Here's A Chart You Won't See On CNBC

Tyler Durden's picture

"Record corporate cash"..."Record corporate cash"... "Record corporate cash"

That pretty much covers most of the conversation on prime time financial media and TV stations when discussing corporate balance sheets.

There is, however, one big problem with that mantra. As Zero Hedge first showed in January with "Corporations Have Record Cash: They Also Have Record-er Debt, As Net Leverage Soars 15% Above Its 2008 Peak" companies indeed have tons of cash. What isn't discussed is where that cash came from. The answer: debt. Because while companies have record cash, they have recorder-er debt.

Today, we are happy that more are starting to notice this simple math problem. Here is Deutsche Bank's Torsten Slok who is the latest to be struck by this "revelation".

If you look at cash levels relative to debt levels you find that corporate cash holdings are at the lowest level in 15 years, see also the chart below. In other words, a very important reason why corporates have more cash is because they have taken on more debt via IG and HY issuance. Expect capex to accelerate going forward but keep in mind that debt levels for corporate America are at the highest level ever and there is a risk going forward that higher rates through debt-servicing costs and higher defaults could have a negative impact on the recovery and hence the terminal rate for both short and long rates.

Of course, as long as rates are low and keep declining, this record debt hoard is not a big issue.

Once rates start going up, however, nobody would possibly have been able to foresee the absolute massacre that will take place at corporations, levered with publicly tradable debt to never before seen levels.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
bania's picture

But looks like it's off the lows for the decade.

Vampyroteuthis infernalis's picture

Borrow until they take away the credit card. No different than the typical US debt slave.

LetThemEatRand's picture

Part of the reason they are borrowing is to avoid taxation.  They hoard cash overseas, then borrow money for operations in countries that tax their income.  Nice little loophole not available to the average US debt slave. 

Manthong's picture

Yeah, like Apple really needed to float that last dozen billion or so in bonds…

It has a net positive position and more real cash than the US government.

Pladizow's picture

In revolution there are two types of people: those who make it and those who profit from it.” – Napoleon

See: TBT, TBF, SJB, JGBD and many others!

Xibalba's picture

Not gonna see it on Bloomberg either.  They've been obsessed with basketball for the last two days.  #destraction

NoDebt's picture

You mean it was all <gulp>..... a LIE?

That... that's not possible.  

I don't believe it.  I WON'T believe it.  

walküre's picture

Sterling did nothing wrong. This whole thing is a farce. The National Black Association can juggle it's own monkey balls. Soon to be featured on BET and commented by Oprah and Arsenio. I'm watching European soccer games instead.

Keyser's picture

The Sterling debacle is just getting started... He has said he isn't selling... The drool is running down the lawyer's chins... Watch for him to sue everyone from the bimbo ex-girlfriend to the NBA... 


HughK's picture

12 ZH members have supported walküre's post.  I'm not one of them.

Polonius's picture

Bloomberg TV runs the same program every day - Betty sucking up to oligarchs with the most annoying voice on television, and the red head sucking up to oligarchs with the occasional "now wait a minute" interjection to be sure no guest ever finishes a complete thought.  And then there's Matt Miller.  He must have photos of big Mike becuase he actually seems human, sane and capable of independent thought. 

svayambhu108's picture

In war there are two types of people: those who make it and those who don't

U4 eee aaa's picture

In war there are two types of people: those who die and those who live the rest of their lives with PTSD nightmares

Flux's picture

At Zero Hedge there are two types of people:

Those who pine away for WW3 and global economic collapse and those who make bank.

villainvomit's picture

I see three types of people at ZH

The vast majority that DO NOT believe in all the ipse dixit bulllshit we are fed 24/7.

A handful that don't have a clue.

And.....those that may fit in the first category listed above, but have their own category as they would really, really like to punch Jamie Dimon in the face.

Just sayin.

forwardho's picture

Sir, I am but a lowly gardener, And I have more real cash than the US government.

The US balance sheet is a silk stocking stuffed with shit.

Pickleton's picture

With images of a playdo press in my head.  Thanks.

The Shootist's picture

Talleyrand would do well in the current government. Led to slavery by snakes we are.

Ignatius's picture

Then comes the canard of "tax relief" so American corporations will be incentivized to repatriate the cash under the illusion of expanding domestic investment (jobs).

daveO's picture

Only after rate increases squeeze them, like 30 yrs ago.

pitz's picture

This dramatically over-states cash (while not, of course, under-stating debt).  As foreign 'cash' has to be reduced by 30%+ if it is to ever be paid to the benefit of domestic debt or domestic shareholders. 

I'm not surprised though.  All these CEO's think there's going to be some magic repatriation tax amnesty, which is quite doubtful.  Meanwhile that 'cash' loses value with each passing year. 

