Tag Archives: Markets coverage
Overstating the importance of the stock market
by Chris Roush
Felix Salmon of Reuters was on CNN’s “Reliable Sources” Sunday morning to talk with host Howard Kurtz about coverage of the stock market in the wake of the downgrade of the U.S. government’s debt.
Here is an excerpt:
KURTZ: Did the press kind of miss the boat here? Because there were all those headlines, “11th Hour Compromise,” “Deal is Done,” “The Crisis is Over,” and then, suddenly, it seems like the real economy was sending a very different message.
SALMON: Well, let’s not confuse the stock market with the real economy. The stock market is not the real economy. The stock market is a bunch of traders who are all trying to make money. And frankly, in mid-August, most of them are on holiday anyway.
And it can gyrate. It can go — it can get volatile. You get a news event like the downgrade, and stocks can move up and down.
I think it’s very easy to overstate the importance of that. And it’s very important to remember that what happens in the stock market is not some kind of referendum on what’s happening to the economy as a whole.
KURTZ: Well, I suppose a partial rebuttal to that would be that in this age of 401(k)s, that a lot of people are at least indirectly invested in the stock market. But let’s come back to your –
SALMON: Well, no. Let me add on to that, because it’s important. If you are investing in a 401(k), you actually want stocks to be cheap. If you aren’t retiring tomorrow, if you’re still putting money away, month after month, this is like — you know, if stocks go down, that’s good for you because it means you can buy them more cheaply. This idea that stocks falling is always bad and stocks rising is always good is incredibly simplistic, and it’s not actually true.
KURTZ: So is this a fatal miscalculation in terms of the media coverage? Because it’s hard to cover the whole economy, so we have this snapshot. The Dow went down 680, the economy is tanking. Are we really making too much of these gyrations and these market indexes?
SALMON: Absolutely. You know, the Dow went up over the past couple of years. It went down a bit.
You know, I think people concentrate far too much on what happens on any given day. And the fact is that if you’re investing for a period of 20 or 30 years, what happens on any given day is completely irrelevant.
Read more here.
News swings with the stock market
by Chris Roush
Joanne Ostrow of the Denver Post writes Sunday about stock market coverage on television.
Ostrow writes, “CNBC’s Jim Cramer, hyper host of ‘Mad Money,’ put it succinctly (accompanied by dire sound effects): ‘Whenever we hear 600-point decline . . . you can’t help but be scared to death.’ For parallels, he examined the 1987 crash which was ‘hard to understand, like now.’ Not that we get it more than before, but he’s entertaining. His message: Stay the course.
“On Bloomberg, the analysts can’t see any bottom yet. The debate is whether we’re in a recession already, or merely sliding that way. And guess who comes out smelling like a rose in a quarterly revenue report? News Corp.! The Murdochs shrugged off the hacking scandal — in terms of money, if not reputation. Meanwhile, Apple surpasses Exxon as the biggest stock in the world. That we can understand.
“The network is full of talk about the QE2, the Fed’s second round of ‘quantitative easing.’ Don’t ask. Does all this teach us anything meaningful about how the global economy works? Bloomberg assumes a certain level of sophistication. That is, you have to know the economic history of Japan to make sense of the analysis. What we got out of it: It’s bad, but maybe not as bad as it sounded at the beginning of the crisis.
“Fox Business explained how it took nine years for a government to crawl back from a AAA rating downgrade the last time it happened, saying emotional trading is a losing game that can cost big money over time. This isn’t your grandfather’s stock market, we learned; it’s run by unemotional computers. The takeaway: Don’t panic.”
Read more here.
Tips on covering the financial crisis
by Chris Roush
Andrew Gauthier of TV Spy has tips from a handful of local TV newsers on how to cover the current financial crisis.
Here are a couple:
Keep It Simple
“I think keeping it simple and understandable is job one,” says WOIO anchor-reporter Paul Joncich. “Most folks who have stock portfolios have access to much more information than we can provide in a minute and a half of TV time. So I always try to get my financial expert to talk about what this means to Joe Citizen who may not have stocks.”
“I try to cut through the numbers,” says WLS reporter Jason Knowles, adding that he asks the experts, “What is the bottom line for someone like me who has a 401 K and other investments and isn’t savvy on trading?”
