ALL BUSINESS: Cash Is King for Investors

Rosenberg points to the record number of dividend cuts by S&P 500 companies over the last 12 months — 1,043 of them, according to S&P. That's evidence corporations are hoarding cash so that they can fund operations, buy other companies or to ensure they can satisfy their debt refinancing needs going forward.

The end result is that stock investors are seeing their cash flow squeezed. Since 1955, the average has been 15 dividend increases for every decrease. Now, it's five increases for every six decreases, according to S&P.

Shifting investor sentiment is also reflected in the surge in the personal savings rate, which was hovering near zero in early 2008 but soared to 6.9 percent in May. That was the highest rate since 1993.

Even with the massive government stimulus program, Americans are choosing to bolster their nest eggs rather than spend. According to Rosenberg's calculations, the total stimulus from the Obama administration came to $163 billion at an annual rate in May, but consumer spending only increased at an annual rate of $25 billion.

So long as the cash just stays on the sidelines, there won't be much fuel to propel stocks and the economy forward.

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Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

(This version CORRECTS spelling of executive's name to Ablin sted Albin)

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