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The furor over GE's accounting underscores how companies are struggling to price for the future at a time when people are living longer.
Fitch Ratings’ annual report on long-term care insurers ranked GE second on its list of the 16 riskiest LTC insurers. GE stock fell 3.18% on the news.
The U.S. State Department has approved a possible $8 billion sale of F-16 fighter jets to Taiwan, the Defense Security Cooperation Agency said on Tuesday in an official notification to Congress. It said the sale serves U.S. national, economic and security interests and would help Taiwan maintain a credible defense. China has already denounced the widely discussed sale, one of the biggest yet by the United States to Taiwan, which Beijing considers a renegade province.
The bullish start to the week fizzled out on Tuesday, despite mostly-optimistic chatter. Credit Suisse's "recession dashboard" says there's not one in sight. "Key signals such as labor and credit trends remain quite healthy," explains Credit Suisse chief U.S. equity strategist Jonathan Golub.And, while he laments it, fund manager Kyle Bass made the case that central banks are going to continue doing anything and everything they can to keep the global economy propped up. JPMorgan's global head of quantitative and derivatives strategy Marko Kolanovic even went as far as saying last week's temporary inversion of the yield curve wasn't the cause for worry it might normally be.InvestorPlace - Stock Market News, Stock Advice & Trading TipsDisruption in Europe may have been the crux of the weakness. The United Kingdom may postpone the selection of the Bank of England's next governor until after Brexit, though Brexit itself remains up in the air. In Italy, Prime Minister Giuseppe Conte announced his resignation, simultaneously criticizing Deputy Prime Minister Matteo Salvini for calling for the no-confidence vote that led to his exit.Both cast a cloud of uncertainty over Europe, which was already struggling to maintain economic growth. * 10 Undervalued Stocks With Breakout Potential All told, the S&P 500 snapped a three-day win streak with its 0.53% setback on Tuesday. The Dow Jones Industrial Average wasn't quite as damaged, falling 0.37%, while the NASDAQ Composite ended the day 0.45% lower. Top News in the Stock Market TodayIt had little impact on shares, but it's a developing story that could matter more in the future. That is, on Tuesday, a string of personnel exits from the healthcare arm being developed by Apple (NASDAQ:AAPL) was thrust into the spotlight. The report named six key people who'd left the company in recent months, reportedly frustrated about the direction Apple's health business was moving. Some employees interviewed anonymously suggested tensions had been mounting for some time. The disruption calls into question how much traction Apple's health initiatives will garner in the foreseeable future.Walt Disney Company (NYSE:DIS) joined General Electric (NYSE:GE) as a recent accusee of misleading accounting, though in this case, the red flag is being waved by a former insider. Sandra Kuba, formerly a senior financial analyst with Disney that was terminated in 2017, suggested the entertainment giant had habitually reported more revenue than it had actually generated. Kuba went as far as to formally inform the Securities and Exchange Commission.Walt Disney denied the accusation, and given the small gain DIS stock mustered on an otherwise bearish day, investors aren't concerned.Investors are concerned about Sarepta Therapeutics (NASDAQ:SRPT), however, after the Food and Drug Administration responded to its most recent drug approval request with less than open arms. The FDA sent a so-called Complete Response Letter to Sarepta regarding concerns and questions it had about its Duchenne muscular dystrophy drug that's been in development for years.The letter is not a rejection, but it does suggest the FDA is so far unconvinced that the drug is worth greenlighting. SRPT stock fell more than 15% on the news. Big MoversDespite its clear capacity to put and keep itself in the spotlight, "meatless" meat company Beyond Meat (NASDAQ:BYND) hasn't impressed the analyst community. Until Tuesday, no analyst was willing to call the stock a "Buy" … that is, until today. JPMorgan analyst Ken Goldman upgraded BYND stock to that rating, explaining "We are encouraged that velocity -- sales per distribution point -- has been the primary driver of recent acceleration, as it suggests the products are catching on with consumers."The call pushed Beyond Meat shares up by more than 6%.It's not much of a household name, but for households that own a piece of electronics manufacturer Cemtrex (NASDAQ:CETX), that stake is worth 36% more today. Shares jumped nearly 30% in regular-hours action on Tuesday following an impressive second quarter report that saw an additional 6% advance in after-hours action. The promise of real profits within the next few quarters fanned the bullish flames.Not every big mover was necessarily a winner though. Madison Square Garden (NYSE:MSG) tumbled nearly 9% after the company's second-quarter bottom line fell short of estimates. Its new project in Las Vegas is proving costly but not fruitful.As of the time of this writing, James Brumley did not hold a position in any of the aforementioned securities. To learn more about James, visit his site at jamesbrumley.com, or follow him on twitter at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Stock Market Today: Beyond Meat Makes a Friend on Wall Street appeared first on InvestorPlace.
