The Big Picture | Financial Press

Kudlow on Ritholtz

Thursday, May 15, 2008 | 04:30 PM

Every time I think to myself, "Tonite is the night I might actually strangle this bastard with my bare hands," he goes and does something nice like this:
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Big Picture Ritholtz

My friend Barry Ritholtz, author of the excellent Big Picture blog, did a great job last night defending his recession views on Kudlow & Company. The guests were stacked against him, but armed with his good humor and incisive economic analysis, Barry made his case. It was an impressive performance. Barry has been predicting recession for nearly two years. And while he hasn’t been exactly right, he hasn’t been exactly wrong either.

Incidentally, this morning’s drop in industrial production supports his recession case (even while many other indicators run counter to it). But one thing is certain: Barry’s warnings about rising headline inflation have proven most prescient. In fact, a populist election revolt against high food and gasoline prices is occurring right now.

Mr. Ritholtz is a political moderate – probably a moderate Republican when it gets right down to it. He is a capitalist. He is not a supply-sider. But he is a very smart, good-natured, good guy. For those in the political world, interested in following the hot topics debate in the financial world, you can do no better than reading his Big Picture blog. I read it everyday.

-Kudlow's Money Politic$ http://kudlowsmoneypolitics.blogspot.com/2008/05/big-picture-ritholtz.html

Or, if you prefer, the version on National Review Online:
http://kudlow.nationalreview.com/post/?q=NmEzMjNmNDhhNDYxYjRjZThlZmMwZjUzZDAwMWU1N2Y=

Or on CNBC.com
http://www.cnbc.com/id/24652210

Thank you for the sentiment, Larry.

My First TV Review

Thursday, May 15, 2008 | 11:30 AM

in Financial Press

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If you missed last night's Kudlow & Co., you can see the video here. While readers discussed the pros and cons of the appearance, Dealbreaker actually ran a review of it.

Kudlow & Co. Appearance (5/14/08) (The Big Picture)

We've taken some gentle shots at Barry Ritholtz before, but man, did he outclass'em on Kudlow last night. Going up a panel of, frankly, nutjobs, Barry was cool and logical, while the rest were, well, a bit nutty. The most ridiculous part was when they implied he was a hypocrite for owning stocks, while also thinking stocks might have further to fall. That was the point it was obvious that none of them really managed money before, or really had the slightest clue what he was talking about. At one point, Don Luskin said: "If your FusionIQ (the name of Barry's firm) ever gets to 100, short it." (jerk).

Thanks, guys. I should be only be so lucky as to have such reviews all the time...

Source
Opening Bell: 5.15.08
Joe Weisenthal,
Dealbreaker, May 15, 2008, 7:08am
http://dealbreaker.com/2008/05/opening_bell_51508.php

Wanna Bet ?

Saturday, May 10, 2008 | 06:41 PM

in Data Analysis | Economy | Financial Press

My pal James Pethokoukis is a 2002 Jeopardy! champion -- so I don't lightly challenge his knowledge of either the esoteric trivia or data driven facts.

However, when he -- along with Messrs. Wesbury, Mankiw, & Kudlow -- declared unequivocally that, since there have been no negative quarters of GDP, there is no Recession, I picked up that challenge. As the publicly available GDP data I pulled from the Bureau of Economic Analysis and the Federal Reserve Bank of Philadelphia showed, these gentlemen were incorrect: Recessions can and do begin with positive GDP data.

While no one can say for sure as of May 10, 2008 we are definitely in a recession, I certainly see plenty of evidence suggesting that is a very strong possibility.

Similarly, James cannot say for sure that a +0.6% = No Recession -- though I graciously concede he also has some evidence to back up his claims. Indeed, Jimmy P. is so confident, he is now calling this The Recession That Wasn't.

Well, we will find out ~~soon enough~~ eventually. Hence I propose the following bet: If a recession is eventually declared by the NBER, and if in between the official start and finish points there is any month in the first or second quarter of 2008, I win. In other words, if any part of Q1 or Q2 2008 is part of a recession, James loses.

If there is no recession, or it there is one, but it doesn't include any month in Q1 or Q2 2008, James wins.

Loser buys dinner for 4, at the restaurant of winner's choice. Why 4? Winner's and loser's spouses are included. The wager includes dinner, wine, car valet, and tip.

