Large Companies Continue to Stockpile Cash

News that President Barack Obama won the US election was met with a fall in the value of the US dollar together with a minor boost to equities. Many companies in both the US and Europe have been stockpiling cash whilst there has been uncertainty in the market. Spending was boosted following the removal of any uncertainty over the US Presidency. The economic boost was noticed in London due to increased recruitment activity in November, particularly for UK contractors as companies gave the go ahead to pursue projects they may have been holding back.

There remains a significant amount of cash stockpiled in both the US and Europe despite this minor surge in activity as companies continue to monitor the events in Europe and the Global economy. We believe that there is potential for significant stimulus to be added to the markets once this economic uncertainty is removed. Unfortunately, there have been no signs as to when this may occur. Current projections suggest that the economic outlook for 2013 will be poor with little or no growth expected in the US and Europe. However, we advise our clients to watch out for a trigger that could give rise to significant investment opportunities should the large corporations be given the confidence to invest their cash reserves.