Tag Archives: Markets coverage
by Chris Roush
Randall Forsyth of Barron’s writes about how the media coverage of the markets is often a contrary indicator for future performance.
Forsyth writes, “‘As Worries Ebb, Small Investors Propel Markets,’ was the headline of the lead story on page one of Saturday’s New York Times. ‘Americans seem to be falling in love with stocks again,’ the Gray Lady reported.
“To which Barry Ritholtz, chief executive of Fusion IQ, observes, ‘Uh-oh,’ on his Big Picture blog. The bullish tone of the Times piece qualified as a contrary market indicator since it met his four qualifying criteria: a mainstream, non-business publication, with a front-page or cover story about a rallying asset class with a decidedly bullish tone.
“That view was confirmed by Paul Macrae Montgomery, the head of the Universal Economics advisory and the originator of the magazine-cover indicator. Years ago, he studied all the Time Magazine covers going back to the 1920s and found they were redoubtable contrary indicators. By the time Time’s editors put a market trend on the cover, it was within weeks of being played out. A bullish cover meant it was close to time to sell, and vice versa.
“Newspaper stories didn’t conform exactly to the same pattern, Montgomery noted in a phone conversation from his in Newport News, Va., office. First off, for a story to matter it had to get front-page, ‘above-the-fold’ placement, which the Times story had.
“What’s more, newspaper stories tended to signal market tops within two trading sessions, he added.
“That said, however, Montgomery professed less confidence in newspaper page-one stories than magazine covers. Moreover, markets tended to make tops in a longer, more drawn out process. Panic stories that accompany short, sharp breaks usually signal market bottoms and quick reversals, he adds.”
Read more here.
There’s the initial story, with two to four paragraphs. Then there’s the first update that adds more context, the second update and closing the story once the stock market has shut down for the day.
The standard for stock market coverage, in the age of media saturation, is to continually publish updates with the most recent numbers and information. And business networks cover stock market fluctuations in a more frenzied manner.
Updating a story three or more times in one day and getting maybe only 20 views on a single update or having only a few people care about the stock that is flashing across a business network begs the question from some of whether covering the stock market in this manner is overkill, as people who care about a single stock or the Dow Jones Industrial Average are a minority of Americans.
I have days, particularly when I’m in the middle of writing a seemingly unimportant update that might take away the time I would be using to write a longer story, where I believe that these stock market updates are too much and that no one cares about my story update aside from my editor.
But, just as technology has enhanced the ability to deliver news in a timely manner, it has also made stock market trades that much faster and easier. A trader on Wall Street can buy and sell stocks almost instantaneously. It’s fascinating to track how much a stock price can change in just a few seconds in reaction to some piece of company news or even just speculation about a company.
Because of technological advances in both the stock market and in the media, it has made it imperative to deliver continuous updates and news about a company and its stock price. It’s true that the majority of Americans don’t care about the stock price of Performance Technologies or some other company, but the reason that business journalists, publications and networks exist is specifically for the people who do and who are highly invested in the most minute change in a stock price.
Wall Street traders and other investors can lose or gain millions of dollars in a series of quick trades, and they frequently depend upon business news agencies and television networks to provide them timely, accurate news to provide them they need to decide whether or not to buy and sell stocks.
Several months ago I spoke to a business journalist who had inaccurately published a headline about the stock price of a company and was contacted later by a gentleman who had made a trade based on the incorrect information — and lost thousands of dollars because of it. Scenarios such as this one remind me in the moments that I think my story update is pointless that at least one person is depending upon the information I am delivering to be completely up to date.
Bloomberg has developed news delivery systems such as First Word and Headlines to publish the most important nuggets of information in the quickest manner possible. Other news organizations do the same. This type of delivery system, just as the banners scrolling across the bottom of business networks, makes the most sense to me. Even though a few people will click on the story, busy bankers and traders only have time to consume the most relevant parts of the article for their job and don’t read through the rest.
The only type of stipulation that I have to believing in the importance of continuous stock market coverage is whether the constant coverage fuels the stock market frenzy of trading or whether this would happen without the information delivery system of business news outlets.
My inclination is that, even if CNBC didn’t have someone on the trading floor covering stock fluctuations as if they were a sports commentator, the trading would still happen in this manner, and that ultimately the business journalist is there to serve the consumer of the news.
by Chris Roush
Nik Deogun, senior vice president and editor in chief at CNBC, sent out the following staff announcement on Thursday:
I am pleased to announce that Josh Lipton is joining CNBC as a markets reporter, effective Monday, January 28.
