OT: Is this the end of General Electric?

[The Spin Meister]

General Electric has been one of the countries biggest and most influential companies for decades. It had holdings in just about every industry, is a major defense contractor, and for many years was considered a key indicator of the over all economy.

In recent years it has fallen dramatically. Poor investment choices, terrible management, and bad luck have made it a shell of its former self.

Now, the same guy that warned about the Madoff Ponzi scheme says that GE is about to collapse and has been misstating financials for several years. Both its energy division and its insurance unit are in terrible shape. Says that this will be bigger than Enron and Worldcom combined.

 

[psuro]

Wonder if this news was leaked earlier - affected the stock market yesterday.

I think we are heading towards the big "R" word.

 

[The Spin Meister]

Wonder if this news was leaked earlier - affected the stock market yesterday.

I think we are heading towards the big "R" word.

Linked article says it was a report for a client that is a hedge fund and the hedge fund was given the report earlier. No doubt that hedge fund acted on the report, probably by shorting GE stocks. Info may have leaked beyond fund or others saw the fund activities and responded likewise.

Is GE still in the DOW? I think they were replaced a couple years ago. Even if no longer in the DOW, such news may have affected the market as these scandals have a way of spreading fear.

 

[psuro]

Linked article says it was a report for a client that is a hedge fund and the hedge fund was given the report earlier. No doubt that hedge fund acted on the report, probably by shorting GE stocks. Info may have leaked beyond fund or others saw the fund activities and responded likewise.

Is GE still in the DOW? I think they were replaced a couple years ago. Even if no longer in the DOW, such news may have affected the market as these scandals have a way of spreading fear.

I agree they were replaced - I think 2 or 3 years ago. And yes, even though they are not part of the DOW, this would greatly affect the market, just as any other potentially cataclysmic event would.

 

[Obliviax]

General Electric has been one of the countries biggest and most influential companies for decades. It had holdings in just about every industry, is a major defense contractor, and for many years was considered a key indicator of the over all economy.

In recent years it has fallen dramatically. Poor investment choices, terrible management, and bad luck have made it a shell of its former self.

Now, the same guy that warned about the Madoff Ponzi scheme says that GE is about to collapse and has been misstating financials for several years. Both its energy division and its insurance unit are in terrible shape. Says that this will be bigger than Enron and Worldcom combined.

I'd be shocked, with the accounting reforms that have been put in place from enron, global crossing, etc. that there is an opportunity to really mislead. But I've been wrong before.

 

[Beachwineguy]

I think we are heading towards the big "R" word.

RutgersAl?

 

[Cletus11]

I'd be shocked, with the accounting reforms that have been put in place from enron, global crossing, etc. that there is an opportunity to really mislead. But I've been wrong before.

GE has been known to be playing accounting tricks forever. They are famous for hiring ex-IRS agents into accounting specifically to exploit all the loopholes. That being said, GE going down is bad for the USA. Talking about at one point arguably the greatest and most innovative company in the world. You look at great American companies that literally transformed the world and made the USA a dominant economic and world power like GE, Dupont, Kodak, Xerox that now are not. In the end, if you are not a leader in manufacturing, technology, engineering, business then you are eventually going to fall behind.

And yes, I think a recession is coming and not because of yesterday's sell off. The signs were there starting end of last year. Business is not spending money right now. Things are always cyclical and there was a bounce during the election year and post Trump and tax cuts but all that is coming to an end. I also fear this next recession is going to be much longer and much deeper than previous.

 

[psuro]

GE has been known to be playing accounting tricks forever. They are famous for hiring ex-IRS agents into accounting specifically to exploit all the loopholes. That being said, GE going down is bad for the USA. Talking about at one point arguably the greatest and most innovative company in the world. You look at great American companies that literally transformed the world and made the USA a dominant economic and world power like GE, Dupont, Kodak, Xerox that now are not. In the end, if you are not a leader in manufacturing, technology, engineering, business then you are eventually going to fall behind.

And yes, I think a recession is coming and not because of yesterday's sell off. The signs were there starting end of last year. Business is not spending money right now. Things are always cyclical and there was a bounce during the election year and post Trump and tax cuts but all that is coming to an end. I also fear this next recession is going to be much longer and much deeper than previous.

We had our 401(k) guys in yesterday. One of them referred to the tax cuts as a "sugar high". I thought that was appropriate.

 

[The Spin Meister]

Found an interesting Harvard analysis of GE under Jeffrey Immelt. I always thought that Immelt was a terrible CEO (Immelt....Emmert....coincidence?) They blame the problem on 'activist investors'.