101 years and counting's picture

borrowing to pay out dividends and buy back stocks at bloated prices is great for future growth.....

but, only in the eyes of the top .0001%.  this country is so rotten and corrupt, we're fucked.

Thermopylae's picture

"That's why I'm richer than you"   -  JDimon

That will be taught to our grandkids right along side with "Let them eat cake".


steveo77's picture

With Fuku blowing up an aerosolizing, let them eat and breath yellow cake.

mt paul's picture

yellow cake


with Mox fuel frosting

and plutonium sprinkles 

DaddyO's picture

With China and Russia looking like the good guys in the battle of wits with the current USSA regime, Woar becomes the final outcome.

World opinion is rapidly escalting towards siding with Russia. China is willing to finance whomever is willing to launch the first volley.

The USSA becomes the pariah and a well placed nuclear attack on NYC and Vichy DC has all the earmarks of being acceptable in the world's eyes.

Afterall, they had it coming...

Then it's on like donkey kong.


walküre's picture

Spare NYC. Vichy DC can sink into a black hole for all I care. To even things out, blow up Hollywood for good measure. That would set things right for a few decades and mankind just may have a chance to evolve further.

Keyser's picture

NYC has already been targetted, Obozo told us himself... 


Winston Churchill's picture

Talking of which, what the hell just happened to the dollar ?

Boxed Merlot's picture

That will be taught to our grandkids...


I'll do my part. 


And by the way, the sentiment was taught before the guillotines too:

When the wicked dies, his hope will perish,
    and the expectation of wealth perishes too.

12 Whoever belittles his neighbor lacks sense,
    but a man of understanding remains silent.


Proverbs 11: 7 & 12



Headbanger's picture

So just where is all this debt money going if it's not going into capex for future growth??


Oh wait....

Ying-Yang's picture

Off topic....

Saudi Arabia shows off nukes... everyone loves a lil nukie!

Earlier today, at Saudi Arabia's northeastern military base of Hafr al-Batin, the kingdom's armed forces held a massive military parade to mark the conclusion of a major exercise codenamed "Abdullah's Sword." A surprise feature of the parade was the inclusion of two Chinese DF-3 missiles, known as the CSS-2 in NATO nomenclature. These missiles were supplied to Saudi Arabia in 1987 and have long been based in the mountainous desert well south of Riyadh, from where they can target Iran. Today is the first time they have been seen in public.

Take note of who was there:

Top guests included King Hamad of Bahrain and Sheikh Muhammad bin Zayed, the crown prince of Abu Dhabi, the lead emirate of the UAE. Also present was Pakistani army chief Gen. Raheel Sharif, who sat next to Prince Mitab, the minister of the Saudi National Guard and senior son of the king.



Manthong's picture

Why would they ever need to use those things?

Their good buddies in Israel would be happy to do that for them.

mt paul's picture

one of those nukes is a 20 yr old liquid fuel relic


hope they have been on top of O ring replacements

SAT 800's picture

It's coming. Hedge accordingly. And I don't mean anything on that chart, either.

SAT 800's picture

I'm now short the ES contract for June from 1875.25 times four; $200 a point. with todays date. Let's see what happens next.

Tom_333's picture

Well off the lows for the devade. Well off... You need to get with the program

ZH Snob's picture

once hyperinflation kicks in they'll have more cash than they can handle.



youngman's picture

unintended consiquences by the FED

DavidC's picture

"The market is not rigged...the market is not rigged..."


SunRise's picture

 as seen on a Market Rigger BillBoard

TideFighter's picture

Corporate Cash being held WHERE?

Can't bring IT home, so bonds we go!

Dr. Engali's picture

Expect CapEx to accelerate going forward? WTF are they smoking? As long as Zirp is in place and until the over capacity issues are addressed, companies will continue to reward shareholders with buy backs and dividends over spending on CapEx.

ParkAveFlasher's picture

We all know that the American consumer just can't git enough of that innovative stuff.  Just give them bigger wallets if they need to carry more cards. 

Of course by "American consumer" I do mean the global consumer of prime American export goods like debt, litigation, pre-detonated explosives, and Halliburton contractors (who require concessionaires, translators, and so forth to function properly in the restoration and ongoing maintenance of batch-obsoleted community infrastructure deigned for upgrade by remote-guided airborne flag implacement devices).

I wonder if "capex" includes devices intended to provide revenue streams or some other bogus scumduggery.  These fuckers wouldn't tell a lie that was easily uncovered. 

forwardho's picture

(batch-obsoleted community infrastructure deigned for upgrade by remote-guided airborne flag implacement devices).

Bravo!!!  That madame, is a work of art.

NoDebt's picture

Agreed, that is one heluva piece of wordsmithing there.

TrumpXVI's picture

Yeah, that, "Expect CapEx to accelerate going forward" part is what stopped me short....makes no sense at all.  There's not a snowball's chance in Hell that companies are going to expand production.  All the borrowed money is for something else entirely.