An accomplished journalist, Josh will work closely with CNBC’s ace team of reporters and producers who mine the markets every day for real-time news and analysis. In addition to appearing on CNBC-TV, Josh will frequently contribute to CNBC.com.
Previously, Josh was the markets editor for Bloomberg Television where he was responsible for all markets coverage, working with Bloomberg’s team to develop reports on stocks, bonds, currencies and commodities.
Prior to joining Bloomberg in June 2011, Josh was a staff writer at Minyanville, where he covered the capital markets. Before that, he served as a staff writer at Forbes, where he reported on finance and investing and contributed stock recommendations and investigative feature stories to Forbes magazine.
Josh holds a bachelor’s of arts degree from Colgate University and a master’s degree from both the London School of Economics and Columbia University Graduate School of Journalism.
Please join me in welcoming Josh to the team.
by Liz Hester
John Kinnucan’s sentencing Tuesday made headlines across the wires and papers. The story’s a juicy one about a man accused of insider trading who taunted the officials trying to put him in jail. This time the government won. Here’s the story from the Wall Street Journal:
More than two years after he first took to email to defiantly object to the government’s tactics in a broad insider-trading crackdown, John Kinnucan had little to say Tuesday, other than sorry.
Mr. Kinnucan, the Portland, Ore., research consultant who repeatedly taunted U.S. officials for more than a year, was sentenced to four years and three months in prison after admitting last year to passing on confidential information about technology firms to hedge funds and other clients.
The sentence for securities fraud caps a contentious chapter in the government’s insider-trading crackdown. Mr. Kinnucan, 55 years old, was first approached in October 2010 by two FBI agents who said his phone calls had been secretly recorded and they wanted him to cooperate. He responded by sending a brazen email to hedge-fund traders and other clients declaring that he was approached by “two fresh faced eager beavers,” a development first reported by The Wall Street Journal.
The New York Times went even further with some of the more colorful details of Kinnucan’s past and run ins with the government.
The case against Mr. Kinnucan has been among the more bizarre strands of the government’s broad crackdown on criminal activity at hedge funds. His name first emerged in November 2010, when The Wall Street Journal reported that the F.B.I. had tried to persuade him to record telephone calls with his clients, including SAC Capital Advisors. He rebuffed their request and boasted about his recalcitrance in an e-mail to his hedge fund customers.
“Today two fresh faced eager beavers from the F.B.I. showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information,” the e-mail said. Mr. Kinnucan added that he “declined the young gentleman’s gracious offer to wear a wire and therefore ensnare you in their devious web.”
He then went on something of a publicity campaign, appearing on CNBC and writing a commentary for DealBook titled “Why I Chose Not to Wear a Wire.” In interviews and writings, he argued that he had not violated the law because the information he provided clients was publicly available.
As the investigation wore on, Mr. Kinnucan grew more belligerent. He made nearly 25 threatening telephone calls to F.B.I. agents and prosecutors, many of them laced with repeated references to sexual and other forms of violence, the government said.
Reuters had a few more details from the court appearance.
While in custody, Kinnucan has become “a shadow of himself,” his attorney, Jennifer Brown, told the court. She said he lost 35 pounds, was depressed and had not sought communication with his family, including two brothers and a sister who were in the courtroom on Tuesday.
“He is humbled and ashamed and has really taken in the message of what he’s done here,” Brown said.
(Judge Deborah) Batts recommended that Kinnucan serve his sentence at a prison south of Portland, Oregon, and be enrolled in an alcohol abuse program there.
The judge acknowledged letters written on Kinnucan’s behalf by his friends and family, noting that he has shown he can be kind. But she also noted the seriousness of insider trading and that obstruction of justice “cannot be tolerated,” despite his personal problems.
Kinnucan’s “sense of entitlement and anger were equally, if not more” to blame for his behavior, she said.
Bloomberg chose to lead with a similar angle about the judge’s rejection of Kinnucan’s plea for leniency.
Broadband Research LLC founder John Kinnucan, the expert-networker who refused to cooperate in a U.S. probe of insider trading before admitting to passing tips to hedge-fund clients, was sentenced to four years and three months in prison.
U.S. District Judge Deborah Batts in Manhattan today rejected the argument by Kinnucan’s lawyers that his actions stemmed from alcohol abuse triggered by the stress of being the target of a federal crackdown on insider trading. Defense lawyer Jennifer Brown also said Kinnucan suffered from an addiction to gambling in the stock market.
