The Guest Blog

Yoshikami: GE's Earnings Are Proxy For Economy


GE reports earnings and we expect the results will be another confirmation that this recovery is real and that the gloomy outlook many strategists have should now be reassessed.

Looking at GE earnings is instructive not just to see the state of this company's recovery but also as a proxy for the overall economy.

With economic activity improving and interest rates remaining low, the seeds are planted for a stronger economic recovery than many predicted.

Look for bright spots in GE's earnings report, something we have not seen in many quarters. While they certainly will still highlight problems from loans in Europe and other problem debt assets, we believe that they will describe a loss scenario not as great as they had feared.

And with a tremendous stockpile of cash on their balance sheet, the company will likely proclaim that its financial standing is stronger than it's been in years. Watch for comments on how cash will be used in the future (dividends or acquisitions).

Issues of concern that remain include losses in Europe from frothy lending activities, currency exchange challenges and sluggish sales of big ticket items. The company will likely provide clarity on these issues and investors should take note of short and long term pronouncements on these issues.

CEO Jeff Immelt continues his goal of remaking GE to reflect a more global oriented model after selling numerous businesses that do not meet the company's long term vision. Credit should be given to management as they have remade a massive company and are taking proactive actions to address long standing problems in GE's company portfolio.

Sebastien Bozon | AFP | Getty Images

Navigating through choppy waters for a company of this size is not easy and while they certainly have had missteps, credit should be given to the actions taken.

In corporate America, there are too few firms willing to address core issues and take decisive action and GE has done just that.

We expect this quarter's earnings to be surprising and provide confidence to investors. GE is becoming a global infrastructure company with a more reasonably sized financial services division.

Not everyone will agree with all the actions taken by this high profile company. Still, at least a clear statement and vision has been laid out by management to remake itself for the 21st century.

(GE is the parent company of NBC Universal, of which CNBC is a part. Comcast has agreed in principal to buy the majority ownership of NBC Universal, from GE.)

Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm ( He oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. Michael and YCMNET were ranked as one of the top 100 investment advisors in the United States for 2009 by Barrons. He appears regularly on CNBC and CNBC Asia and can be reached directly at