The Promise of GE’s Split Into Three Separate Parts


To the Editor:
Those who hate General Electric stock at these levels must be short (“GE’s Big Split,” Cover Story, Aug. 5). I have confidence in CEO Larry Culp’s ability to drive this conglomerate into three separate companies that, when all is said and done, will generate an acceptable (that is, better than the overall market) investor risk/return profile. Call me an optimist, but I’m not giving up.

To the Editor:
Having been burned severely by holding GE stock and subsequently selling it at a loss, I believe this is a “show me” story. There are several carcasses of big companies on the “turnaround-story trail,” such as IBM and AT&T, which should provide ample caution to future investors before taking a plunge into GE’s stock. You can’t resurrect the Titanic by melting an iceberg or cutting it into three parts.

Michael Martin, Chatham Township, N.J.

The Labor Force

To the Editor:
There were at least two references in last week’s Barron’s about the low unemployment rate, and one in our local paper, which also stated that the unemployment rate was the lowest in 50 years. Randall W. Forsyth got it right, but everyone else left the report to be interpreted as great news (“Job Boom Means There Is No Recession. It Also Boosts Pressure for Rate Hikes,” Up & Down Wall Street, Aug. 5).

Forsyth pointed out that the rate is calculated including a reflection in the dip in the labor-force participation rate. As long as people are being paid not to work, it is easy to lower the unemployment rate, because if you aren’t looking for a job, you aren’t included among the unemployed.

I think it was Benjamin Disraeli who first said there are lies, damn lies, and statistics. The fact is, the labor-force participation rate is the only measure of economic health because it is a measure of production, which is also a measure of demand.

The last time I looked, the labor-force participation rate left much to be desired.

Louis Levy, San Antonio

The Fed Begins to Act

To the Editor:
Above my pay grade, but it is interesting and encouraging to know that the Federal Reserve will let more securities roll off its balance sheet (“The Fed Is About to Ramp Up Balance-Sheet Shrinkage. It May Get Dicey,” The Economy, Aug. 5).

I would like to know when it will start selling junk bonds and municipals. That upsets me, as the Fed should not be buying corporate bonds. What’s next? Equities? Convertible bonds turn into equities, right? Getting too close to the fire there.

Also, what if the Fed is buying Chicago pension bonds? Is it now bailing out irresponsible cities?

Well, as Lisa Beilfuss points out, the Fed is starting to do something. I hope it will follow through. It is interesting that Beilfuss is the only one talking about this.

Ray Noack, On Barrons.com

Stock-Picking Advice

To the Editor:
Great words by Neuberger Berman’s Eli Salzmann in the interview with Lauren Foster (“A Recession Is Coming. These Are the Stocks to Hunker Down In,” Aug. 4). Salzmann recommends buying a company that’s earning below-normal returns and has a catalyst, something that’s going to change it and take earnings from below normal back to normal, or even above normal.

This is the best stock-picking advice you could ever get.

Rohit Bhosekar, Harrisburg, N.C.

Define Recession

To the Editor:
Reading “This Labor Market Looks Nothing Like Most Recessions” (Other Voices, Aug. 5) was a refreshing change from the standard gnashing of teeth from the doom-and-gloom crowd. Call me naive, but we have never had recessions when the unemployment rate was 3.5% and unfilled jobs were at the current level. Working people have money to spend, and it is the lack of spending that causes recessions.

But what about the inverted yield curve? Who cares? The yield curve is the summation of the expectations of investors and largely based on their anticipation of a replication of previous occurrences. If we had previous recessions while experiencing the same economic conditions as we have today, perhaps the yield curve might tell us something useful. But we don’t, so let’s ignore a signal that only has as much relevance as the famous prognostication based on whether the Super Bowl winner was from the original National Football League or a later entry.

Anyway, when the Federal Reserve starts to unwind its portfolio, it will drive up long-term interest rates.

David Ingraham, Calsbad, Calif.

To the Editor:
Of course, we are in a recession. Our national output has dropped two quarters in a row, and U.S. workers are finding their paychecks covering less and less of their expenses each month.

ZipRecruiter chief economist Julia Pollak cited high and accelerating “nominal wage growth” as a signal that we aren’t in a recession. That is misleading and illogical. Would you rather have 2019’s 3% wage growth and 1% inflation, or our current 5% wage growth and 9% inflation? Ask a bus driver in Buenos Aires who got a wonderful 25% nominal raise how he/she feels in a world of 65% inflation.

When the average American worker falls further behind each month, the only word to describe it is “recession.”

Philip Nassos, Naperville, Ill.

Send letters to: mail@barrons.com. To be considered for publication, correspondence must bear the writer’s name, address, and phone number. Letters are subject to editing.



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2022-08-12 15:15:00

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