Monthly Archives: July 2011

Forget the Debt Ceiling Debate… Where’s the Economic Growth?

It is our contention at Hennion & Walsh that the market has essentially priced in the belief that an agreement on raising the current debt ceiling will happen. It is just now a question of when the agreement will be finalized and what the length and terms of the finalized agreement will be. Unfortunately, the finalization of the agreement may not be enough to avert further consideration of a downgrade to the U.S. AAA credit rating by the rating agencies. Regardless, after this current debt crisis is behind us, investors, in our opinion, will return their focus to a stalling economic recovery that is facing multiple headwinds. These headwinds include a stubbornly high unemployment rate, a disturbing trend of increasing jobless claims, elevated commodity prices, a lackluster residential real estate and increasing sovereign debt problems overseas and, as previously discussed, on our homeland.Read more

Healthy U.S. Corporate Balance Sheets within an Unhealthy U.S. E

Many U.S. Corporations continue to have very healthy balance sheets with significant percentages of cash on hand. To this end, according to a January 10, 2011 report entitled, A Cash Buildup and Business Investment, by Robert Sadowski of the Federal Reserve Bank of Cleveland, highlighted cash holdings and other liquid assets as a share of total corporate assets rising around by approximately 2% since the start of the most recent recession. This share; 7.4% as of September 2010, is the highest relative cash % for U.S. corporations since the mid-1950s. The cash on hand could support potential business expansions, dividend increases, stock buy-backs and/or mergers or acquisitions (M&A). All of these potential deployments of cash listed above could be positive not only for the each respective company but also for the stock market and economy as a whole.Read more

Kicking the Can Further Down the Road

When we, at Hennion & Walsh, consider that Washington is currently considering increasing our self-imposed debt ceiling to allow the U.S. to issue more debt to service existing debt already outstanding, we can’t help but think that we are just “kicking the can” further down the road.Read more