James, do we have a bet?

Video: David Einhorn, Greenlight Capital, William Ackman, Pershing Square Capital

Saturday, May 10, 2008 | 06:11 AM

in Credit | Derivatives | Financial Press | Video

Every now and again, CNBC puts on a superlative show. Friday morning's Squawk Box was one of those times when they hit the ball out of the park.

As I was heading out the door to work, I heard David Einhorn of Greenlight Capital begin chatting about shorting stock, soft SEC enforcement, and Allied Capital (ALD). CNBC also announced that William Ackman of Pershing Square Capital was coming on in a while.

Einhorn discussed his presentation at Jim Grant's conference Private Profits, Socialized Risk as well as his book, Fooling Some of the People All of the Time: A Long Short Story.

So before leaving the house, I TiVo'd Squawk, and then headed off to work. I watched the show Friday evening, and it was fantastic. Watch the videos below and see if you agree.

• The Short & Short of It
Short selling can be good for the markets, with Owen Lamont, DKR Fusion, David Einhorn, Greenlight Capital and CNBC's Steve Liesman

click for video

• Whistle-Blowing pt. 1

Activist investors face challenges convinsing regulators to face the facts, with William Ackman, Pershing Square Capital Management and David Einhorn, Greenlight Capital Management

click for video

• Whistle-Blowing, 2
click for video

• Hedging Your Bets

Discussing fraud on Wall St., with David Einhorn, Greenlight Capital Management president

click for video

Related

Fooling Some People site
http://foolingsomepeople.com/main/

The Speech
http://foolingsomepeople.com/main/speeches.html

Book: Fooling Some of the People All of the Time: A Long Short Story

Jim Grant's conference presentation Private Profits, Socialized Risk

Is Inflation Really Understated? (No!)

Thursday, May 08, 2008 | 11:20 AM

in Financial Press | Inflation | Psychology/Sentiment

Yesterday, I wrote: "David Leonhardt's NYT columns are oftentimes insightful and illuminating. Unfortunately, today's column is not one of those times . . ." I promised readers (and David) an explanation. Consider this it.

First off, I interpreted Leonhardt's column as really two distinct issues -- one psychological, one statistical. He got the first one right, but muffed the second.

The psychological concepts of recency effect and salience were dead on. Gasoline is the only consumer product that has 6 foot tall prices on street corners and highways. We see gas prices more readily than we do many other items. So the visibility -- Salience -- is very high. Additionally, drivers tank up every week or more. You cannot help but see and feel the prices more acutely than other items.

The same is true for food prices. You see supermarket prices more readily than many other items, shop for them more regularly. When a restaurant menu has to use stickers to update new menu prices -- they change too rapidly too print new menus each time -- you notice it.

The Psychology of inflation is a genuine factor in how people feel. On these issues, the column correctly described the angst behind frequent purchases.

Perhaps it is a matter of emphasis, but I thought the column's tone and content failed to adequately address other realities of price changes in the US.

Let's look at these explicitly. Consider the following realities:

- Education, Health Care, Housing, Insurance, Property Taxes are not as visible as food or energy. However, they have all risen tremendously in price;

- David mentions that Prices were flat in the 1980 -- but that followed a huge spike in the preceding decade, the inflationary 1970s. That points to the impact of the Fed more than anything else. In the 1970s -- and the early 2000s -- the Fed dropped rates, allowing more inflation than is comfortable.

- Prices do not necessarily rise smoothly; they seem to sawtooth, rise abruptly, stay the same for a period, rise abruptly again. When this huge run in commodities ends -- as all bull markets eventually do -- would it surprise you to see prices flat for 2 decades?

- Even with the recent pullback in Housing, prices remain significantly elevated; By many traditional metrics (i.e., median incomes to median home prices) Houses are cheaper than they were in 2005/06, but much more expensive than prior years.

- Owner's Equivalent Rent (OER) -- the BLS method of accounting for housing expenses -- is flawed, but not quite in the way the column suggested. First off, it fails to account for increases in utility costs, property tax increases, and rising maintenance expenses. Additionally, while OER understated inflation when housing prices were rising -- due to the falling rental market -- it may not be overstating them on the way down. Why? The excess inventory of homes for sales have become rental units, and in many markets is depressing rental prices. (UPDATE: See Tim Duy: Misunderstanding the CPI for more on this).

