Tag Archives: Markets coverage
Yvette Kantrow of The Deal writes in the latest issue about how Fortune magazine has gone gaga over banking analyst Meredith Whitney, writing about her childhood and the fact that she doesn’t drink coffee while downplaying her stock-picking acumen.
Kantrow writes, “Looking at those pieces today is instructive because of how much emphasis the magazine — like the rest of the media — has historically put on investment performance when evaluating and feting favorite analysts. (‘Stock jocks with the picks to prove it’ is what one Fortune story in 2001 dubbed its all-stars.) But for Whitney, it’s more than willing to drop that emphasis.
“It mournfully explains, ‘Whitney’s insights haven’t always translated into lucrative investment picks’ and notes that her stock picking ranked 1,205th out of 1,919 equity analysts last year and 919th out of 1,917 through the first half of 2008. But not to worry, chirps Fortune: ‘That said, evaluating Whitney solely on the timing of her buys and sells misses the point. It’s not just that she’s bearish on the entire banking industry. What makes Whitney so interesting is the brutality of her arguments and the evidence she summons in making them.’
“We don’t disagree with Fortune’s contention that evaluating Whitney on her stock-picking record ‘misses the point.’ Indeed, this column has long argued that ranking analysts based on investment performance is useless or worse. After all, at the height of the Internet boom, analysts who followed that sector looked great. Moreover, analysts were never meant to be stock pickers to the public — aka Fortune readers. Their main job is to provide analysis and market intelligence to fund managers, not just yell buy or sell.
“With its celebration of Whitney, Fortune, perhaps without even realizing it, seems to be inching over to this camp.”
Read more here.
Yulico writes, “The result is that some general counsels inside hedge funds are now telling their analysts and portfolio managers to be more tight-lipped — especially with journalists.
“One of my best sources, an analyst at a hedge fund that has been subpoenaed in the Lehman probe, says he has been told by his superiors to not talk with the media — not even on background. (In the interest of disclosure, this source and I speak about stocks other than Lehman, a company and stock I’ve never even written an article about.)
“For financial writers like me, who like to dig into public companies and provide the information or angles that some CEOs may not want to hear, this breakdown in dialogue is a detrimental development.”
Read more here.
Liz Claman, an anchor at Fox Business Network, writes Friday about how she was able to obtain one of four copies of an as-yet unreleased insider’s book on why Bear Stearns & Co. collapsed.
Claman writes that she got it from one of her best Wall Street sources.
She notes, “So once I had it, I had to call BrickTower Press.Â Needless to say they were stunned to hear that a reporter had gotten a hold of it.Â But for a boutique publisher whoâ€™s best-selling book up until this point was ‘Gardening in Deer Country,’ they were pretty cool about it.Â Because the galleys are being mailed to book critics and literary reviews TODAY, they knew the clock was ticking. They have allowed Fox Business to use quotes in a limited number.Â We thank them.
“Weâ€™ll be following the story all day long, Iâ€™ll be revealing quotes throughout the day with response from market watchers and former Bear Stearns employees, along with expert short-sellers and former SEC prosecutors.Â BrickTower says itâ€™ll reveal the identity of ‘Anonymous’ on or around September 22nd, the date of release, but of course feel free to start guessing his identity now.Â Â The book is now available for pre-order on Amazon.Â I predict that however many copies theyâ€™ve ordered, theyâ€™ll have to order more.”
Read more here.
TheStreet.com media critic Marek Fuchs takes issue with reporting at Forbes and the New York Times that ignores or plays down the risk that Merrill Lynch has kept by financing a deal to take $11 billion of risky investments off its books.
Fuchs writes, “And, as happens when you don’t let your foot get caught on the details of a deal, a false conclusion came next, set out happily in the very next line:
‘John Thain, Merrill’s chief executive officer, appears to be doing everything he can to wipe the slate clean for the company.’
“Yes, he’s wiping the slate clean … by financing the sale of the bucket of slop and keeping much of the risk.
“While Forbes really struck out on behalf of investors, others — like The New York Times — at least touched upon the technicalities of the financing but failed to explain what it meant.”
Read more here.
Orange County Register business columnist Jon Lansner wonders why S&L regulator John Reich believes that the media can cause the downfall of a struggling financial institution.
Lansner, former president of the Society of American Business Editors and Writers, writes, “I’m not going to defend every report on banking made by every reporter in recent weeks. But the media â€“- and the financial analysts we quote about banking’s deep woes -â€“ did not make the bungled executive and regulatory decisions that left, say, IndyMac in such bad shape. IndyMac’s financial hole is estimated to be as big as $8 billion. The bad judgment that created those kind of losses was the culprit for IndyMac’s failure, not a widely reported critical letter written by a U.S. senator.
“In wake of the IndyMac debacle, Reich questions why some analysts are guessing what other banks and S&Ls won’t survive the current economic storm. Reich hints that reporters disseminating those banking critiques are bordering on criminality: ‘I am an ardent believer in free speech and the First Amendment, but I also know our Supreme Court has ruled that free speech has its limits. You cannot scream ‘fire!’ in a crowded theater. Nor, in my view, should anyone feel free to scream ‘failure!’ in a bank lobby. This, in effect, is what happened across America (two weeks ago) and it was shameful.’
