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A lot of traders think that GE’s (GE) financial results will be badly damaged by trouble at its GE Capital unit. The worry has the conglomerate’s stock trading at $24.70, below its 52-week low. The period high is $42.15.
According to Reuters, "The cost of protecting General Electric Capital’s debt with credit default swaps rose to 348 basis points from 209 basis points on Friday, according to Markit Intraday. That means it now costs $348,000 a year to protect $10 million of GE Capital’s debt."
GE Capital may not be the only unit at the company facing trouble. If the economy continues to slow here and in Asia, the earnings at the firm’s huge infrastructure unit, the company’s growth engine, could also be undermined.
Douglas A. McIntyre
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