Stocks discussed in Jim Cramer’s Stop Trading! TV program, Thursday December 18.
General Electric (NYSE:GE)
Cramer discussed Standard & Poor’s negative outlook in General Electric’s credit rating. S&P’s managing director, Scott Sprinzen said GE has a one in three chance of a credit downgrade in the next three years. While GE is not on credit watch, Spinzen warned of earnings pressure and the need for funding at GE Capital and admitted “it is going to be a pretty severe credit cycle.” However, if GE were to make a $5 billion net income for 2009, reduce commercial paper and be more conservative with capitalization, “chances are we could move back to a stable outlook,” said Sprinzen. Cramer asked why the S&P’s report was released after GE raised capital rather than before. Sprinzen says the S&P is busy reviewing a number of companies and the report could have happened any time in the last 18 months. “There’s nothing magical about today,” Sprinzen said.
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