“Trying to blame the media â€“- whether the critic be regulator or banker â€“- for challenges of sickly financial institutions is nothing new. I reported extensively on the last S&L crisis in the late 1980s and recall rebukes of my own ‘irresponsible’ reporting by, among others, Charlie Keating’s Lincoln S&L. Keating eventually served jail time for trashing the failed institution.”
Read more here.
Ryan Chittum of Columbia Journalism Review wonders if the Securities and Exchange Commission‘s war on short sellers spreading rumors has hurt business journalists, and quotes one business reporter who recently tried to call a well-known short and couldn’t get him on the phone.
Chittum writes, “This is, of course, very true. Business reporters are bombarded by ‘longs’ and touts all the time. Contrarian sources are invaluable in helping journalists break through the flacky haze by pointing out problems the companies are papering over.
“But as I wrote in the Opening Bell this morning, Iâ€™d like to see more coverage of whether the SECâ€™s move has caused a ‘short squeeze’, where investors who have shorted stocks scramble to cover their bets by buying shares, sending a stock soaring.
“In the five days since the SECâ€™s announcement, financials have rallied 31 percent, The Wall Street Journal reported today, without noting the SEC connection.”
Read more here.
Jed Horowitz of Dow Jones Newswires writes Friday afternoon about how the timing of Merrill Lynch’s second-quarter earnings release for late Thursday afternoon affected how the poor results were positioned in Friday’s newspapers.
Horowitz notes that Merrill said it released its earnings Thursday so it wouldn’t conflict with J.P. Morgan’s earnings release on Friday morning.
Horowitz writes, “Indeed, by early Friday headlines about Merrill’s loss were off the front-page Web sites of The Wall Street Journal and the New York Times’s business section, though Merrill Lynch Chief Executive John Thain came in for some knocks on the inner pages of the papers’ print editions.
“There was nothing Machiavellian in the timing, Thain said in a 6:00 p.m. Thursday evening call with reporters. The company simply wanted to avoid a release conflict with JPMorgan Chase & Co. (JPM), which beat Merrill to its customary 8 a.m. release time, Thain said.
“The delay was not aimed at giving Merrill additional time to complete more asset sales that could offset its heavy writedowns and avoid a dilutive equity offering, Thain added. Merrill did announce the sale of two businesses for more than $7 billion; the sale of one, its 20% stake in Bloomberg LP to Bloomberg Inc., was widely telegraphed before the report.
“Merrill could have moved the announcement of its results to an hour before or after Morgan’s 8 a.m. release, said an investor relations executive with decades of experience at a Merrill rival, and some financial services firms have resolved conflicts that way. But investor relations professionals worry that dawn releases risk entrusting interpretation of results to inexperienced reporters manning early-morning news desks, while companies fear late-morning releases lead to conference calls during market hours when a slip of the tongue can create havoc with a stock price.”
Read more here.
Marketwatch media columnist Jon Friedman examines Friday the demands that the struggles of financial companies in the past year have placed on business journalists.
Friedman writes, “For financial journalists, the biggest challenge may be trying to accumulate instant expertise in so many areas.
“‘You have to get a primer on Fannie and Freddie,’ lamented [Newsweek columnist Daniel] Gross. ‘Next week, it’s going to be the FDIC. Before, it was the Fed and the discount window. It has been a rolling problem.’
“‘I try to write big-picture things and find the truffle on the forest floor,’ [Fortune columnist Allan] Sloan told me. Sloan is not only one of the senior observers on the Wall Street scene, but also one of the most forward-thinking of the lot.”
Read more here.Â Â
Kaja Whitehouse of the New York Post writes Friday that CNBC staff writers are upset about the Vanity Fair article by Bryan Burrough that implied their reporting was sloppy in covering the downfall of Bear Stearns & Co.
Whitehouse writes, “Burrough told The Post he’s been taken aback by the strong reaction, including calls from CNBC employees. ‘Maybe I touched a nerve,’ he said. ‘I don’t know.’
“And he says his intention wasn’t to place the blame on CNBC. ‘The idea that CNBC did in Bear Stearns is ridiculous,’ he said, but added that ‘there’s a few places where they stepped right up to the line and I think I point that out in the article.’
“While media watchers speculate that CNBC may now become more cautious in its reporting, Gasparino says ‘there’s no change in the way I do my job and I don’t think there is in the network.’”
Read more here.
Dow Jones Newswires plans to start a new markets column called Connections, to be written by Spencer Jakab, according to an internal e-mail from deputy managing editor Michael Reid.
Reid writes, “The column will run each week on Monday, Wednesday and Friday at 9 am eastern. Â It will examine issues, themes, links and connections in all global markets, from commodities to equities, forex to credit. Spencer will examine ideas like co-relation investment plays, dislocation of markets, cross-trading opportunities and the convergence (and in some cases divergence) of various global economic forces across asset classes. This column can be found under the code N/CNX.
“Spencer is the ideal columnist for this new, broader look at markets. He has been writing the Taking Stock equities column (initially called Street Savvy) for about two years. Prior to that he has written about energy markets in the US and equities markets in Europe.
“Before joining Dow Jones, Spencer was an emerging markets equity analyst at Credit Suisse First Boston, based in Europe, for eight years. He was ranked the top analyst in his sector for five consecutive years by a variety of investor surveys such as Institutional Investor and Greenwich Associates. He went on to become head of emerging Europe research, managing a team of 24 analysts covering 11 countries and spread over six offices. He wasÂ the youngest-ever managing director in CSFBâ€™s equities division.”