Tag Archives: business news

DIY Business News: How to stop yelling at the TV screen and get some real news

Stock Ticker Old

Spare me the whining about Americans and their financial illiteracy.  It’s not like they are getting any help from institutions which ought to be assisting them. 

Media bashing gets a bit cheap at times, but in this realm the broadcast media isn’t delivering anything close to real “business news.”  For starters, most of what passes for “business” news on the cable TV outlets is nothing more than financial sector gossip and stock market reporting.   When everything is said and scrolled across the screen, what the consumer has gotten is information of the stock markets, by the stock markets and for the stock markets.  

If we take the most generous definition of an investor possible – one including individual investors, investors in retirement 401(k)’s, IRAs, mutual funds, and ETF’s – then we can claim that 48% of the adults in the U.S. have money invested in “the market.” [CNN]  Meaning, 52% of Americans have no investment in “the market” at all, and one could question how carefully those who have funds in the retirement accounts are attending to the investments made on their behalf.  Drilling a bit deeper into the numbers we find that only 13.8% of all U.S. families held any individual stock. [CNN] “Ownership of savings bonds, other bonds, directly held stocks, and pooled investment funds sustained sizable drops in ownership rates between 2010 and 2013, although none of the four types of assets are commonly held, with ownership rates in 2013 varying between 1.4 percent (other bonds) and 13.8 percent (directly held stocks).” [FED pdf]

The best face we can put on this is that what passes for business news in this country is stock market information of direct interest to at best 14% of the nation’s adult population.  Why? We can guess — (1) It pleases the managerial types who are focused on short term gains in stock prices? (2) It’s cheap to produce?  Reporting on stock prices is really easy, especially if the big driver is something accessible like the Dow Jones Industrial Average. (3) It gives executives an opportunity to tout the value (whatever that might be) of their companies, thus moving their stock prices up?  However, what it doesn’t do is give anyone a clear overall picture of business in the United States of America.

Do It Yourself

If business news isn’t what’s on offer from the news channels which purport to provide it – then where to find it? 

The Federal Reserve has all manner of publications available online which will inform the inquisitive about consumer and personal finance.  Auto and Student debt is up at the moment, while the home ownership rate is falling, but not as many homeowners are now in default.  Interested in income inequality, or wealth gaps? Information is available from the FED on those topics as well.  Look and one can find all manner of information and analysis, unfettered from political punditry, on the subject.  In fact, one can discover that the way we talk about income inequality may be a function of how we measure it.

The San Francisco Federal Reserve is pleased to highlight its blog, with features ranging from how the FED recycles old currency to how Medicare payments may be curtailing inflationary trends.  If more generalized information is the target, then the Beige Book is as good a source as any:

“Commonly known as the Beige Book, this report is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector. An overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis.” [FED]

Think of the Beige Book as “one stop shopping” for general economic news in each of the FED’s regions.

 Hard Hat

Labor:  A steady diet of cable business news might leave a person with the idea that labor news doesn’t exist except so far as it concerns minimum wage issues, or the latest protest of less than living wages. It’s more difficult to find than information about economic trends, but it’s there.   A person might want to start with Labor Press.OrgLabor Notes, is another source.  Union labor issues are well publicized in AFL-CIO sites.  There’s more information available from the SEIU, and AFSCME.

Those cable shows – and they are just ‘shows’ – could fill a goodly amount of their time just from Department of Labor information.  They won’t because they’re too busy tossing softballs to CEOs, but they could for example offer the investor’s side of the argument about fiduciary responsibility and financial advisers from DoL information.  If it’s numbers that are wanted, there’s a whole bureau for those – the Bureau of Labor Statistics.  Want the current consumer price index, the unemployment rate, payroll employment figures, average hourly earnings, the producer price index, productivity statistics, or the employment cost index? All these are available from the Department of Labor.

Doing Business:  Republican presidential candidates Cruz and Kasich both proposed eliminating the Department of Commerce.  This is taking the Tea Party Express right over the edge into the Silly Swamp.  One excellent source of information about our economy is the Bureau of Economic Analysis, which compiles data regarding personal income and outlays – read: income and spending – what could be more “economic” than that?  Want information concerning the Gross Domestic Product? Consumer Spending? Corporate Profits? Fixed Assets?  Balance of Payments? State and Metropolitan GDP? Quarterly GDP by industry? It’s all available from the Department of Commerce Bureau of Economic Analysis.