Betting against General Electric Co stock has increased in the last week as the stock has fallen following a report by fraud investigator Harry Markopolos that questioned the conglomerate's accounting, financial analytics firm S3 Partners said on Tuesday. Short sales, or bets that GE's stock price will fall, rose 13.5% to $14.3 million in the last week and 20.7% to $20.6 million in the last month, Ihor Dusaniwsky, managing director of predictive analytics at New York-based S3 Partners, told Reuters. GE stock closed down 3.3% at $8.38 on Tuesday, and is down about 7 percent since Markopolos's report came out last Thursday.
U.S. stocks started the week with a bang on Monday amid improved forecasts regarding the trade war with China and news of a potential government stimulus. As confidence has returned, investors are searching for stocks that will emerge as the winners from the market boost. New York brokerage firm, Wolfe Research, points to General Electric (GE) and J.P. Morgan (JPM) as two potential winners who can outperform the market over the next 12 months. Let's take a closer look: General Electric (GE)Despite recent turbulence, one top analyst argues that the bears should take note of all of the progress GE has made in the past six months.GE has placed a strong focus on meeting its balance sheet goals. Not only has the company fully liquidated its Wabtec stake, but it’s also likely that GE will finalize the sales of its Bio-Pharma and Baker Hughes segments in the next twelve months. Wolfe Research's Nigel Coe, a four-star analyst according to TipRanks, believes that GE can make a significant dent in its $20 billion pension deficit, retire its $6 billion in preferred stock and $10 billion of fund insurance obligations, all with the $32 billion of surplus capital that is being realized.As a result, Coe reiterated his Buy rating on GE stock, with a $14.00 price target, which implies about 67% upside from current levels. (To watch Coe's track record, click here)The stabilization of the worldwide power market has also had an effect on GE. According to industry data firm McCoy, the power market could reach about 40GW of capacity orders this year, compared to expectations of sub-30GW. This has allowed the company to achieve quarter-over-quarter and year-over-year growth in its power backlog as well as HDGT backlog build. This means that it’s likely GE will be able to deliver more than the 40 to 45 gas turbines designated for 2019 and 2020.Furthermore, some investors have expressed concerns regarding CFO Jamie Miller’s departure as well as the $1.2 billion of working capital pressure from the grounding of the 737 MAX jets. However, Coe argues that these risks don’t change GE’s long-term growth narrative.Coe concluded: “While we acknowledge a higher pension deficit and slightly more conservative long-term GE Capital funding requirements, risk/reward remains skewed to the upside and the stock is now re-energized as a fresh money idea.”All in all, this troubled industrial giant certainly has the Street divided. Based on 9 analysts polled by TipRanks in the last 3 months, 3 rate a Buy on GE stock, 3 suggest Hold, while 3 recommend Sell. The 12-month average price target stands at $9.42, marking about 12% upside from where the stock is currently trading. (See GE’s price targets and analyst ratings on TipRanks) J.P. Morgan (JPM)Even with the possibility of interest rates being cut further, Wolfe Research is still betting on this banking stock.According to five-star analyst, Steven Chubak, JPM should be able to offset negative impacts of low interest rates and the trade war based on its volume growth.As a result, Chubak reiterated a Buy rating on JPM, with a price tag of $120, suggesting the stock can rise just over 10% from current levels.“We believe the impact from lower rates should be largely offset by volume growth as JPM should continue to benefit from strong organic growth in IEA, which has been a significant driver of net interest income expansion in recent years,” Chubak explained.Another threat to JPM is the possibility that the economy could enter into a recession. That being said, management stated that they believe recession fears are overblown based on the current low unemployment rate, healthy housing market and high consumer confidence.Even so, the company has made itself more defensible as it has placed a significant focus on growing the payments segment of the business. JPM recently