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S&P Indices Senior Analyst Howard Silverblatt on the firms data showing the decline in the amount of cash companies are holding onto and how they ...
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Today S&P indices announced that after thirteen consecutive quarters of company holding record amounts of cash on balance sheets -- we've talked about that their port and -- right.
The cash is now.
Ticking downward joining us now on a fox this is exclusive first with the -- that they have found it is SP indices senior analyst.
Howard silver black Howard great to have you so the -- -- cash is finally leaving and getting on the field where's it going.
How much should the leaving it -- down one point 4% but we hadn't seen one I have to 2% increases.
At this point we have to see where that money is going is not going -- the capital expenditure is buybacks were down for the quarter.
Dividends -- up.
Mostly Levy take -- take way he obviously besides.
The in the downturn is that companies still had even with this one point 4% decrease.
An enormous amount of cash sitting on their books waiting to be used it's over seventy weeks and expected 2012.
Income.
Just sitting there not being used and and we we mostly because companies and.
-- this okay so the actual number I was wanna be able to say guys there's this much cash on the balance sheet you're saying now about one point 13.
Trillion and.
Transaction somewhere around here billion dollars cop which again is it is not a -- watch percentage number but we -- seen go up -- the back to the stand each quarter and now eight.
Stop that and actually went down for that this time.
Since 2008.
And you're saying it's not going into capital expenditure meaning building new plants -- -- it is not can't prolong it will OS this this quarter earnings -- decent and non-GAAP basis who decade.
They just didn't accumulate as much would not seen that much an expansion outside of dividends which have been increasing nicely put the board -- the index or not in the index.
Is that the buybacks indeed take -- -- second quarter which is another sign showing that company's.
Have consent of -- going forward and -- is doing the minimum amount of expenditures.
OK last point on this -- that I wanna move to dividends and what you called Q five the fifth so called quarter.
But not paying down debt is that a possibility that some companies are using cash to pay down debt.
There wasn't a lot of changing that there was some refinancing.
Involved -- -- reduction but a lot of that was -- 2011.
The the -- -- sitting here again it's not a big ticked down but it is -- tick down and normally.
We would get paid that much attention to except that it -- that if the trend fifteen quarters is a long time.
And when you not seen anything glow like plants and equipment -- employment right.
I it sent a -- -- and that will be watching.
All right so one thing you did see it -- hikes a little bit in dividends we know the S&P dividends in the aggregate are about the highest historically they've been about either a long timer record.
You talk about something called the fifth -- -- -- Meaning as we head toward the fiscal -- and we can put this up on the screen.
Dividends that are paid out before December 31 would be taxed at about 15%.
But anything after that we could see a jump of more than 43.
Per -- so.
What are companies doing what's the behavior you are seeing -- That that's we needed to clarify in this that.
The current law says it will go to 43 point 4% to that the -- the congress and the president have to agree to do something different.
What companies that doing and again they have all of this -- you looking to pay Q1 and we seen this historically.
Is moving the gates is what we expect instead of paying me on January -- like ten to fifteen and 21 billion dollars in qualified dividends were paid.
In this January -- not -- combat few pennies -- We would expect them to move the actual -- date to December perhaps December 35 December 30.
That we hold as we get the 15%.
-- eight.
Instead of the 43% tax they look.
Basically they pay you in January -- -- -- give -- 50% more to get what you would have gotten December 30 want to expect equities to jump on that as people -- and just to get the dividend currently.
-- within a few dividend stocks out there you can play because yields you know -- -- but you know -- -- obviously one it's still in place a high giving -- those 5% -- paid -- CE always moves when it it does -- that's feasible.
And there is background noise -- Companies potentially paying out -- days we've heard that for awhile but we haven't seen that much materialized yet but -- is with is that it.
Howard silver flat -- -- -- -- -- senior analyst showing us some interesting behavioral data on behalf of corporations first on Fox Business exclusively today thank you so much thank you.
