US companies still building up their cash piles

The ratio of US non-farm, non-financial companies’ liquid financial assets to their short-term liabilities rose to its highest level in over fifty years in Q4 according to the Federal Reserve’s latest Flow of Funds report. Although this implies such firms are in a strong position to weather an economic slowdown, their shares are generally overvalued by historical standards and we continue to expect the stock market to end the year lower than it is now.