launched its cryptocurrency, JPM Coin, as well as expanded Chase Paymentech or its payment processing service. While it does face intense competition, Chubak points out that many of these competitors will likely use their platforms to serve banks as opposed to working against banks.Chubak concluded, “We argue that JPM’s best-in-class organic growth, strong management team, and better performance track record in periods of stress justify a higher late-cycle multiple. We believe that JPM has room for further upside on returns as newer growth initiatives within Payments and Retail Brokerage scale.”The rest of Wall Street largely buys into what this banking giant has to offer, as TipRanks analytics reveal JPM as a Moderate Buy. Out of 9 analysts polled in the last 3 months, 6 are bullish on J.P. Morgan stock while 3 remain neutral. With a return potential of nearly 14%, the stock’s consensus target price stands at $122.11. (See JPM's price targets and analyst ratings on TipRanks)
The center, a partnership with GE Healthcare, features 20 artificial intelligence apps, 38 large screens with some being touch screens that help track and monitor rooms and a patient's progress.
"My biggest worry is that GE would demo everything, plant grass, put a fence around it and do nothing with it. That is a prime piece of real estate in the town," says town supervisor Terry Middleton.
(Bloomberg) -- General Electric Co. has “very high” exposure to the long-term care insurance market and is worse than average when it comes to the adequacy of reserves tied to those policies, according to Fitch Ratings.Genworth Financial Inc., which was spun off from GE in 2004, and Unum Group also are below average, Fitch said Tuesday in a report that analyzed the assets backing reserves that fund future cash flows for long-term care businesses. GE said its current reserves are “well-supported” for its long-term care portfolio. Insurers in recent years have been burned by the policies, which pay for home health aides or nursing-home stays, amid higher-than-expected costs and low interest rates.“Exposure to the long-term care market remains a plague,” Anthony Beato, director of insurance at Fitch Ratings, said in a statement. “It continues to be a risky product despite the adoption of more conservative reserving philosophies that more closely align to its volatile liabilities.”The policies are among the riskiest products at U.S. life insurers because of their volatility, high capital requirements and sensitivity to interest-rate risks, according to Fitch. The ratings company expects insurers to add more funds to back the policies in the near to immediate term.GE has been grappling with issues from an old book of insurance contracts, announcing a $6.2 billion charge in 2018 tied to that portfolio. Harry Markopolos, the fraud examiner known for calling out Bernie Madoff, released a report last week that slammed GE’s insurance accounting and its holdings in oil-services company Baker Hughes.He said GE will need to boost insurance reserves by $18.5 billion immediately in cash and take an additional noncash charge of $10.5 billion when new accounting rules take effect. GE pushed back, with Chief Executive Officer Larry Culp calling the claims “market manipulation.”The reserve issues have hammered GE shares, which have dropped more than 50% since the beginning of last year. Markopolos’s claims sent them down 11% on Thursday, though they’ve since reversed some of that decline. The stock slipped 3.2% to $8.39 at 2:10 p.m. in New York.GE has been seeking to reassure investors. The company said Monday in a post from Steve Winoker, the vice president of investor communications, that its role as a reinsurer means it won’t be responsible for 100% of every claim on every life. Goldman Sachs Group Inc. analysts said Tuesday in a note that GE appears to hold high reserves compared with competitors.“Our current reserves are well-supported for our long-term care portfolio characteristics,” GE said Tuesday in an emailed statement. “Our future liabilities depend on variables that will play out over decades, not years, and are assessed using rigorous annual testing processes, sound actuarial analysis and the application of regulatory and accounting rules.”A spokeswoman for Unum said in an email that the insurer is focused on its strategy which includes effectively managing the long-term care business.Julie Westermann, a spokeswoman for Genworth, said in an emailed statement that the insurer has been working to improve the legacy long-term care business and believes its reserving process is appropriate. Genworth has boosted premiums and will seek more increases in coming years, she said.