- Core Absurdity: The idea of eliminating "Volatility" by ignoring prices in food and energy is ridiculous. If one wants to smooth the data or pull out price fluctuations, you should use a moving average. For example, as Oil ran from $20 to $120, the concentration on the Core didn't reduce volatility, it instead eliminated a huge source of Inflation.

- The same is true for the doubling and tripling of food prices over recent years.

- Speaking of food, the BLS concept of Substitution is more nonsense. When Steak goes up in price, and consumers choose chop meat instead, that does not mean there was no inflation -- it means you have been price out of steak. (No mention of that in the column)

- Also omitted: Hedonics -- quality adjustments -- which have claimed that falling prices are deflationary. See our prior discussion: Technology Adoption Lifecycle as to why they are not (go to #3).

- If hedonic quality improvement is anti-inflationary, what about corresponding drops in quality? The low, low price retailers sell cheap clothing, but subjectively speaking, the quality has been decreasing rapidly. Where's the Hedonic adjustment for that?

- Sometimes, skepticism is deserved. Each of the major BLS changes in CPI data have resulted in a significant shift downwards in price reporting:

Courtesy of San Diego Union Tribune

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Lastly, as to the conspiracy theories, I have my own take on it: The government doesn't respect you enough to lie. They actually put out all of the official statistics reach month for anyone with the time and interest to plow through them. All of these data runs, adjustments, changes to CPI, historical data -- its all online, waiting for you to review it, and be mollified or outraged.

Most people don't bother . . .

Sources:

Seeing Inflation Only in the Prices That Go Up
DAVID LEONHARDT
NYT, May 7, 2008
http://www.nytimes.com/2008/05/07/business/07leonhardt.html

The Fed's inflation gauge isn't realistic, critics say
Dean Calbreath
San Diego UNION-TRIBUNE, April 17, 2008 http://www.signonsandiego.com/news/business/20080417-9999-1n17inflate.html

Previously:
GDP, Inflation & Recession
http://bigpicture.typepad.com/comments/2008/04/gdp-inflation-r.html

Is the Fed Causing a Global Food Crisis?
http://bigpicture.typepad.com/comments/2008/04/is-the-fed-caus.html

Inflating Our Way Into Recession
http://bigpicture.typepad.com/comments/2008/02/inflating-our-w.html

Inflation? What Inflation? (NYT Edition)

Wednesday, May 07, 2008 | 09:16 AM

in Financial Press | Inflation

David Leonhardt's NYT columns are oftentimes insightful and illuminating.

Unfortunately, today's column is not one of those times . . .

More on why tomorrow.

IF ANYONE HAS ANY SPECIFIC EXAMPLES, FEEL FREE TO USE COMMENTS

Source:
Seeing Inflation Only in the Prices That Go Up
DAVID LEONHARDT
NYT, May 7, 2008
http://www.nytimes.com/2008/05/07/business/07leonhardt.html

Fannie Mae is Fantastic !

Wednesday, May 07, 2008 | 06:42 AM

in Credit | Derivatives | Financial Press | Real Estate

At lunch with a journo friend, the question arose as to whether or not yesterday's front page NYT article on Fannie Mae (FNM) was inflammatory or not.

I am not sure if inflammatory was the correct word, but the Times certainly got the gestalt right of how bad things are at the mortgage GSE these days.

Consider these Fannie Mae facts:

• Their loss of $2.2B was 4X greater than expected ($-2.57B v.s. $-.640m expected)
• FNM accounted for 81% of the home-loan market in Q1 2008
• Shareholder equity dropped to less than zero for the first time in 15 years (from $20.5 billion in Q4)
• Subprime exposure: $51.2B
• Alt-A exposure: $344.6B
• Fair market value of assets dropped to $12.2 billion last quarter from $35.8 billion in December. This includes $56.1 billion in Level 3 assets;
• Moody’s downgrades FNM’s financial strength one level to ‘B’
• Credit and derivative losses rose fivefold to $8.9 billion; expects bigger credit losses in 2009;
• Estimates for credit losses in 2008 were boosted to 13 basis points to 17 basis points (up from 11 to 15 basis points). Each basis point, 0.01%, = 15 cents of earnings/sh (Morgan Stanley)
• Company issued $6B in securities to shore up balance sheet
• FNM cut their dividend to preserve capital
• Fannie Mae warns the housing slump will persist into next year.
• CEO sees 7-9% decrease in home prices in 2008 (previous estimate: 5 - 7%)
• FNM’s regulator, Office of Federal Housing Enterprise Oversight (OFHEO), said it will lower surplus capital requirements to 15 percent from 20 percent. Hence, this should allow more (not less) lending into the troubled mortgage market.
• Ofheo also lifted its consent order -- imposed in 2006 after $6.3 billion in accounting errors;
• Barney Frank’s (approved by BB) proposed mortgage bailout boosted FNM -- it rallied 15% from opening lows.

