Commentary on the CTC Virtual Roundtable Poll

by Craig Martin, Executive Director, Corporate Treasurers Council

During all of the CTC roundtables held throughout June (14 locations across the country) whose participants represent a broad spectrum of industries, there didn't seem to be one person that said they were NOT growing. It was no longer "less bad" or flat. Not that they were saying there was a sharp upswing, but business was improving. That seemed in sharp contrast to what one was reading in the press or even hearing from economists or other pundits. And even our own Liquidity Survey which was very recently released said that corporations had increased their cash balances over the prior six months, and remained very conservative in their short term investments. All during this time we also heard from many other sources that there was approximately $1.8 Trillion sitting on non-financial corporations' balance sheets.

So, we thought it would be interesting to conduct a very informal poll of those participating in a CTC virtual roundtable on this past Wednesday, July 21st, discussing this very topic and whether they had any plans to begin deploying the cash somewhere in the near future, and to what means. While this was a fairly small pool of respondents (about 30), they represent a very broad cross section of industries and geography. Answering the question: "How do you expect to eventually deploy the cash?", 50% expected to increase capital expenditures, and 80% were looking at acquisitions. Slightly more than a third were looking to hire. And just over 10% were looking to increase dividends and repurchase stock.

The obvious follow-up question would then be when would they expect to take these actions? Almost half (43%) said during the first half of 2011, which is not that far off. Just over 20% said they had already begun or would look to start deploying cash in the next 3-6 months.

This just seems to corroborate the earlier findings from the June roundtables, that at the very least, this group of treasurers and assistant treasurers from the Corporate Treasurers Council are a little more sanguine about the economy and the outlook for growth in the coming months. Since the roundtables and this poll were conducted, we have already seen some signs of slight improvement. Caterpillar, GE and others recently increased their dividends while this past quarter's earnings releases from most companies and sectors have been quite positive. So, will there be a double-dip recession? This group would say not.