Focus on People
“I just did something very simple the other day,” recounts KOB reporter Joe Vigil. “With talk of another recession, and lost jobs, I talked to two people who are out of work. I’m sure others out of work could relate to what those two said… I didn’t get into a lot of details about why the market went down, just let the people speak about the struggles they’re facing now, as the chance that a lot more people could be out of work looms.”
Read more here.
The stock market pundits on TV
by Chris Roush
Mary McNamara of the Los Angeles Times writes Friday about the performance of the gurus who appear on television to talk about what’s happening in the markets.
McNamara writes, “As interns presumably scrambled to find ever-more creative synonyms for ‘plummet,’ anchors and analysts on the cable networks went hysterical and numerical, chronicling the Dow minute by minute with the tommy gun intonations of horse race announcers, slamming up charts and graphs and reaching such giddy heights of hyperbole — ‘Is the dollar now a double-edged sword impossible to catch barehanded on the way down?’ was an actual question heard on CNBC — that it may be years before the profession recovers.
“Gone was the restraint shown in the hours after news of Osama bin Laden’s death, the energized but somber tones that accompany reports of natural disasters or military actions, the ‘objectivity’ of political reporting. In its place was a collective adrenal gland dump. Here was a story everyone could go nuts over, a story with disaster in the headline and no body count; a story about money, which is not only intrinsically sexy, it means the networks were free to unleash all the crazy Wall Street types and foreign market experts.
“Natural agitators like Cramer and Santelli — men born to scream on the floor of the stock market — were in their element, and even the more measured (and British) Simon Hobbs appeared to be using more than three facial muscles. Meanwhile, men and women who spend most of their lives muttering to themselves in the corners of the cultural conversation (because nothing is more boring than finance until the markets start to fall) found themselves ragged into hair and makeup. What does the Brandeis economics department think of the situation?”
Read more here.
Networks rely on S&P experts despite criticizing ratings agency
by Chris Roush
Network reporters have been critical of Standard & Poor’s in the aftermath of the firm’s downgrade of the U.S. credit rating, reports Julia Seymour of the Business & Media Institute, despite the fact that they counted heavily on S&P experts when covering other stories.
Seymour writes, “The three broadcast networks responded to the downgrade by trying to downplay Standard & Poor’s decision to lower the nation’s rating by criticizing them for past mistakes, especially their failure to anticipate the housing bubble and crash.
“Yet that criticism also revealed hypocrisy on the part of the network news media which have interviewed S&P experts for years. More than 60 percent (14 out of 23) stories critical of S&P were since April 2011 when the ratings agency downgraded their outlook for long-term U.S. debt to negative.
“But in the six years between August 2005 when the housing market was in decline and August 2011, the networks interviewed experts from S&P in 70 stories about a range of topics including housing, retail sales, the possibility of recession and other economic issues. That’s more than 3 times as many stories as were critical of the company during the six years since the housing drop.
“CBS was by far the most reliant of the three networks on S&P analysts for economic predictions and information with 53 of those interviews on their morning and evening news programs. CBS criticized S&P one-tenth that often (5 stories).”
Read more here.
Abysmal coverage of market turmoil
by Chris Roush
Michael Hlinka, who reports on business issues of the day for CBC’s “Metro Morning,” talked with Lauren McKeon of the Canadian Journalism Project about the abysmal coverage of the latest installment of the U.S. debt crisis, political bias in business reporting, and the questions journalists are missing.
Here is an excerpt:
J-Source: Now, there are some people that are saying that the S&P just confirmed what we already knew: that the U.S. government has a major fiscal problem right now, and things aren’t going so. But others are saying it’s this big shock – but the government was doing so well! Have journalists oversold the idea that the economy was recovering?
MH: Yes. I think they basically followed the party line. I’m a full-time teacher. I do a business commentary and I love doing it, and it’s a great, great experience, but I spend most of my time working with students and preparing academic materials, that’s sort of my stock and trade.
