A $45 Billion Cable Company Merger Isn't What The US Economy Wants Right Now
Morgan Stanley
"S&P 500 firms had $1.4 trillion in cash at the end of 2014 (ex-Financials), and cash flows remain strong," said Goldman Sachs' David Kostin in a research note published on Monday. That number goes up to $1.7 trillion if you consider the top 1,500 publicly traded companies.
For the most part, public companies have been deploying excess cash to shareholders in the form of buybacks and dividends.
Today's $45 billion Time Warner Cable takeover by Comcast is similar in that it's largely just money moving from one balance sheet to another.
While buybacks, dividends, and M&A deals can line the coffers of investors in the near-term, it doesn't do quite as much directly for the economy.
Companies can better stimulate the economy by investing in growth - which would include hiring more people - or even by just replacing old equipment, which means growth for manufacturers.
"The transaction will generate approximately $1.5 billion in operating efficiencies," the companies said in a press release.
Unfortunately, "operating efficiencies" usually means closed offices and layoffs.
Today's deal is encouraging for financial markets in that it may reflect animal spirits are in the air. However, the U.S. economy would rather here about multi-billion dollar expansion plans that come with job creation.
- US buys 81 Soviet-era combat aircraft from Russia's ally costing on average less than $20,000 each, report says
- 2 states where home prices are falling because there are too many houses and not enough buyers
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- Why did a NASA spacecraft suddenly start talking gibberish after more than 45 years of operation? What fixed it?
- ICICI Bank shares climb nearly 5% after Q4 earnings; mcap soars by ₹36,555.4 crore
- Markets rebound sharply on buying in bank stocks firm global trends
- Bengaluru's rental income highest in Q1-2024, Mumbai next: Anarock report
- Rupee falls 10 paise to settle at 83.48 against US dollar
- Nothing Phone (2a) blue edition launched
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market