When thinking of broadcast media it’s important to remember that what keeps the cable ‘business’ news going are advertising sales, and a commercial which might cost $2,000 to $3,000 for a network broadcast sponsorship could be as cheap as $175 on cable.  Little wonder their business seems to be limited to softball interviews and streaming the DJIA numbers on the screen – which you could do at home on any computer monitor.  Those shows are relatively banal because they probably can’t afford anything else.

Enterprises like Bush’s Baked Beans, Chef Michael’s Canine Creations, and Slap Chop are right in the mix with Ford, Chevrolet, and Wal-Mart sponsoring what passes for business and news reporting. [HuffPo] We’d be better served to Keep Calm and Do It Yourself.

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Filed under Commerce Department, Economy, labor, media, Tea Party Express

Money Honey and the Sticky Mess of Business News

JP Morgan Stock CertificateWell, no surprise here… Maria Bartiromo is leaving CNBC for the friendlier climes of Fox Business News.  [Guardian]  FBN appears to be collecting a group of well known anchors who represent a form of business journalism which is fine for the Financialists among us but not quite so good for the illusive common consumer of business news.  Not to put too fine a point to it, BUT the sooner this assemblage is all in one place — away from those of us who are not willing to settle for blather and bluster the better.  Here’s why:

Investors vs. Traders — Michael Hiltzic, writing for the LA Times, notes the “top” business news cable channel isn’t about business. He’s right:

“First and most important, CNBC isn’t really a business news service for the average investor, though that’s how it pitches itself. It is and always has been a service for traders, who are nothing like investors. Traders have very short investing horizons, have to move fast, and often don’t make their decisions on corporate fundamentals like balance sheets, cash flow and the potential for profit or loss.”  [LATimes]

If you are looking for information about the health, wealth, and management of a publicly traded corporation — it isn’t on the so-called business channels.   An investor is looking for information useful toward making a decision for longer term allocation of capital, the focus on the Quarterly Earnings Report is of interest to the traders who may not hold a stock much longer than it takes to make a profit on its sale.   This situation leads to the second problem.

Blind Shots in the Dark — traders trade, that’s what traders do.  They are guessing, conjecturing, speculating on the future price of a stock, constantly running toward or away from moving goal posts.  Thus, what we get on the business channels all too often includes less than illuminating formation.

Convenient causality – Convenient causality is clearly visible when the talking head on the TV says something like, “Shares of toy maker  Silli-Mess rose today after reports indicated strong consumer sentiment for this holiday season.”  Whoa.   While toy sales may, in fact, have a good run because the consumer sentiment seems to be higher, unless the toy is a blockbuster with the little tykes it may just be one more plastic piece of short term entertainment in a highly competitive market.  And, just because “consumer sentiment” is slightly higher — who says that’s going to drive sales of a particular product?  A person could make the same statement about cars and canned soup.

Dangling Correlations – the second cousin of the convenient causality.  Consider the following two headlines from the same news outlet in the space of 15 hours.  Monday, November 25 headline: “Oil prices stabilize after Iran deal, Asian shares steady” [Reuters]  Tuesday, November 26 headline: “Global shares droop as oil prices climb on Iran deal doubts.” [Reuters]  So, is there a correlation between the current diplomatic efforts with Iran and oil prices?

There might be, BUT does this tell us much of anything about larger, long term, factors like exploration results? Consumer demand?  Trends in fossil fuel utilization?  Nupe.  Did anyone mention this headline: “The US has 43 nuclear power plants’ worth of solar energy in the pipeline,” [Quartz]?

Once again, the information describes the oil market for traders not investors, and for short term interests not those of long term investors.

Softball specials – One of Bartiromo’s specialties, the softball questioning of CEO’s, [TBusN] highlights the superficiality of most cable business news.  The Velvet Glove, with which the many issues of JPMorgan were handled on CNBC, created the following rejoinder from Bartiromo: “Should we talk about the financial strength of JP Morgan? The company continues to churn out tens of billions of dollars in earnings and hundreds of billions of dollars in revenue. How do you criticize that?” [Reuters]  Oh, how about the following headline from Quartz (Fernholz) “A list of all the reasons why JP Morgan may be facing the biggest bank fine ever,” September 2013?

