Tag Archives: Economics reporting

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The life of San Diego’s jobs reporter

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Alex Pacheco interviewed Jonathan Horn, who covers the employment beat for the Union-Tribune in San Diego, about his job and his career in journalism.

Jon Hilsenrath

Is Jon Hilsenrath’s Fed coverage influence fading?

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Matthew Boesler of Business Insider takes a look Thursday at how the markets reacted with a yawn to coverage from The Wall Street Journal‘s Jon Hilsenrath, who has been known in the past to influence markets with his Fed coverage.

Boesler writes, “Hilsenrath went on CNBC this afternoon and argues that, in fact, the overall message from the Fed yesterday was ‘hawkish’ (the opposite of dovish), placing emphasis on the minutes of the June FOMC meeting that were released hours before Bernanke spoke. Furthermore, he argued that Bernanke was only saying the same thing he’s already been saying for weeks – that tapering of bond purchases is going to happen, but interest rates will stay pinned at ultra-low levels for a long time.

“When Hilsenrath presented that argument, he got a lot of blowback – perhaps because those who view him as a mouthpiece for Fed policy couldn’t reconcile the argument he was making with the market reaction to Bernanke’s comments.

“‘I don’t know, Jon,’ said CNBC anchor Scott Wapner. ‘I look at markets across the board that are reacting as if the Fed chairman changed the game at 5:00 yesterday afternoon.’

“Markets hardly reacted to Hilsenrath’s comments in the CNBC interview today. Maybe that is a sign that the perception of him as some sort of mouthpiece is fading.

“That may represent a notable shift in perception from just a few weeks ago, when a Hilsenrath blog post published on WSJ.com ahead of the June FOMC meeting – titled ‘Analysis: Fed Likely to Push Back on Market Expectations of Rate Increase’ – caused stocks and bonds to rally.”

Read more here.
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Thomson Reuters to suspend early peeks at consumer confidence data

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Thomson Reuters is expected to announce Monday it will suspend the practice of giving clients an early peek at consumer confidence data, yielding to pressure from the New York attorney general, reports Peter Lattman of the New York Times.

Lattman writes, “In response to the attorney general’s inquiry, Thomson Reuters took the position that its tiered pricing system was legal, said the person briefed on the investigation. But Mr. Schneiderman’s office demanded that Thomson Reuters suspend the selective disclosure of the survey at 9:54:58 to its highest-paying customers.

“After Thomson Reuters resisted making the change, the attorney general’s office threatened to seek a court order to stop it from prereleasing the data, this person said. Rather than wage a court battle, Thomson Reuters capitulated and agreed to temporarily suspend the practice for the duration of the investigation.

“When Thomson Reuters releases the University of Michigan consumer confidence survey this Friday morning, no one will receive the information before 9:55.

“Thomson Reuters has recently had other problems with its release of market-moving data. Last month, the company accidentally released a manufacturing survey from the Institute of Supply Management to a small group of traders milliseconds before others received it. Those traders used computer models to process and trade on the data.”

Read more here.

Euro economy

Europe to keep interest rates low

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While most Americans were busy eating hot dogs and celebrating the birth of our nation, two of Europe’s central banks were sending the clearest signals yet that they will keep interest rates low for the foreseeable future.

Here is the story from the New York Times:

Answering critics who said they were running out of ways to promote growth and lending, the European Central Bank and the Bank of England on Thursday did something neither had done before, committing themselves to keeping interest rates low indefinitely.

The bid to reassure investors brought the two central banks into closer alignment with the Federal Reserve, which, under Chairman Ben S. Bernanke, has adopted a policy of becoming more open about its intentions.

At the same time, they appeared eager to signal that they would not follow the Fed in preparing for a gradual withdrawal of economic stimulus.

Mario Draghi, the president of the European Central Bank, based in Frankurt, said at a news conference that crucial interest rates would “remain at present or lower levels for an extended period of time.” Until Thursday, the bank had steadfastly refused to pin itself down on future policy.

“It’s not six months,” Mr. Draghi said. “It’s not 12 months. It’s an extended period of time.”

Mr. Draghi also said that the central bank was signaling a “downward bias” in interest rate policy, meaning further cuts were possible or even likely.

The Wall Street Journal added this context:

Still, Mr. Draghi stopped short of the data-based road map the Fed gives. The U.S. central bank has said it will keep rates near zero as long as the unemployment rate is above 6.5% and inflation expectations stay anchored.

The ECB’s strategy “is a weak form of forward guidance. But it is guidance nonetheless,” said Holger Schmieding, economist at Berenberg Bank.