(Updates with shares, Goldman report, company comments starting in seventh paragraph.)\--With assistance from Richard Clough.To contact the reporter on this story: Katherine Chiglinsky in New York at email@example.comTo contact the editors responsible for this story: Michael J. Moore at firstname.lastname@example.org, Dan Reichl, Daniel TaubFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The heads of nearly 200 U.S. companies said Monday they are committing to a move away from the idea that the main purpose of a company is to maximize shareholder value, marking a break with a long-held conviction.
The report comes days after investigator Harry Markopolos accused GE of tens of billions of dollars of fraud stemming from its long-term care insurance business.
After forensic accountant Harry Markopolos savaged General Electric’s accounting procedures in a report that sank the stock, GE got some good news from Goldman Sachs.
If you're a regular InvestorPlace reader and own shares of IBM (NYSE:IBM), you might be familiar with some of my articles criticizing CEO Ginni Rometty. She's a big reason I wouldn't own IBM stock. Source: JHVEPhoto / Shutterstock.com There are other reasons, including Warren Buffett selling the last of his International Business Machines stock on May 2018 after a costly seven-year hold, but it is Rometty's eight-year run as CEO that I believe more than anything has destroyed IBM's chance at regaining its former glory. While I freely admit I don't know Rometty and wouldn't recognize her if I ran into her on the street, I do believe her technology chops aren't up to speed to other women working in the industry. Her background, for better or worse, is in sales and marketing, not technology. InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Undervalued Stocks With Breakout Potential Sure, she recognized Red Hat was an excellent way to springboard IBM's cloud ambitions, but almost anyone in her position would be fully aware of the acquisition opportunities out there.In my last article about IBM, I facetiously suggested that General Electric (NYSE:GE) should merge with IBM so GE CEO Larry Culp could run the combined entity. "Larry Culp is a proven winner. Ginni Rometty has done nothing in her 7.5 years as IBM's CEO to demonstrate that she has the technology chops or the leadership qualities necessary to reignite the company's former penchant for innovation," I wrote July 26. "I'm not saying IBM hadn't already lost its innovation spark before Rometty became CEO in January 2012, but she's been at Big Blue for most of her career. If she were going to make IBM great again, she would have already done it."Not only is Rometty past her best before date, but she has assembled a board over the last eight years that's ancient by almost every standard. Technology companies are supposed to be young and innovative; the IBM board is anything but.If IBM is to regain its former glory, not only should Rometty step down as CEO, but they ought to recruit some younger directors. Until both of these things happen, the IBM stock price won't see $200 for a very long time. Here's why. The Average Age of the BoardIn 2019, IBM appointed two new directors to its board, both women, one of whom is African American. The move is to be applauded. However, the age of the two directors is 58 (Admiral Michelle Howard) and 60 (Martha E. Pollack). The average age of the 12 IBM board members, including the two new appointees, is 64, one year less than the traditional retirement age. While I understand it's hard to recruit younger candidates because they're still in the prime of their careers, I do believe that a company trying to get its mojo back should bend over backward to make that happen in order for IBM stock to excel. How old is the average director at Square (NYSE:SQ), considered a financial services disruptor? It's 55, almost a decade younger. In fact, four out of 11 of Square's directors are younger than 50 with just one over the age of 70. Just as Ginni Rometty, Square CEO Jack Dorsey is also Chairman. However, Dorsey co-founded Square; Rometty's merely worked at IBM for 38 years. At the very least, the Chairman's role at IBM should be separate from the CEO. In January 