General Electric News - The Last Straw (NYSE: GE)

By The Greek - Economy and Markets

Wall Street Greek reports on corporate events regularly, so to see the most recent news, please visit our front page. Based on recent events and the way things have fallen into place, there seems a very good chance that General Electric (NYSE: GE) could have miserable news to report on Friday.

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Why would a company recruit Warren Buffet to invest $3 billion dollars? Well, just about every company in existence would like to have the vote of confidence that Buffet's dollars represent. That $3 billion count, then allowed GE to turn to the open market and find enough demand for another $12 billion of needed capital.

Now answer me this... Why would a company raise $12 billion, a week and a half before its earnings report? Why would that same company schedule its report for a Friday, ahead of a long weekend? Now, I haven't paid close attention, but I believe this might not be abnormal for GE; however, it is irregular for any corporate earnings report to reach the wire on a Friday. Companies that report news on Friday afternoons, for instance, are typically trying to bury it. Also please forgive me for not writing this article when the idea first hit me, but such is Mango.

Anyway, there seems a good chance General Electric will have bad news to report on Friday. GE recently reduced its full year earnings guidance, and its Q3 consensus estimate figure has come down nine cents over the past three months. That's a lot! The consensus estimate for Q3 now stands at $0.45, according to Thomson FN and Yahoo. You'll recall that the company made its number last quarter, but missed for the first time in memorable history in March. CEO Jeff Immelt came under heavy criticism because he had made a positive statement just weeks before that report. You'll recall that even Jack Welch, the iconic ex-chief of General Electric, tore Immelt to shreds that day on CNBC.

"The weight of the world sits on the back of General Electric's EPS report on Friday."

All signs point toward a bad report on Friday, and considering what happened Thursday, should we call that "the last straw?" If, however, GE were to miraculously do less horribly than expected, it might give cause for rally. Thus, the weight of the world sits on the back of General Electric's EPS report on Friday. I'm sorry to say, my feeling is this will be the straw that broke the camel's back. I hope not though.

Emergency Closure is Possible

Believe it or not, an emergency closure of the stock exchange is possible tomorrow, depending on just how bad the selling gets, if it gets going again. With the weekend ahead, and a long one at that, the government might decide it's a good time to let cool heads take a breath and possibly prevail as a result. The stock exchange is open on Columbus Day nonetheless, but even that seems in doubt now. Closing a stock exchange is considered taboo, even counterproductive. However, a lot of other things that were also not supposed to happen in a capitalistic democracy have occurred. Welcome to bizarro world, where down is up and up is nothing.

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