Mr. Draghi’s comments didn’t materially alter the outlook for ECB policy, analysts said. Even before Thursday’s meeting many economists expected interest rates to stay where they are well into next year at least. Those expecting a change thought the next move would be a rate cut, not an increase. “A rate cut is there if needed but is not imminent,” Mr. Schmieding said.

The ECB said the economy should gradually improve in the coming months. Euro-zone gross domestic product has contracted for 18 straight months through the first quarter of 2013. Inflation remains subdued.

But a vibrant, job-creating rebound remains elusive. Unemployment is at a record rate of 12.2% in the euro zone, trimming spending on big-ticket items such as automobiles. It is above 25% in Spain and Greece and approaching 18% in Portugal, putting additional strain on public debt. Small businesses in southern Europe pay considerably higher rates on loans than their German counterparts, ECB data showed Thursday.

The Financial Times said it was the first time the ECB had offered forward statements about interest rate policies:

The bank cut its main interest rate to 0.5 per cent in May and its deposit rate stands at 0 per cent. Mr Draghi said the bank kept an open mind on adopting its first negative interest rate in the future.

While the bank still expects a gradual recovery for the eurozone later in the year, Mr Draghi presented recent improvements in business surveys in a more gloomy light than in previous comments, pointing out that the improvement amounted to a slower pace of contraction in the indicators.

Following Mr Carney’s first meeting as chair of the Monetary Policy Committee, the Bank of England chose to issue a rare statement along with its decision to hold rates.

“The Committee noted that the incoming data over the past couple of months had been broadly consistent with the central outlook for output growth and inflation contained in the May report,” the BoE said.

“The significant upward movement in market interest rates would, however, weigh on that outlook; in the Committee’s view, the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.”

However, the market still expects the first interest rate rise in 2015, rather than the 2016 date forecast in May and June before the Federal Reserve signalled it would rein back its quantitative easing programme

All of the coverage pointed out that the shift was prompted by U.S. Federal Reserve statements that sent the markets into turmoil trying to determine when it was going to end its easy money programs. This looks like an attempt by Europe to reassure investors that the time of low interest rates will continue, especially as unemployment remains high.

And returning some stability to the markets will be a much welcome event for everyone.

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Government cuts hit the private sector

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The New York Times wrote an interesting story Wednesday about the effects of federal spending cuts on the private sector:

Congress’s $85 billion, across-the-board budget cuts may not have brought the economy to a halt, as many once feared. But they are having a negative effect on jobs in the private sector, according to an analysis of the industries whose head count is most dependent on federal funds.

It is no surprise that some of the companies that are hurting are closely associated with military spending, which was specifically targeted to absorb about half of the cuts from the so-called sequester that began March 1. But many of the businesses experiencing the most pain are those that provide a wide range of services, like plumbing and maintenance.

Contractors say they are trying to make do by picking up other projects where they can, but private sector and state and local government demand has also been weak or shrinking in recent years. Many in the facilities support field, a business category that includes janitorial, maintenance, trash disposal, guard and security, mail routing, reception and laundry services, say they are frustrated by the lack of public awareness about how defense budget cuts affect workers who are not performing stereotypical military functions.

And the problems began several years earlier, the story said:

Government cutbacks, not just the sequester and other federal budget cuts but also several years of state and local government layoffs, appear to be an important factor in holding back the economic expansion. “The great puzzle in this recovery is why it’s not quicker, particularly relative to other recoveries,” Mr. Wolfers said. “The sequester is one of the many insults that been hurled at the recovery so far.”

Some government contractors said that their problems started even before the sequester officially began in March, partly because months of debate over Congressional budget cuts made government agencies and military bases wary about how much money they’d have available to spend.

The timing of the story was excellent since the U.S. economy didn’t grow as much as previously thought, according to the Wall Street Journal story:

The U.S. economy expanded at a slower pace than previously estimated in the first quarter as consumer spending and business investment were revised sharply downward, indicating a weaker trajectory for the economy even before growth downshifted in recent months.

The nation’s gross domestic product, the broadest measure of all goods and services produced in the economy, grew at a 1.8% annual rate from January through March, the Commerce Department said Wednesday. That was less than the earlier estimate of a 2.4% growth rate.

The revision was due largely to slower growth in consumption, which eased to a 2.6% gain from the earlier estimate of 3.4%. Consumer spending, which accounts for two-thirds of economic output, was likely hit by a rise in payroll taxes at the start of the year and relatively stagnant incomes, two forces that have pushed the saving rate lower.

Spending on legal services, personal care and health care all were weaker than previously estimated, the Commerce Department said.

The latest figures raised questions about whether growth will be strong enough later in the year for the Federal Reserve to start dialing back its $85-billion-a-month bond buying program. That prospect helped push stocks higher Wednesday and pushed the yield on the 10-year Treasury note lower, easing borrowing costs.

