Apple, Google, and other companies began to accumulate cash. At the end of the second quarter, the balance sheet of the largest non-financial companies in the world reached 6.85 trillion dollars. It is reported by CNN, citing the rating of S & P. Corporations are nervous about a new variant of the coronavirus: the вЂњdeltaвЂќ strain is spreading around the world and could hurt the global economy.
Fear of economic turmoil is forcing tech giants to save money: Apple, Microsoft, and Alphabet (owner of Google) have a combined $460 billion on their balance sheets. Amazon has accumulated almost $90 billion and Facebook has more than $64 billion.
Build up their reserves are not only technology corporations. In December, the U.S. holding company Berkshire Hathaway, owned by Warren Buffett, had $138.3 billion in its account, and at the end of June, that amount rose to $144.1 billion. Corporations have increased their savings вЂ” and debt levels вЂ” through low-interest rates, which have allowed them to borrow more money.
вЂњWe had previously assumed that companies would start using cash by this time,вЂќ said Christopher Harvey, head of wealth management at Wells Fargo. вЂ” вЂњBut companies are spending money on buybacks, dividends, and mergers. The cost of financing is incredibly cheap right now, so firms are issuing debt and the cash in their accounts keeps piling up.вЂќ
Market participants expect the U.S. Federal Reserve (Fed) to raise short-term interest rates in 2022, which will reduce the number of money companies borrow. Borrowing money will become more expensive at higher rates, and corporations will be able to start using their money to increase investment and pay employees.
Fear of the вЂњdeltaвЂќ strain weighs heavily on the economy. Companies are still afraid to spend cash and prefer to keep it on their balance sheets, investors are reluctant to risk money, and oil prices are falling due to low demand. China's economy was steadily recovering from the pandemic, but due to the new variant of the coronavirus, its growth in the second quarter was below experts' expectations.