Companies are sitting on a record amount of cash amid lingering uncertainty about disruptions from Covid-19, defying expectations earlier this year that a waning pandemicCash and short-term investments on corporate balance sheets globally are at an all-time high of $6.84 trillion, according to data from S&P Global, extrapolated from second-quarter earnings reports. That is 45% higher than the average in the five years preceding the pandemic and a 2.6% increase from the previous quarter.
In April, analysts at Goldman Sachs had lifted their 2021 forecast for spending growth by S&P 500 companies to 19% from 10%, “as uncertainty continues to fall and global economies continue to reopen.” But global capital expenditures are expected to slow in the third quarter after a strong start to the year, according to an Aug. 6 report by JPMorgan Chase & Co. Corporate spending growth is forecast to decline to 5.8% this quarter at a seasonally adjusted annual rate, down from 12.9% in the previous one.
Companies have enjoyed one of the strongest economic rebounds in history, driven by a powerful combination of fiscal and monetary stimulus. But now some indicators are flashing warning signs and prompting finance chiefs to build up their cash buffers again.
Any novel virus will kill off a percentage of their initial hosts. From that point, a virus evolves to survive on more hosts by becoming more contagious and less lethal. Variant scares are driven by those looking to make money.
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