A dearth of merger activity has Wall Street preparing for some bloodletting among investment bankers. But a lack of deals is also telling for Main Street. Continued weakness in M&A activity shows that corporate executives remain as wary as ever, despite record levels of cash and strong-profit growth in the past two years. And it places them firmly in the camp of doubters over the recent strength of the recovery.

Normally, at this point in an economic rebound, and especially given the bounce-back in financial markets during the first quarter, companies would be in deal-making mode. Not so, today.