Great Expectations –  The following sentence, which passes for analysis in altogether too many quarters gives us an example of Great Expectations:   October 23, 2013: “U.S. stocks declined, with the Standard & Poor’s 500 Index falling from a record, as valuations reached an almost four-year high and forecasts at companies from Caterpillar (CAT) Inc. to Broadcom Corp. disappointed investors.” [Blmbrg]  That would be translated as they “missed analysts expectations.”

What were the analysts expecting?  Stop. Think. Apply Felix Salmon’s “weather report” test.  Was the temperature a few degrees colder today than we expected?  Do we blame Mother Nature?  No, in most cases we say that the weather reporter or the agency making the conjectures missed the mark.   Might it be even remotely possible the analysts missed their marks?

In the meantime, there’s better sources of business news available for investors (not traders) thanks to the Internet, but it’s sad that those broadcast outlets aren’t helping people sort the wheat from the chaff.

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Filed under Economy, Politics

Would It Be Too Hard To Deliver Some Real News?

One of the more unfortunate results of the Financialist bent in our economy is the corruption of business and economic news.   On national broadcasts “the economy” is often reduced to a few moments during which the Talent will inform us of unemployment figures (maybe) or some other statistics (perhaps) before dutifully reciting the latest numbers from the New York stock markets.

All too often the script goes something like this: “The Department of Labor released its unemployment report for (fill in the date) showing a moderate uptick in private sector employment for the month of (fill in the date).  The Stock Market, which opened slightly down this morning reported gains in the early afternoon after the report was released.”  And, then come the numbers.

The first question for most viewers probably ought to be: So What?

The stock markets are filled with traders. Traders trade. That’s what they do for a living.  They would trade if the employment numbers went up — with maybe more “buys.” They would trade if the employment numbers went down — with maybe a few more “sells.”  However, shifting from the employment numbers to the stock market numbers gives the appearance that the two are inextricably and causally connected.  They may not be.

For example, we could have the best employment improvement in the past year, but if the Eurozone starts to implode I’d be as willing as a bond trader to bet that the “the markets” will go down.  The one thing the stock market report does tell us is that human beings are essentially herd animals and it doesn’t take too much to stampede the cavvy.  Anything and everything can be interpreted as a rationale for trading.

Lately, the most extended “economic” informational stories have been related to the housing market and recessionary pressures on middle class Americans — “The impact of layoffs”… “The Sad Tales of Foreclosure”… with little context supplied to the subjects.   We ought to be able to ask more informed questions.  How many of the present foreclosures were precipitated by homeowners who refinanced homes in which they had some equity?  How many of the foreclosures are related to families with profound medical expenses?  How many of the foreclosures are the result of homeowners who were sold NINA loans by subprime lenders like Ameriquest?  How many are the result of fraudulent appraisals conducted by unscrupulous brokers?  How many homeowners were unable to refinance because of a deterioration in home values, when the original values were inflated?

Without contextual information the simplistic charges and counter-charges made by Wall Street apologists on one hand and those who defend the “flippers” on the other — “It’s All Goldman Sachs,” “It’s All Fannie and Freddie,” or “It’s All Irresponsible Homebuyers” — are allowed much more credence than they deserve.

The context is available.  There are several excellent publications which address the collapse of the housing bubble — but most viewers are on their own to locate these references.  There are reports available from the Department of the Treasury, the Office of the Comptroller of the Currency, the Department of Housing and Urban Development.  However, you have to find them yourself.  Spending time searching The Web for information means you’ll probably have to miss broadcast news about the latest natural disaster, shark or bear attack, house fire, and political trivia.

The situation on the so-called “business channels” is even worse.  Nearly every segment relates to “what does this mean for the Market?”  “This” being nearly any imaginable topic.  If the “analysts” aren’t analyzing, then we can bet that someone will be interviewing the manager of Flight By Night Securities about his (rarely hers) predictions for the “investment picture” for the foreseeable future.  That the prognosticators fell flat on their faces in late 2008 is “old news.”

The truly sad part of the housing bubble collapse story is that the information WAS out there.  Contrary to some popular versions of the narrative, more than just a handful of investors and fund managers were cognizant of increasing default levels, increasing numbers of subprime loans being sold even to people who could have qualified for conforming mortgages, and the decreasing underwriting standards that polluted the whole system.  So, why does it seem like so many people were so surprised when the bottom dropped out in 2008?

