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Thing One: So Much Cash, So Little Use For It: The good news? Companies are as flush with cash as they have ever been. Now the bad news: They're not going to spend any of it, except to give it back to shareholders.
U.S. companies plan to pay a record $300 billion in dividends this year, writes the Wall Street Journal, up from $282 billion a year ago. Companies also announced plans last month to buy back nearly $118 billion in stock, the most for any single month on record, by one measure.
All of this cash flowing to investors has a couple of positive effects, besides the obvious make-investors-happy effect: For one thing, it is helping to boost stock prices through the roof, for whatever that is worth. For another thing, it will result in more tax money to the U.S. government, which I hear tell has been experiencing some agita about its budget lately. Dividends are being taxed at higher rates this year -- one effect of this year's "fiscal cliff" caused by all of that budget agita -- so more dividends equals many more tax dollars.
Of course, the government's budget woes could be alleviated a good bit if companies would stop hoarding cash overseas, away from the clutches of the IRS. U.S. companies are holding a record $1.9 trillion offshore, according to Bloomberg's count, having shipped another $183 billion overseas in the past year.
As one analyst tells the WSJ, all of this cash sloshing about is hardly a great sign. Companies are giving it back to shareholders and stashing it overseas because they can't figure out what else to do with it, as Paul Krugman notes in his New York Times column. Corporate cash may be pushing the Dow to a record high, but it is not being invested in the future, or in people. The job market is still missing more than 3 million of the jobs it lost during the recession. At the current pace of hiring, that hole could take nearly two more years to fill. And then there are wages, which have stagnated even as corporate profits have hit record highs.
It's something to keep in mind when reading today's February jobs report. The job market is recovering, but still far from healed.
Thing Two: Not-So-Stressful Tests: One group of companies in particular should be forking a bit more cash over to shareholders soon: The banks. The 18 biggest U.S. banks mostly got clean bills of health in the Federal Reserve's latest round of stress tests, meaning they will probably be allowed to raise their dividends and buy back more stock. There are good reasons to question just how stressful the Fed's tests really are, the NYT notes, in terms of their assumptions about losses during another crisis and about how much capital they really need.
Thing Three: China: Do What We Say, Not What We Do: China's commerce minister warned Japan, the U.S. and other countries against engaging in "competitive currency depreciation" to boost their growth, the Financial Times writes. "Leave that sort of thing to China," the FT does not add. Actually, to be fair, China has gotten out of the active currency-devaluation game lately as it tries to press gently on its property bubble.
Thing Four: What A Draghi: One group not rushing into the currency wars is the European Central Bank, which on Thursday again decided to leave interest rates alone, despite the continent's never-ending recession. Things are going to have to get a lot worse for the ECB to act, ECB chief Mario Draghi declared, expressing confidence that Italy's recent spot of trouble isn't going to turn into another financial-system-eating nightmare.
Thing Five: In Case You Need More Proof: The past decade has been among the hottest in the past 11,000 years, according to a new study of the entire stretch of the Holocene period, the WSJ writes. There is a clear spike in temperatures at the very end of the WSJ's compelling 11,000-year temperature chart, strongly suggesting that this is man-made and not a natural temperature fluctuation.
Thing Six: Fed Considers Do-Nothing Strategy: Fed officials are considering just hanging on to all of the bonds it has bought during its years-long campaign to boost the economy, letting them mature rather than trying to sell them off and risk roiling the bond market, Reuters reports. The approach makes sense, but it does raise questions about the Fed's ability to withdraw support for the economy quickly, if needed. But won't that be a nice problem to have?
Thing Seven: Carl Icahn Will See You In Dell: Not content to make his rival, William Ackman, miserable, activist investor Carl Icahn has turned his attention to struggling computer maker Dell, for some reason. He declared yesterday that Dell had better borrow a bunch of money and pay him and other investors a huge dividend, or else spend years in litigation, the WSJ writes. That should turn things around.
Thing Seven And One Half: The Robots Will Blow Out The Candles: On this day in 1817, the New York Stock & Exchange Board was officially formed, by the same people who in 1792 had signed the Buttonwood Agreement to trade stocks under a buttonwood tree in lower Manhattan. In 1863 the name was changed to the New York Stock Exchange, which eventually became the go-to site for photographs and videos of anguished and/or ebullient traders. Today the NYSE is operated by NYSE Euronext after its merger with a European electronic exchange, and the whole company will soon be owned by an Atlanta futures exchange called Intercontinental Exchange. You can still find a few traders there for souvenir photographs, but it has mostly been taken over by computers.
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Calendar Du Jour:
8:30 a.m. ET: Jobs Report for February
Heard On The Tweets:
Is it still a stairway to heaven or have they upgraded to like an escalator or teleport or something?
— M. Kittenosaurus(@mkat816) March 7, 2013
My biggest problem with Facebook isn't design — it's that I won't put in work to update my scattered, irrelevant friend list
— John Herrman (@jwherrman) March 7, 2013
a filibuster is basically the political equivalent of getting cornered by the drunkest guy at a party.
— Morgan Murphy (@morgan_murphy) March 7, 2013
— Thomas Lennon (@thomaslennon) March 7, 2013
-- Calendar and Tweets rounded up by Alexis Kleinman
People may not take my threats seriously, but after I nuke the U.S., I'm going to kill Superman. #shitjustgotreal
— KimJongNumberUn (@KimJongNumberUn) March 7, 2013