February 6, 2009

Press Clairvoyants: Opening Rise Means Markets Want Stimulus Passed (Update: CNN Doubles Down, Home Page Contradicts; Oh, Now It’s a ‘Rescue Plan’)

Have you ever wondered how the geniuses who report business news know why the stock market opens or closes up or down on any given day — especially when they venture into political explanations?

I received this e-mail from CNN just after the markets opened:

CNNheadlineOnStimulus020609

Gosh, those e-mail drafters at CNN are smart. Who knew that the markets want the stimulus package so bad?

Can’t you hear, senators? The markets want their stimulus and they want it now!

Give me a break. There is no hard evidence of CNN’s assertion. Others commenting on the opening, including CNN itself, aren’t buying all of what the e-mail was selling. Here’s what CNNMoney.com had to say at 9:42 a.m.:

Financial stocks rallied Friday morning, pushing the broader market higher as investors accepted massive January job losses, and tried to look ahead to the government’s stimulus plan and new version of the bank bailout.

That’s in the neighborhood, but still far from “rais(ing) hopes that stimulus will pass quickly.”

But RTT News doesn’t even mention the stimulus at all in its commentary on the first half-hour of trading:

Major Averages Posting Strong Gains In Early trading

(RTTNews) – After seeing some initial strength, stocks have continued to perform well over the course of the first half-hour of trading on Friday. The major averages have all moved firmly into positive territory, adding to the gains posted in the previous session.

With traders expressing optimism ahead of a speech from Treasury Secretary Tim Geithner on Monday, banking stocks are turning in some of the best performances. Most other sectors are also moving higher, with steel, semiconductor, and real estate stocks posting notable gains.

This didn’t stop other wire services from engaging in de facto stimulus package lobbying. Although this Reuters report ahead of the opening didn’t mention the stimulus package, this one shortly after the opening did. The Associated Press’s Madlyn Read wrote just before the opening that “Wall Street was set for a moderately higher open Friday as investors hung their hopes on the government’s stimulus plan even as they awaited another bleak jobs report.”

Zheesh. It’s just as likely that investors know how little real stimulus is in the bill, and have already discounted its relevance, whether it passes or fails. It may also be that the markets have had a bad few weeks recently as the reality of what Congress and President Obama are on the verge of doing to the economy has set in.

The overriding point is that the business press is pretending to know something concerning which it really has no idea. For them, that’s business as usual.

Cross-posted at NewsBusters.org.

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UPDATE, 1:15 p.m.: You can’t make this stuff up — CNNMoney.com home page has the text of its latest e-mail I received minutes ago at its home page, with a Fortune article that contradicts it right there as well:

This AP link, despite its writers’ game efforts, makes it clear that the markets are far more interested in Tax Cheat Tim Geithner’s modification of TARP than anything related to the stimulus.

The wire service did find someone to say the stimulus plan’s passage is important to the markets. But they framed another analyst’s quote in the context of support, when I doubt it really was:

Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, said investors now are wondering “will government stimulus stop this virus that’s spreading throughout the country?”

Well if they’re “wondering,” they must not be “wildly supporting.” Zheesh.

The highlight of the Fortune article is this:

The proposed stimulus, as it’s currently being debated in the Senate, would allot about $40 billion for transportation, construction and repair; $20 billion for building schools; and $60 billion for updating the electric grid and “greening” homes. The Congressional Budget Office estimates that about a quarter of the funding will be spent in 2009.

That’s $30 billion (one-fourth of 20+60+40). No one can really think that the markets are all excited about $30 billion, which is less than 1% of what the government spends in a year.

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UPDATE: The CNN folks must have gotten a DNC memo to change the terminology. Now it’s an “economic rescue plan” in this after-close e-mail –

CNNpostClose020609

A complete POS (pile of stink) by any other name ….

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4 Comments

  1. Think maybe the suspension of mark-to-market coming Monday had something to do with it? ( http://corner.nationalreview.com/post/?q=MDFjZTliZmY1NmNmMmZjMDgwNWE1YmVjOWUzNGE0Y2E= )

    Comment by Joe C. — February 6, 2009 @ 6:47 pm

  2. Another possible reason for the Friday market moves, and for Monday too…

    http://corner.nationalreview.com/post/?q=MDFjZTliZmY1NmNmMmZjMDgwNWE1YmVjOWUzNGE0Y2E=

    Mark-to-Market Suspension Monday? [Iain Murray]

    The Dow is heading up, and it’s not because Senatorial opposition to the stimulus is weakening. It started with the news yesterday that the Administration is on the verge of getting one huge thing right and will announce a suspension of certain mark-to-market rules on Monday. This will instantly reduce the risk for financial firms with bad assets on their books from future paper losses that could adversely affect their regulatory solvency. As we at CEI have been saying from Day One of the financial mess, there is no easier relief measure around. To its very great credit, the Obama administration appears to have realized this. Obama and Geithner actually deserve applause for this.

    However, it seems likely that the significant Dow rally that will probably result will be spun otherwise, as market support for the stimulus. Ironically, the best way to stop them getting away with this spin may well be to praise them extravagantly for something they’ve done right.

    Comment by Cornfed — February 6, 2009 @ 9:23 pm

  3. FOX made the same mistake. Carl cameron last night was saying the market rallied on anticipation of the stimulus passing. Maybe it rallied because no one wanted to be holding shorts through the weekend. Maybe it rallied on news the crap sandwich was in trouble.

    Comment by Largebill — February 7, 2009 @ 10:15 am

  4. #3, Unfortunately the Fox people are largely at the mercy of the wires if they don’t have alternative original reporting or a ton of perpetual skepticism.

    Comment by TBlumer — February 7, 2009 @ 12:04 pm

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