2018, I even suggested that Rometty moves into the Executive Chairman's position, hiring an entrepreneurial CEO to lead its turnaround. That never happened. Instead, Rometty went for the Red Hat Hail Mary. The Bottom Line on IBM StockIf you look at IBM's roster of directors, none of them have high tech experience. Sure, all of them have used technology in their specific careers, but no one stands out as a real go-getter in the tech industry. At least Square has several directors that have serious tech venture capital experience that allows them to understand the technical aspects of the company's business better. You would think that a company with a market cap of $120 billion would be able to find one or two directors with real-world tech experience. Given the current composition of IBM's board, I don't see how it's going to work through the Red Hat integration successfully. Until the board gets younger and more technically bent, I remain skeptical of IBM stock's chances. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post IBM Just Canat Compete With Current BoardÂ appeared first on InvestorPlace.
General Electric Co (NYSE: GE ) stock initially took a big hit last week following accusations of rampant fraud by former Bernie Madoff whistleblower Harry Markopolos, but one analyst says the allegations ...
General Electric Co ranks among the riskiest backers of long-term care insurance, suffering from both high exposure to claims and a relatively small cash pile to pay them, Fitch Ratings said in a report on Tuesday. The Fitch report, which the credit rating agency produces annually, echoed concerns raised last week by financial investigator Harry Markopolos, who estimated that GE has under-reserved by $29 billion for its long-term care policies.
Following through on Friday's bullishness, more hope on the trade front spurred the S&P 500 up to the tune of 1.21%. The move left behind a gap, though, and still left the index under a couple of key moving average lines that could be resistance.Source: Shutterstock Chinese stocks led the charge. Enthused about the prospect of rekindled trade between China and the United States, Baidu (NASDAQ:BIDU) rallied nearly 8% during the regular session headed into its post-close earnings report. But, shares jumped nearly another 9% on numbers investors liked.Iqiyi (NASDAQ:IQ) was up almost 6% during yesterday's regular-hours session, but didn't see the same post-close fate as Baidu. IQ stock fell more than 9% after Monday's closing bell rang. Revenue came up short of expectations and guidance was less than thrilling as well.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHolding the market back was General Electric (NYSE:GE), down 1.4% as investors continue to grapple with recent accusations that its balance sheet under-reflected its true risks. * 15 Growth Stocks to Buy for the Long Haul As for names worth a closer, trading-oriented look headed into Tuesday's session, check out the stock charts of Lowe's (NYSE:LOW), Procter & Gamble (NYSE:PG) and Twitter (NYSE:TWTR). Here's what's most noteworthy. Twitter (TWTR)It has been incredibly erratic action, but progressive action nonetheless. That is, Twitter shares are being guided upward, squeezed toward the narrowing tip of an ascending wedge pattern. More recently, TWTR stock has been finding support at levels that suggest the buyers are working on forcing a breakout.That won't be easy, particularly given how overbought Twitter shares are since the bottom made in early 2017. But, the pattern that has taken shape thus far isn't atypical of initial public offerings. Every one has to fall apart sooner than later, but most everyone eventually shrugs it off and works its way into a bullish mode. * Click to EnlargeThe bigger-picture in only evident through the long-term lens of the weekly chart, framed by light blue lines. The upper boundary of that pattern currently rests at $44.70. * Zooming into the daily chart another wedge becomes evident. Framed by red dashed lines, a rising trading range has materialized. There's still room for wide swings though. * Since May, the gray 100-day moving average line and the purple 50-day line have both stepped up as technical support. * Although it's not ideal, the weekly chart also suggests a pretty good cup-and-handle pattern. The brimline, of course, is the ceiling that connects all the major peaks going back to mid-2014. Lowe's (LOW)Lowe's shares haven't made a straight