by Bill Holter, Miles Franklin:
No, we’re not talking about 4G phones, nor God, gold, guns and grub. Today let’s look at GE, Greece, and finish with a very interesting Germany and Gazprom. Last week GE shocked the market place by announcing they will sell their crown jewel GE Capital. Why would they do this? Isn’t GE capital their growth engine? Isn’t it their cash cow? What could they possibly be thinking? In my opinion they are “thinking” correctly, maybe a bit too late though.
The plan is to offload the finance division and pay a very large cash dividend to shareholders. In my opinion they are calling “top” to the entire paper bubble now enveloping the world. Maybe some sanity circulated the halls of their Fairfield Ct. home office and they decided the stone has no more blood to be squeezed? Think about the macro situation, can interest rates go any lower from here? What will happen to their “book” when interest rates start to rise? What about their derivatives book? I believe it is possible someone looked at this and figured out either they will be defaulted on or they themselves cannot perform somewhere?
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