Friday, April 11, 2008

GE Throws Market a Curveball

Big surprise today with GE's announcement. GE appeared to be executing well, as told to us less then a month ago by their management. Either one of two things happened: 1)They lied in March, or 2) The market has significantly deteriorated since then. I'd say its mostly scenario 2. They probably saw some weaker results early in the quarter, but figured things would iron out as the marked calmed down. Didn't happen. Lots of unhappy money managers today. Anyone stop and think how many mutual funds own GE? Many have it as their largest holding? As I write, the stock is down 10%.

Consumers are completely spooked right now. And who wouldn't be? Has anyone seen the news lately? Any person who casually follows economic trends, and gets most of their information from the nightly news, has to believe we are in for a bad stretch. I've said this before, but the media doesn't realize their role in this. They make the same money or more if there is bad news. It makes for good ratings. But they are helping to weaken consumer confidence, which negatively affects the economy.

First UPS, and now GE. Two companies which represent good broad indicators of the US economy have given bleak reports. Not a great sign.


Anonymous said...

You have objectively summarized it. I think the media is doing it for political reasons (poor economic conditions help the democrats -- helped Bill Clinton in 1990’s, "It's the economy stupid").

Michael said...

It is possible that there are political motivations behind it. To me, the biggest reason is the media's problem with sensationalizing every story. Everything must be a "crisis" or "collapse" to catch headlines now. So in an effort to make headlines, they aren't realizing the implications their stories have on consumer confidence.