line to their current price since finding a bottom in 2009. In fact, there has been nothing straight about LOW stock for years. But, a well-established bullish trend line has kept the overarching advance intact. The up/down action, in fact, has been oddly reliable for years.Something has changed just within the past few weeks, however, that could finally snap the winning streak. On the other hand, that would require one final but significant technical floor to buckle. The stock could reach that inflection point sometime as early as this week. * 10 Undervalued Stocks With Breakout Potential * Click to EnlargeIt's evident on both stock charts, but more perspective is seen on the weekly chart. That is, Lowe's shares brushed a long-standing floor last week, marked in yellow and tried to push up and off of it. * Although that has been where LOW stock has bounced every pullback thus far, in July, shares made their first lower high in years. That happened the first time after Lowe's shares failed to move above a major peak. That's the horizontal ceiling around $118, marked in blue on both stock charts. * It's subtle, but telling that each MACD peak and subsequent crossunder since the beginning of 2018 has been lower than the last. That points to fading bullish efforts. Procter & Gamble (PG)At the beginning of 2018, most investors had doubts about Procter & Gamble. Although relatively new, David Taylor was capable, but it appeared the company might be beyond anybody's help.The tide turned in a convincing way by the middle of last year though, resulting in a rebound effort that has been tightly defined by a narrow trading range. Although overbought and ripe for a pullback, until it's clear the lower boundary of that range is no longer holding up, the advance has to be respected. That's especially true given the circumstances that have taken shape of late. * Click to EnlargeThe rising trading range is marked with a yellow line on top and a red line on the bottom of both stock charts. It has poked above the ceiling a couple of times, and bumped it yesterday. * The weekly chart offers some needed perspective, but it also shows us something fairly new. That is, the RSI indicator is now deep into overbought territory, thanks to an unusually persistent advance. * Although the 70% gain since mid-2018 leaves P&G shares vulnerable to a pullback, that doesn't inherently mean one will materialize. Notice that the weekly bullish volume bars are, for the most part, on the rise.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post 3 Big Stock Charts for Tuesday: Twitter, Lowe's and Procter & Gamble appeared first on InvestorPlace.
General Electric Co ranks among the riskiest backers of long-term care insurance, suffering from both high exposure to claims and a relatively small cash pile to pay them, Fitch Ratings said in a report on Tuesday that sent GE's shares tumbling. The Fitch report, which the credit rating agency produces annually, echoed concerns raised last week by financial investigator Harry Markopolos, who estimated that GE has under-reserved by $29 billion for its long-term care policies. GE shares were down more than 3% at $8.40.
Shares of General Electric Co. fell Monday, as the big bounce of last week’s lows lost some steam, while the industrial conglomerate continued to defend itself from last week’s attack by a short seller.
The following are the top stories in the Wall Street Journal. - Twitter Inc and Facebook Inc suspended accounts they believe to be part of a Chinese effort to undermine antigovernment protests in Hong Kong, marking the first time the companies have pointed to China as a source of disinformation campaigns, company representatives said on Monday. - Drugmakers Endo International Plc and Allergan Plc are in talks to avoid going to a landmark trial set to begin in October over the opioid crisis, according to people familiar with the matter.
The Kansas Insurance Department’s news release says it takes allegations of fraud seriously, but adds that the Markopolos report doesn’t take all information available to the regulator into consideration.
Insider purchasing was seen at companies favored by Carl Icahn and George Soros last week. The CEO of an industrial giant put his money where his mouth is as well. Conventional wisdom says that insiders and 10% owners really only buy shares of a company for one reason -- they believe the stock price will rise and they want to profit from it.