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.