The fallout in the aftermath of last week's infamous tweet by Jack Welch in which he dares to accuse the BLS of manipulating labor data (the same BLS which has already been purposefully caught leaking data, but never actually caught red handed manipulating it: after all things like these don't happen, Liborgate notwithstanding), something which it did (although the one thing that nobody dares to say is "why" because if suddenly it becomes clear that if this most critical of economic indicators is fudged, then every other one must be) has begun. Moments ago, in response to perceived political badgering by Fortune and Reuters, Jack Welch, the CEO of Chairman of GE from 1981 to 2001, just after the company's stock peaked at $593 billion, the outspoken critic of Obama has decided to sever ties with both the CNN-controlled publication and with the Thomson Reuters organization, and instead going forward will use the WSJ as a platform. What drove Welch over the edge is the now traditional media response of attacking the person instead of the argument whenever the status quo is threatened, in this case predicated by articles by both Fortune and Reuters.
As Fortune's Stephen Gendel explains:
CNNMoney, which shares content with Fortune.com, ran a story on Friday covering Welch's tweet. The piece said that even conservative economists thought Welch was wrong to question the jobs numbers. On Tuesday, Fortune.com ran a story detailing Welch's record as a job destroyer. GE lost nearly 100,000 jobs during the 20 years in which Welch ran the company. "I never put myself out there as an employment agency," Welch told Fortune.
Following the story, Welch sent an e-mail to Reuters' Steve Adler and Serwer saying that he and his wife Suzy, who have jointly written for Reuters and Fortune in the past, were "terminating our contract" and will no longer be sending our "material to Fortune." Reuters' story about Welch's tweet quoted money manager and blogger Barry Ritholtz, who said Welch's comments were laughable. Reuters wrote that Ritholtz comments were referring to allegations that Welch regularly manipulated GE's earnings during his tenure as CEO in order to best Wall Street profit estimates.
Reuters used blogger Barry Ritholtz as the centerpiece for its particular debunking:
"This guy is the guy that's telling me the books are cooked? That's hilarious," said Barry Ritholtz, CEO and director of equity research at Fusion IQ in New York, which manages about $300 million in assets. Ritholtz, one of the first to respond to Welch's tweet, was referring to the allegation that during his tenure at GE, Welch sometimes used the GE Capital finance unit to sell quickly assets such as real estate and ensure that the largest U.S. conglomerate regularly beat Wall Street profit estimates.
In addition to blogging, Barry Ritholtz manages $256.7 million for 700 clients according to the latest Form ADV for his firm Fusion Analytics, which employs 18 people, and charges a 0.60% annual management fee for assets managed over $5MM (link, full investor borchure here). He and his employees are frequent guests on CNBC.
Either way, we have already noted the major issues with the BLS report (here and here). For those who believe that the unemployment rate, which is at a 3+ year low, is indicative of the general status of the US economy, which is now growing at a sub-stall speed ~1.5% GDP, please advise: we have some AJ RMBS we need to offload and are always looking for gullible idiots buyers.
Full Welch letter below: