This past Friday’s earnings announcement by General Electric and the resultant sharp decline (2%) in the major U. S. equity indices has caused a reevaluation of the recent sanguine outlook for the U.S. equity markets by many market analysts. GE’s earnings were a surprising disappointment with continuing earnings declining by 12% from year earlier levels. Company guidance as recently as a month ago had indicated a strong gain in excess of 12% in first quarter earnings. The negative earnings surprise has many negative connotations for the U.S. and worldwide economies and capital markets.

First, GE is one of the world’s best managed and successfully diversified companies. It is unprecedented for this company to report such weak earnings without ... Log in to view full article.