Not sure I agree that this is the main reason as Immelt always seemed to be chasing what ever was the hot idea of the month. But it could point out a problem for all of corp America. These investors can be very disruptive and if they are just there to pump up stock prices that is very bad news.

 

[Sharkies]

I also fear this next recession is going to be much longer and much deeper than previous.

By what metric though? Consumption data doesn't support this, US economy moving right along at 2+%, wage growth is on track for 3% YOY... I just don't see it.

 

[Columbus_Lion]

If this report is true, I would be concerned about all the GE pensions out there.

 

[Obliviax]

The corrections are healthy and good, IMHO.

Janet Yellen was not so doom and gloom. A lot of the loss is due to China and trying to reign in decades of abuses by China on the world stage. She also notes why some current reporting doesn't align with historical performance (yield curve).

 

[Jovialgent]

The world today is full of smoke and mirrors. Business, sports, religion, education, politics...it's difficult to tell the good guys from the bad. My motto is to trust everyone at first, but always cut the cards.

 

[ForesterGump]

There's so much computer driven trading going on, its hard to tell whether a sell off is due to a bunch of computers firing things up or a bunch of actual investors heading for the exits. I'm leaning on these things being computer driven by some algorithm.

 

[indynittany]

General Electric has been one of the countries biggest and most influential companies for decades. It had holdings in just about every industry, is a major defense contractor, and for many years was considered a key indicator of the over all economy.

In recent years it has fallen dramatically. Poor investment choices, terrible management, and bad luck have made it a shell of its former self.

Now, the same guy that warned about the Madoff Ponzi scheme says that GE is about to collapse and has been misstating financials for several years. Both its energy division and its insurance unit are in terrible shape. Says that this will be bigger than Enron and Worldcom combined.

GE is in crony capitalism hell because it's no longer too big to fail.

 

[ThePennsyOracle]

This is what you get for not naming Jack Donaghy as CEO.

 

[sluggo72]

If this report is true, I would be concerned about all the GE pensions out there.

GE's pensions? Why worry about them? They are probably in better shape then 90% of all the public pensions out there, let alone the private pensions for things like Laborers Local 123 or Operating Engineers Local 526.
The pensions for things like school teach, public administrators etc in the state of Kentucky are like 10% funded. The good ones are all the way up to 30%, iirc.

 

[Fox Chapel Lion II]

Jack Welch and his hand-picked coffee-fetcher Jeff Immelt destroyed GE. GE Capital, instead of making small loans to people who wanted to buy a refrigerator, became their personal piggy bank. Ever wonder why, quarter after quarter, they always beat the estimates by a penny?

Now even Thomas Edison made mistakes, but there was always something particularly malignant about those two.

 

[Howie'81]

We had our 401(k) guys in yesterday. One of them referred to the tax cuts as a "sugar high". I thought that was appropriate.

Yeah, letting people keep more of the money THEY EARN is a sugar high.

 

[demlion]

Wonder if this news was leaked earlier - affected the stock market yesterday.

I think we are heading towards the big "R" word.

Oh, no, 'ro. We can't be headed for a recession. Somebody told me we would balance the budget and win a whole bunch of easy trade wars.

 

[LionJim]

This is what you get for not naming Jack Donaghy as CEO.

Nice.

 

[Woodpecker]

This is what you get for not naming Jack Donaghy as CEO.

I loved the way they used to bust on GE on that show (I was working for GE at the time).
"Hello. For over 100 years, G.E. has been imagining the future today. And I'm here to talk to you today about a wonderful new synergy. It's called product integration. It's revolutionizing the way we monetize broadcast television. How does it work? Simple. All you have to do as the writing staff of an NBC show is incorporate positive mentions, or "pos-mens," of G.E. products into your program. For example, you could write an episode where one of your characters purchases and is satisfied with... one of G.E.'s direct-current drilling motors for an offshore or land based project. Product integration -- setting a new standard in upward revenue-stream dynamics... for all of us."

 

[wbcincy]

Nice.

He still wouldn’t have been as good as Rip Torn.

 

[WestSideLion]

The world today is full of smoke and mirrors. Business, sports, religion, education, politics...it's difficult to tell the good guys from the bad. My motto is to trust everyone at first, but always cut the cards.

I went to Columbia Biz School with a few successful analysts. They echoed this and said so much “value” in our economy is based solely on rising P/E multiples in the market, not really on increased creation of goods and jobs. It’s complex.

 

[psuro]

Yeah, letting people keep more of the money THEY EARN is a sugar high.

I trust the words of people who manage money and do research instead of letting their political positions dictate their financial position.