“It appears his sense of entitlement and anger are equally if not more to blame than gambling or alcohol addiction,” the judge said. “Insider trading is a serious crime and obstruction of justice by threatening personally the government authorities who are doing their jobs by investigating and prosecution insider trading cannot be tolerated.”
No matter which order you chose to put the details, they make for pretty good copy. And it’s probably a good idea to not threaten the agency that’s making a case against you.
by Chris Roush
Laura Gottesdeiner of AlterNet.com interviewed Columbia Journalism Review‘s Dean Starkman about how the financial media has not done its job in recent years.
Here is an exscerpt:
LG: Still, sometimes it feels like mainstream media doesn’t only fail to investigate Wall Street’s crimes–they actually helped facilitate them. Is the business press itself an accomplice?
DS: The biggest problem during this period was this narrowing definition of what constitutes a business story. There are fights over what journalism is, and you can divide journalism into two great competing schools. One is the access school, and the other is the accountability school.
In the lead-up to 2006, the accountability school was increasingly marginalized and in retreat, while the access school–doing the profile and getting the scoop on deals–became much more prominent. And so the big missed story–the accountability story–was the radicalization of the financial system, particularly in mortgage lending and discussions of subprime and predatory lending.
Meanwhile, when I went back and reread some of the coverage by really good reporters from really good magazines, the coverage of Wall Street, even if it was well intended, actually helped to exacerbate the crisis and add flames to the frenzy. Things like positive profiles of Wall Street executives made things worse and made the world worse. Unwittingly maybe, but so what?
Read more here.
by Chris Roush
Bloomberg Television had a segment Wednesday evening on how Twitter is influencing financial news.
Business journalist Heidi Moore of The Guardian, a prolific tweeter, was part of the discussion.
by Chris Roush
Tim Worstall of Forbes.com writes about a writing technique used by some business journalists when covering daily stock price changes.
Worstall writes, “A little insight into the way that a certain form of financial journalism works. The financial journalism that talks about short term movements in prices on markets that is. In this case, the fall in Apple‘s share price on Friday.
“Here’s what we get told up at the top:
Apple Inc shares fell 3.9 percent on Friday after the iPhone 5 debuted in China to a cool reception and two analysts cut shipment forecasts.
“OK, note the ‘after’ there. We’re not actually directly being told that Apple share fell because of the analysts or the cool reception. But everyone will take it as actually meaning that.
“And that’s not how share prices actually work. The best description from the academic literature is as a ‘random walk.’ Sure, over the long term, share prices are indeed driven by real events. Apple’s the world’s most valuable company because it’s one of the most gargantually profitable. Over periods of months or years stock markets do get prices around right. But over hours or days, just not so much. All of the academic research says that these very short term movements really are just random. So on a particular day a few more want to sell than buy: the price goes down. A couple of days (hours, seconds?) the reverse is true and the reverse happens.
“However, we humans are story telling creatures. And where there isn’t one we’ll invent one so that we can make sense of the world. Things just happening doesn’t suit our worldview: so share prices don’t move based upon the animal instincts of investors. There has to be some news, a story, to have made them change their minds and thus prices.”
Read more here.
by Chris Roush
Billionaire investor Warren Buffett sent a terse e-mail to CNBC correcting an incorrect report, which the business news network later acknowledged on the air, reports Kaja Whitehouse of the New York Post.
Whitehouse writes, “In his rebuttal e-mail, a copy of which was provided to The Post by hedge-fund manager Whitney Tilson, Buffett said capital gains taxes don’t apply to estates.
“‘Mr. Kaminsky also made the statement that the estate that was a seller was better off by selling in 2012 than 2013,’ he wrote. ‘This, too, was incorrect.’
“He said capital gains are wiped out by stepped-up basis rules, with assets marked at their current fair-market value at the time of death.
“Buffett also blasted Kaminsky for saying his buyback was hypocritical on principal as Buffett is known to eschew buybacks.
“Buffett attached a copy of Berkshire’s 1984 annual report showing he has outlined conditions under which he would favor buybacks.
“CNBC anchor Melissa Lee read a correction late Tuesday that thanked the famed investor for ‘watching and setting us straight.’”
