14 BARRON’S March9,
REVIEW
25,864.
Dow Industrials:+455.
Dow Global Index:+1.
0.71%
10-year treasury note:-0.
Jack Welch’s
Long Shadow
Jack Welch, who transformed General Electric—the
company founded in part byThomas Edisonin 1892—
during his 20 years as CEO, died last Sunday at 84. “To-
day is a sad day for the entire GE family. Jack was larger
than life and the heart of GE for half a century,” said
GE CEO Larry Culp in a statement toBarron’s. “He re-
shaped the face of our company and the business world.
Jack was a strong and constant influence throughout my
career, despite never having worked directly for him.”
Welch took over at GE in 1981 and retired in 2001. He
was controversial; his critics called him “Neutron Jack”
for his propensity for layoffs. But investors loved him. A
thousand dollars invested in GE over Welch’s tenure
would have become about $85,000. The same money put
into the S&P 500 would have been worth about $20,000.
Still, some critics blame Welch for planting the seeds of
GE’s later decline. Since the start of 2001, GE has lost
investors about 4% a year, on average, trailing U.S. mar-
kets by about 10 percentage points annually. Big bets on
financial services and power generation struggled. New
management has a tendency to clean out the fridge: GE
has taken about $27 billion asset writedowns over the last
decade. Welch may have been responsible for some, his
successors for others.
The debate over GE, and Welch, continues. A day after
his death, one of GE’s biggest bears, JPMorgan’s Stephen
Tusa, relented a bit on its comeback bid under Culp. Tusa
upgraded GE, albeit to only a Hold from Sell, raising his
target price from $5 a share to $8. It’s still one of the low-
est target prices on the Street.—Al Root
INVESTORS LOVED HIM
Dancing in the Dark
Stocks swung wildly between virus
fears and stimulus hopes. The Bank of
Australia cut interest rates to 0.5%,
while the Bank of Japan and the Euro-
pean Central Bank signaled a readi-
ness to loosen. On Monday, the Dow
set its largest single-day point gain, at
1,294, or 5.1%. On Tuesday, the Federal
Reserve suddenly announced a half-a-
percentage-point rate cut, the largest
since 2008 —and stocks plunged—
only to surge nearly 1,200 points the
next day, and yo-yo through Friday.
The result: better than it felt. On the
week, the Dow industrials gained 1.8%,
to 25,864.78; the S&P 500 rose 0.6%,
to 2972.37; And the Nasdaq Composite
advanced 0.1%, to 8575.62.
The Outbreak Hits Home
By Friday, the U.S. had 14 deaths from
Covid-19—11 in Washington state—and
some 250 cases, with more states add-
ing cases as more tests are given; the
administration said more than a mil-
lion tests could be administered after
problems developed with an earlier
Centers for Disease Control and Pre-
vention test. The president tweeted the
possibility of a middle-class tax cut, the
administration proposed disaster-relief
support for hospitals caring for the
uninsured, and Congress moved on an
$8.3 billion virus package. The large
number of Americans without paid
sick leave also raised concerns.
A Two-Man Race
Former Vice President Joe Biden
trounced Democratic front-runner
Sen. Bernie Sanders in the South Car-
olina primary, then received endorse-
ments from former rivals, Sen. Amy
Klobuchar and Pete Buttigieg—just in
time for Super Tuesday, with prima-
ries in a third of the U.S., including
delegate-rich Texas and California.
On Super Tuesday, Biden won states
mostly in the South and Midwest,
while Sanders picked up three, includ-
ing California. The result left Biden
ahead in the delegate count. Both
former New York City Mayor Mike
Bloomberg and Sen. Elizabeth Warren
then dropped out, with Bloomberg
endorsing Biden.
Taliban Peace, Maybe
The U.S. agreed to a tentative peace
process with the Taliban in Afghani-
stan, setting up the possibility of end-
ing the U.S.’s longest war. The key: an
end to violence over the next 14-
months and Taliban talks with the
Afghan government.Continuedattacks
against Afghan forces, however,
quickly triggered U.S. air strikes.
Annals of Deal-Making
Elliott Management took a 5% stake in
Twitter,reportedly targeting CEO
Jack Dorsey, the social-media com-
pany’s founder. Dorsey is also CEO of
payments companySquare...Cole
Haan and Warner Music shelved their
initial public offerings...Gilead Sci-
encesboughtForty Sevenfor $4.
billion, andThermo Fisher Scien-
tificis acquiringQiagenfor $11.
billion...Xeroxlaunched an effort to
buy all ofHP Inc.’s shares, offering
$24 a share for a $35 billion valuation.
2.4%
Newest projection on global
growth in 2020, down from
2.9% because of Covid-
February ISM Supplier Deliveries
Index, up from 52.9 in January,
highest since November 2018
80%
Decline in cars sales in China in
February
$113 B
International Air Transport As-
sociation estimate of how high
airline revenue losses from the
virus will be, an increase from
$29 billion in February
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THE NUMBERS
HE SAID
“Billions of dollars
for antipandemic
efforts is a lot of
money....And given
the economic pain
that an epidemic
can impose...it will
beabargain.”
Bill and Melinda Gates Foundation
Co-Chairman Bill Gates in the New
England Journal of Medicine
Welch: Erik Freeland/Corbis via Getty Images; Gates: Photo by Lintao Zhang/Getty Images