Bloomberg said the payroll tax was to blame for the cut in consumer spending:

Growth in the world’s largest economy was less than originally estimated in the first quarter as an increase in the U.S. payroll tax took a bigger bite out of consumer spending than previously calculated.

Gross domestic product grew at a 1.8 percent annualized rate from January through March, down from a prior reading of 2.4 percent, Commerce Department data showed today in Washington. Household purchases were trimmed to a 2.6 percent advance — still the fastest in two years — from the 3.4 percent gain estimated last month.

Americans cut back on services from vacations to legal advice as the two percentage-point increase in the payroll tax caused incomes to drop by the most in more than four years. At the same time, an improving labor market and rising home prices are underpinning consumer confidence, one reason economists project growth will pick up in the second half of the year.

But it will be interesting to see if the expected growth will actually happen. If small and medium-sized businesses are struggling to replace government contracts and the private sector is cutting spending, then it’s hard to see where that expansion will come from.

Steve Liesman

CNBC’s Liesman on intersection between music, journalism

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CNBC senior economics correspondent Steve Liesman talks about how his love for music plays a role in his journalism.

economy

Conference Board ends early media access to data

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The Conference Board is ending its policy of providing consumer confidence data to business journalists before their release to the public, fearing leaks to traders.

Brody Mullins of The Wall Street Journal writes, “The move is one of the biggest cracks thus far in the traditional way in which private organizations and governmental agencies release market-moving economic data to the public. Previously, the organization had given a 30-minute peek to a small group of journalists who used the head-start to digest the often complicated results and prepare reports.

“The advent of high-speed computerized trading has pushed investors to seek market-moving information a fraction of a second before their competitors. To meet this demand, many media organizations, including Wall Street Journal publisher Dow Jones & Co., have set up systems to feed data directly into traders’ computers, allowing elite investors to trade on the information ahead of the broader public.

“That development, combined with recent instances of suspicious trading ahead of media embargoes, has prompted a broad re-evaluation of how this data is disseminated.”

Read more here.

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CNBC’s Santelli vs. WSJ’s Hilsenrath

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Julia LaRoche of Business Insider writes Wednesday about the brouhaha that erupted between CNBC‘s Rick Santelli and The Wall Street Journal‘s Jon Hilsenrath on the air Wednesday.

LaRoche writes, “Santelli told Hilsenrath that the reason that his stories move the markets is because the world at large believes he’s sourced.

“‘That’s a reality. You can protest all you want.’

“Hilsenrath then gave Santelli a lesson in journalism.

“‘Of course I’m sourced. Every good reporter should be.’

“Hilsenrath is the Washington, D.C-based correspondent  responsible for covering the Fed.  It’s widely believed that he has better access to Fed chairman Ben Bernanke and the rest of the Fed than other reporters out there.  He has even earned the nickname ‘Fed Wire.”‘

“Santelli then argued that Hilsenrath doesn’t hold people accountable.

“‘Part of me holding people accountable is holding people like you accountable, Rick,’ Hilsenrath shot back.

“Hilsenrath got Santelli again at the end of the interview.

“‘Where are all the bad things that you have been saying are going to happen?’

Read more here.

Fed

Fed still able to inspire vast array of headlines

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The Federal Reserve Board announcement Tuesday once again sparked a wide variety of headlines and leads from the financial press. While its importance is obvious, I’m still always amazed at the different interpretations that come out of these public comments.

The Wall Street Journal’s headline “Fed Brightens Recovery View, Stays Silent on Bond Buying,” focuses on the good news. Here’s the lead:

Federal Reserve officials Wednesday upgraded their assessment of the job market but remained silent on when the central bank would begin pulling back on its $85 billion-per-month bond-buying program.

“Labor market conditions have shown further improvement in recent months,” the Fed said in its formal policy statement, though it noted that unemployment remains “elevated.” Fed officials also noted that they see “the downside risks to the outlook for the economy and the labor market as having diminished since the fall.”

Fed officials saw unemployment falling slightly faster and hitting a lower level than they did in their previous forecasts, from March. For instance, by the end of 2014, they see the jobless rate hitting between 6.5% and 6.8%, an improvement from March when they saw it hitting between 6.7% and 7% by then. At the end of last year, the forecast was 6.8% to 7.3%.

Despite the lower expected unemployment rate, Fed officials still expect to keep short-term interest rates low until 2015, their projections showed. Fourteen Fed officials said they didn’t expect to start raising rates until 2015, compared to 13 who said so in March.