The best answer may well be that they weren’t, but that doesn’t mean that the casual viewer of nightly news casts and cable business broadcasts had the information.  The cable business channels cater to the Street. That would be Wall Street not Main Street.  Heaven forfend they should broadcast nay-sayers who might cause the Herd to Stampede for the exits.

Therefore, what the cable business channels will impart is primarily Financial news, which fits right in with our current financialist tendencies. “Financialism is an economic system where the primary activity consists of creating and manipulating financial instruments.” [SeekingAlpha]

We knew that manufacturing had taken a hit in this country, but this wasn’t a topic worthy of much consideration on the financial channels.  Therefore, the information was broadcast piece-meal, if at all.  Off-shoring, and out-sourcing were “old news,” and the attention deficit disordered media moved on.  Unfortunately, the layoffs had an impact on local economies and local housing developments.  There was a total picture, but we were getting jig saw puzzle pieces of it straight out of the box.

We knew that we were getting besieged with offers of home equity loans, low down payment auto loans, and applications for every credit card sponsored by every entity under the sun.  What we didn’t know was that these were being manipulated into asset based securities — that the asset based securities were being manipulated into CDOs — that the CDOs were being manipulated into synthetics — that people were out there buying Credit Default Swaps on the whole mess.  The primary economic activity moved ever closer to the “creation and manipulation of financial instruments.”

Outside of some egregious examples of corporate rapacity, most of these activities were conducted in broad daylight.   Brooksley Born had already sounded an alarm on the lack of CFTC derivatives oversight.  Sheila Bair had been warning about the subprime mortgage market since 2002.  The Office of the Comptroller of the Currency had a working paper, “Specification and Informational Issues in Credit Scoring,” published in December 2004.  There was a red flag in the OCC report surveying credit standards in September 2004, “ At the product level, only three of eight retail products were reported to have a net increase in credit risk in the past 12 months – credit cards and the two home equity products. Examiners cited a decline in the quality of credit card portfolios and concern about external conditions for credit cards and the two home equity loan products as the reasons for the increased risk.

And, the band played on… as if the strains of “Nearer My God to Thee” could still be heard coming from the deck of the Titanic.  Enron, World Com, and Tyco sank — and the happiness people on our television sets kept ‘informing’ us the economy was doing well.  Most people were unaware of the ramifications of the Alternative Mortgage Transaction Parity Act.  The television talent continued to interview CEOs and fund managers.  That J.P. Morgan had been allowed to get relief from capital requirements by using credit derivatives since 1996 wasn’t common knowledge.  Bankruptcies, like that of The Money Store in 2000, should have caused the red flags to fly — they were still at half mast.

The capacity of the American public to take on more debt was questioned when regulators and analysts noticed that the mortgage industry shifted from primary loans into refinancing.  The American public was less informed of this shift than of the “housing start numbers,” and the effect those had on major construction company stocks.

With the advent of Occupy Wall Street the broadcast media “discovered” income inequality trends.  Actually, the San Francisco Federal Reserve published a paper in 2007 saying: “Over the past four decades, overall income inequality has increased in the U.S. One particularly striking feature of the data is that the income gap has widened most between the top and the middle of the distribution, while it has remained relatively stable between the middle and the bottom.”  The paper drew on sources going back as far as 1994.   The broadcast media briefly glimpsed at the global GINI coefficient, meanwhile U.S. residents were living in it, and in the increasing gap between the top 1% and the remaining 99%.

Thus what we now have is a broadcast media which is calibrated to report financial news, all too often without contextual or historical references, and with an emphasis on the reactions of markets — not the reactions of those who are major participants in our overall economic life.

The media evidently consider it sufficient if a representative of the NFIB is speaking of small business, without asking if the association’s position actually represents the interests of businesses employing fewer than 50 people?  Or, that it seems sufficient to have a ‘panel’ consisting of fund managers discussing the turn-around in the automobile industry?  Or, to find no reason to discuss the fact that on the day Kenneth Lewis, CEO of Bank of America told his shareholders All Was Well, his bank owed the Federal Reserve some $86 billion dollars. [Bloomberg]

This really isn’t enough for an informed citizenry.  However, until the day the business channels and nightly recitation of stock market numbers are transformed into realistic economic reporting, we may have to make do for ourselves using print media, blogs, agency reports, and then put the pieces of the puzzle together for ourselves.

 

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Filed under Economy, media