One of the stories that has not been pursued is the number of times the economic revisions, the numbers have been revised down in the United States. In fact, I can give you anecdotally, this morning they released the productivity numbers for the second quarter and they revised the productivity numbers for the first quarter down dramatically. Last week, when they recorded the GDP numbers for the second quarter, the numbers for the GDP first quarter were revised down dramatically. Nobody is looking – that I’ve heard of – at these stories and saying why are they so far off in their initial estimates and why is the consistent bias on the upside on the upside rather than the downside? Because if it were an honest error one would think that there would be equally wrong reporting: overly optimistic and overly pessimistic numbers. Why is the persistent pattern out of the Bureau of Statistics in the States all of the revisions have been downwards, in some cases sharp downwards revisions, over the past year. I think it’s an interesting questions and no one’s really delving into that.
Read more here.
Biz journalism pundits decry “Chicken Little” approach to recent coverage
by Chris Roush
Joe Strupp of Media Matters for America writes that some business journalism experts believe that the media presented an overly pessimistic scenario in the wake of the Standard & Poor’s downgrade of the U.S. government.
Strupp writes, “‘It is a little bit of Chicken Little – ‘the sky is falling’,’ declared Marty Steffens, chair in business and financial journalism at the University of Missouri School of Journalism and former editor of the San Francisco Examiner. ‘You are still very safe in holding American securities … there have been a lot of good stories about how it is not terrible. What happens is journalism gets responsible in a lot of things, but it doesn’t dominate the chatter in the headlines.’
“Several other veteran business journalists agreed, though none singled out specific news outlets.
“Paul Steiger, former managing editor of The Wall Street Journal and currently editor-in-chief of ProPublica.org, said the ratings of S&P and others should not be taken as seriously as the have been:
“‘To get too exercised about what (ratings agencies) do or don’t do is a waste of time,’ he said. ‘Ratings agencies lead and they also follow.
‘My view is to never get very excited about actions by ratings agencies because they are just one voice.’ He later added, ‘…and the record isn’t great.’
“Steiger was referring to some ratings agencies’ past history of mistakes, such as their failures in the run-up to the financial crisis and economic scandals that include Enron and WorldCom.”
Read more here.
Finalists for Business Book of the Year named
by Chris Roush
Andrew Hill of the Financial Times writes about the finalists for the Business Book of the Year competition, which include tomes written by two prominent business journalists.
Hill writes, “Entries for the prize, sponsored by Goldman Sachs, included the Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States, which ought to mark some sort of end-point.
“But debate still rages among business authors about the causes and consequences of the last crisis even as the new turmoil is upsetting world markets.
“So the book award longlist includes Satyajit Das’s Extreme Money, his forthcoming attack on ‘the masters of the universe and the cult of risk’, Margaret Heffernan’s Wilful Blindness, which explains why we ignore obvious error and abuse, and two investigations of signature scandals of the crisis: AIG (Fatal Risk by Roddy Boyd) and the Madoff pyramid scheme (The Wizard of Lies by Diana Henriques).
“Richard Rumelt examines the broader failure of companies to set the right path in Good Strategy/Bad Strategy, while Thomas Friedman, who won the inaugural FT/Goldman award in 2005 with The World is Flat, pairs up with academic Michael Mandelbaum for That Used to Be Us (out next month), an attempt to work out why America seems unable to rise to the global economic and political challenge. Barry Eichengreen’s Exorbitant Privilege offers a partial antidote to such self-criticism, with its balanced examination of the fate of the US dollar.”
Read more here.
Writing about Wall Street, the person
by Chris Roush
Tom Reilly, the editor of the Attleboro Sun-Chronicle in Massachusetts, writes about how business journalists often personify what’s going on in the stock market.
“And I say this speaking as a former business editor, who was hand-picked for that demanding post after my then-publisher came back from a long lunch one day and said, ‘Hey, we need a business editor. Who doesn’t look busy around here?’
“One of the confusing things I noticed about business journalism — along with the fact that, when going on interviews I was sometimes required to wear a jacket and pants that matched, what’s called a ‘suit,’ I believe — was the tendency of my peers to refer to the stock market, or ‘Wall Street,’ as if it were an actual, living person.
“They would write things like, ‘Wall Street was optimistic today about the future of Consolidated Widget as the troubled company announced massive layoffs, sending its stock price soaring.’”
Read more here.