 Of course, the Journal story covered the Fed announcement before chairman Ben Bernanke spoke. That changed the story. There’s the Bloomberg story, which ran under the headline, “Bernanke Says Fed on Course to End Asset Purchases in 2014″:

Federal Reserve Chairman Ben S. Bernanke said the central bank may start reducing bond purchases later this year and end them in the middle of 2014 if the economy continues to improve as the central bank forecasts.

“If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the pace of purchases later this year,” Bernanke said today in a press conference in Washington. “If the subsequent data remain broadly aligned with our current expectations for the economy, we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year.”

Bernanke spoke after the Federal Open Market Committee said today it would maintain the $85 billion pace of monthly asset purchases and that it sees the “downside risks to the outlook for the economy and the labor market as having diminished since the fall.” The FOMC (TREFQE2) repeated that it’s prepared to increase or reduce the pace of purchases depending on the outlook for the job market and inflation.

I guess it’s a good thing that we have access to different media options since these two leads seem to contradict each other. The New York Times story ran under this headline, “Fed Outlines Timeline for Winding Down Stimulus”:

Federal Reserve Chairman Ben S. Bernanke said Wednesday that the central bank intends to reduce its monetary stimulus later this year — and end the bond purchases entirely by the middle of next year — if unemployment continues to decline at the pace that the Fed expects.

Mr. Bernanke said that the Fed plans to continue the asset purchases until the unemployment rate falls to about 7 percent, the first time that the Fed has specified an economic objective for the bond-buying. The rate stood at 7.6 percent in May.

The Federal Reserve also struck notes of greater optimism about the economic recovery, saying in a statement released after a two-day meeting of its policy-making committee that the economy was expanding “at a moderate pace,” the job market was improving and risks to the recovery had “diminished since last fall.”

In a separate forecast, released at the same time, Fed officials predicted that the unemployment rate would decline more quickly than they had previously expected, falling to 6.5 percent to 6.8 percent by the end of 2014. They had predicted in March that the rate would be 6.7 percent to 7 percent.

Stocks fell on Wall Street after the Fed policy statement, with the Dow Jones industrial average down 1.2 percent, or about 170 points. Investors sold on the Fed’s indications that it would reduce its stimulus efforts starting later this year.

The Financial Times also thought that Bernanke offered up a timeline for ending the stimulus and ran this headline, “Bernanke says QE slowdown could start this year”:

Ben Bernanke, Federal Reserve chairman, offered the firmest timeline yet for tapering US central bank asset purchases, saying bond buying by the US central bank could be slowed this year and end altogether around the middle of next year.

In a statement following the latest meeting of the Federal Open Market Committee, Mr Bernanke said it would be “appropriate to moderate the monthly pace of purchases later this year,” assuming the Fed’s expectations for an improved economic outlook held true.

He added that there would be “measured steps through the first half of next year” to slow asset purchases, which would end “around midyear”. Mr Bernanke also said the bond buying, which is running at a monthly rate of $85bn, could end once the unemployment rate fell below 7 per cent. It was 7.6 per cent in May.

However, Mr Bernanke insisted that this scenario could change if the economic outlook changed. “Our policy is in no way predetermined and will depend on the incoming data and the outlook,” he said.

So the leads range from no timeline to the firmest timeline for ending the stimulus. At least all the stories agreed on the Fed’s target unemployment rate and that the policy isn’t set in stone. But given the range of headlines and leads, the comments aren’t likely to offer much reassurance or stability to the markets at this point.

Robin Harding

The great and powerful Jon Hilsenrath

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Barbara Kollmeyer of Marketwatch.com writes about recent coverage of the Federal Reserve Board.

Kollmeyer writes, “After all the seriousness about the Fed meeting that kicks off Tuesday, Ed Yardeni, chief investment strategist at Yardeni Research, injects some humor by asking: ‘Who is the Fed Chairman anyway?’

“‘Could it be that Ben Bernanke isn’t actually the Chairman of the Board of Governors of the Federal Reserve? He may be fronting for the real wizard behind the curtain: Jon Hilsenrath. A few months ago I signed up for Google news alerts to follow both Bernanke and Hilsenrath. Lately, I’ve been receiving more news about the outlook for monetary policy from Hilsenrath than from Bernanke.’

“Hilsenrath is chief economics reporter for The Wall Street Journal (which, like MarketWatch, is owned by News Corp) and triggered what some are calling a Hilsenrally when he reported last week that the Fed will likely push back on market expectations for a rate rise. Financial Times economics editor Robin Harding briefly joined this crowd Monday when an article  he wrote suggested Bernanke will signal Fed tapering at its meeting and press conference this week. Markets fell and eventually recovered after Harding tweeted this:

Robin Harding

Read more here.