Read more here.
by Liz Hester
Wednesday’s big news, that Citigroup plans to cut 11,000 jobs or about 4 percent of its workforce, sent ripples through Wall Street and Main Street. The cuts will come from all parts of the business and across the globe.
Here are some of the details from the New York Times:
Under the reduction, 1,900 jobs will be eliminated in the institutional clients division. Another 6,200 positions will be removed from the bank’s consumer banking business, along with 2,600 jobs in the operations and technology group.
Since 2007, the bank has slashed its workforce by 33 percent, leaving it with about 250,000 employees today.
The reductions at Citigroup come after the bank’s powerful chairman, Michael E. O’Neill, engineered the ouster of its former chief executive, Vikram S. Pandit, and named a handpicked successor, Michael L. Corbat, according to several people close to the bank.
The move, announced Wednesday, is the latest illustration of the immense pressure on big banks to take action in response to stagnant revenue and weak stock prices. The decision also shows the company’s cost-cutting focus under Chairman Michael O’Neill, a banking veteran who took over for Richard Parsons in April and was known in his past jobs for recommending tough medicine.
More than half the cuts will take place in the company’s global consumer-banking unit, where Citigroup will close 84 branches around the world, including 44 in the U.S. Citi expects to sell or substantially scale back consumer lending in Pakistan, Paraguay, Romania, Turkey and Uruguay. The company will cut 6,200 jobs in that unit.
Chief Financial Officer John Gerspach, at a Goldman Sachs GS +0.47% financial-services conference, said the cuts are “a fairly comprehensive initial foray” and “part of a continuum” of business reviews and cost cuts by Mr. Corbat’s management team.
“What you can expect is a continuing examination of every one of our businesses,” Mr. Gerspach said. “We will constantly seek new areas to improve efficiency.”
The decision is the latest sign of banks slimming down amid soft economic growth, uneven markets and tough rules limiting bank profits. Citigroup shares have risen 35% this year but are down 26% since the end of 2010, amid a broad slowdown in markets businesses whose revival after the financial crisis helped bolster major bank stocks. Of the six giant U.S. banking companies, only Wells Fargo & Co. shares trade above the company’s reported book value, a measure of net worth.
Citigroup shares surged 7.1% in Wednesday afternoon trade to $36.71.
Here are the financials from the Bloomberg story:
The plan will save about $900 million in 2013, and projected annual savings will exceed $1.1 billion beginning in 2014, the company said. Annual revenue will drop about $300 million, according to the forecast. The $1 billion charge this quarter is before taxes. An additional $100 million of charges will come in the first half of next year, and Najarian said more cuts could follow.
And a little further down, this analysis of Citigroup’s recent investments in the business:
The bank had invested $3.9 billion last year in all of its businesses, including initiatives to meet regulatory requirements, modernize branches and boost spending on consumer marketing, Pandit said during a Jan. 17 conference call with analysts and investors.
“Vikram had invested heavily in the business back in 2010 and 2011 on the assumption of a stronger global economy,” Staite said. “That obviously hasn’t come through.”
Corbat’s plan calls for job cuts in the operations and technology group and global functions. Citi Holdings, the unit that contains about $171 billion of unwanted assets, will eliminate about 350 positions, the bank said. Most are related to branch closures in Greece and Spain, the bank said.
The job cuts at Citi Holdings don’t go far enough to fix the unit, according to Charles Peabody, an analyst in New York with Portales Partners LLC. Efforts to quicken its disposal of assets are hampered by a lack of funding for potential buyers, and aggressive sales efforts could produce losses beyond the bank’s current reserves, Peabody wrote in a Nov. 13 note.
But the real loss is for all the people who will be looking for another job, especially the bank tellers, loan officers and branch managers who likely haven’t earned (or saved) the bonuses that the investment bankers have.
by Chris Roush
The Globe and Mail in Toronto is making two areas of its business section available exclusively online to subscribers.
A story on its website states, “ROB Insight is a new section that contains sharp analysis and opinion on the biggest business stories of the day. It’s where you can find commentaries from some of the brightest minds in Canadian business journalism, including David Parkinson, Eric Reguly, Sean Silcoff and Scott Barlow, a former Bay Street strategist.
“You’ll also find a selection of items from the Financial Times’s Lex column and Reuters BreakingViews.
“Streetwise is where you’ll find breaking news and analysis on deals and finance in Canada’s capital markets. The Streetwise blog has expanded its coverage with our outstanding team of financial reporters and columnists, led by Boyd Erman.
Read more here.