 

[psuro]

The world today is full of smoke and mirrors. Business, sports, religion, education, politics...it's difficult to tell the good guys from the bad. My motto is to trust everyone at first, but always cut the cards.

My motto is trust no one and let them prove you wrong.

 

[nits74]

We had our 401(k) guys in yesterday. One of them referred to the tax cuts as a "sugar high". I thought that was appropriate.

Without a doubt. Also it's funny how we haven't heard as much screaming about the deficit these days.

 

[psuro]

Without a doubt. Also it's funny how we haven't heard as much screaming about the deficit these days.

Or at all. But, I digress....

There seems to be a general trend that the Big R word will be coming sooner than expected.

 

[jrd23psu]

Yeah, letting people keep more of the money THEY EARN is a sugar high.

Who are these people? I am middle class and those "tax cuts" didn't allow me to take home a single extra cent.

 

[Howie'81]

I trust the words of people who manage money and do research instead of letting their political positions dictate their financial position.

That's your first mistake. Those people are quite political themselves.

 

[Howie'81]

Who are these people? I am middle class and those "tax cuts" didn't allow me to take home a single extra cent.

Get a new tax accountant then. I'm guessing you live in a high SALT tax state.

 

[jrd23psu]

Get a new tax accountant then. I'm guessing you live in a high SALT tax state.

I live in Pennsylvania. The tax cuts were great, for the rich and big corporations. For the rest of us it didn't mean a thing. Same take home pay before and after. I claim 0 dependents on my W4 as well. The tax cuts were not for the middle class.

 

[Howie'81]

I live in Pennsylvania. The tax cuts were great, for the rich and big corporations. For the rest of us it didn't mean a thing. Same take home pay before and after. I claim 0 dependents on my W4 as well. The tax cuts were not for the middle class.

Hey, keep watching CNN. It's demonstrable that the tax cuts helped the middle class in several ways. For me, it was more or less neutral, but I live in NJ and work in NYC and pay SALT taxes out the *ss. Plus I do my own tax returns and see the numbers. If I lived and worked in a low SALT state, I most definitely would've paid less federal income tax and many people did.

 

[demlion]

I live in Pennsylvania. The tax cuts were great, for the rich and big corporations. For the rest of us it didn't mean a thing. Same take home pay before and after. I claim 0 dependents on my W4 as well. The tax cuts were not for the middle class.

Correct. They were for that portion of the middle class which is not clever enough to see they were lied to.

 

[Howie'81]

I live in Pennsylvania. The tax cuts were great, for the rich and big corporations. For the rest of us it didn't mean a thing. Same take home pay before and after. I claim 0 dependents on my W4 as well. The tax cuts were not for the middle class.

And the overall impact on the American economy has been very positive. Corporations employ people you know. Lower taxes make them more competitive with other nations. Means more jobs and more money in the economy. Simple stuff.

 

[Howie'81]

Correct. They were for that portion of the middle class which is not clever enough to see they were lied to.

And some people aren't clever enough to know that they don't know a damn thing about economics unless it's Marxist economics.

 

[AldenT]

By what metric though? Consumption data doesn't support this, US economy moving right along at 2+%, wage growth is on track for 3% YOY... I just don't see it.

Consumption data is a lagging indicator.

The 30-year treasury is the lowest it’s been in history. I’m sorry you “just don’t see it” but the apolitical fixed-income markets are blaring red. Ignore it at your peril.

 

[LionDeNittany]

Consumption data is a lagging indicator.

The 30-year treasury is the lowest it’s been in history. I’m sorry you “just don’t see it” but the apolitical fixed-income markets are blaring red. Ignore it at your peril.

Regardless of your political opinion when 30 year rates in Europe are at zero and millions of retirees in Japan need to save, there is really only one place for money. Us Treasuries.

That is ignoring the structural issues of pensions, variable annuities and other life products and other negative convex issues.

I appreciate that people want to read recession in the fixed income markets but there are many other factors involved.

LdN

 

[richie83]

Correct. They were for that portion of the middle class which is not clever enough to see they were lied to.

Wrong. But I guess you're referring to the people that don't work. And you're right, they didn't get a raise by way of lower taxes.

 

[AldenT]

Regardless of your political opinion when 30 year rates in Europe are at zero and millions of retirees in Japan need to save, there is really only one place for money. Us Treasuries.

That is ignoring the structural issues of pensions, variable annuities and other life products and other negative convex issues.

I appreciate that people want to read recession in the fixed income markets but there are many other factors involved.

LdN

Yes. The entire German yield curve is negative. Treasuries were rallying this morning when the equity market was also up. Brexit, (easy to win) trade wars, a manufacturing recession, softening job numbers...it’s not just a demand or relative value issue.