “expect the Federal Reserve to launch a third round of quantitative easing, or Treasury-bond purchases, in an effort to juice the economy and rouse the somnolent job market. But they don’t expect that to do the trick.” Moreover, they harbor concerns over the world financial system, given the massive debt held by industrialized nations. To weather the storm, “the consensus among our experts is to stick with companies that have good businesses, savvy managers, healthy balance sheets, and low valuations. Preferably, they also pay dividends and buy back shares.”
Bloomberg (June 8)
“The Fed ought to get off the fence…. Bernanke and his colleagues should decide on a new program of monetary easing…. We think the case is stacked pretty strongly in favor of more quantitative easing— the Fed’s unorthodox (and controversial) method for driving long-term interest rates lower by buying government debt.”
Tags: Bernanke, Debt, Fed, Interest rates, Quantitative easing, U.S.
Economist (May 26)
“Despite a recent slowdown, the world’s second-biggest economy is more resilient than its critics think.” China is not dependent on foreign borrowing, enjoys a high saving rate (51% of GDP), has highly liquid banks, and very low central government debt (25% of GDP). “China plainly has enough fiscal space to recapitalise any bank threatened with insolvency. That space also gives the government room to stimulate growth again, should exports to Europe fall off a cliff.”
Wall Street Journal (April 8)
As a group, S&P companies have gained efficiency while rebounding to pre-recession levels. “S&P 500 companies have become more efficient—and more productive. In 2007, the companies generated an average of $378,000 in revenue for every employee on their payrolls. Last year, that figure rose to $420,000.” These same companies have also increased capital expenditures, reduced debt and increased cash on hand.
As a group, S&P companies have gained efficiency while rebounding to pre-recession levels. “S&P 500 companies have become more efficient—and more productive. In 2007, the companies generated an average of $378,000 in revenue for every employee on their payrolls. Last year, that figure rose to $420,000.” These same companies have also increased capital expenditures, reduced debt and increased cash on hand.
Tags: CAPEX, Cash, Debt, Efficiency, Productivity, Recession, S&P