Hence, the cure for too much leverage and a lack of mortgage lending standards is more leverage and increased lending.

Note: We no longer have any short positions in FNM . . .

As the old cliche goes: "It's not the news; it's how the markets react to the news that matters." We agree.

click for larger graphic

courtesy of NYT

Sources:
Doubts Raised on Big Backers of Mortgages
CHARLES DUHIGG
NYT, May 6, 2008
http://www.nytimes.com/2008/05/06/business/06fannie.html

Fannie to Boost Capital After Posting Big Loss
JAMES R. HAGERTY
WSJ, May 7, 2008; Page C2
http://online.wsj.com/article/SB121007526280870313.html

Read It Here First: Murdoch, Ink

Tuesday, May 06, 2008 | 03:30 PM

in Financial Press

A few weeks ago, we asked: Are Murdoch's WSJ changes creating an opening for NYT, FT?

By coincidence, Newsweek ran a similar article a day or so later, titled Murdoch, Ink (it looks like it was in the works for a while, so I am not accusing anyone of plagiarism or even inspiration). It raised many of the same issues of the de-financialization of the WSJ's coverage.

The most interesting aspect of that Newsweek piece was the floated possibility of a realistic buyer for the NYT: Michael Bloomberg:

"But the loudest chatter is about Bloomberg, whose fortune—based on his stake in financial-information giant Bloomberg LP—Forbes magazine pegs at $11.6 billion. In a farewell column in January marking his retirement, Journal managing editor Paul Steiger touted the possibility of a friendly Bloomberg-Times merger. In NEWSWEEK interviews last week, a member of Bloomberg's inner circle confirmed that the mayor's confidants and closest associates are, in fact, encouraging him to explore the idea. The Bloomberg source wasn't authorized to publicly discuss the matter and, as a result, insisted on anonymity. Through a spokesman, Bloomberg declined to comment. According to the source, the proponents of the merger are appealing to the mayor's sense of "civic-mindedness," arguing that he is best suited to take the publishing company private to "help protect the brand" in the wake of relentless shareholder assaults. "It is clearly a brand that Bloomberg could help preserve and that he cares about immensely … and could pay a competitive price" for, says this person.

Murdoch, for one, sees a natural fit between Bloomberg and the Journal's uptown rival. Bloomberg, he notes, has pledged to remain a force in national public life after leaving New York's city hall at the end of next year. To that end, owning the Times would help immensely, Murdoch reasons. Yet the prospect of competing against a Bloomberg-owned Times appears to rattle him. "I wouldn't look forward to going up against him," Murdoch told NEWSWEEK, citing his "great respect for Bloomberg's business abilities."

Rather fascinating. That would make a hell of a combination . . .

Previously:
Murdoch's WSJ Changes Creates Opening for NYT, FT Apr 24, 2008 http://bigpicture.typepad.com/comments/2008/04/murdochs-wsj-cr.html

Source:
Murdoch, Ink.
Johnnie L. Roberts
NEWSWEEK, Apr 28, 2008 Issue
http://www.newsweek.com/id/132852

Related:
What’s an Investor to Do if a Star Firm Stumbles?
GERALDINE FABRIKANT
NYT, May 4, 2008
http://www.nytimes.com/2008/05/04/business/04sherm.html

Visual News Aggregator

Tuesday, May 06, 2008 | 02:00 PM

in Digital Media | Financial Press | Web/Tech

Interesting visual news aggregator from MSNBC: Spectra

You can custom select from a variety of news topics and sources.

Here's the official blurb:

Spectra merges the news spectrum and the color spectrum into an expansive news viewing experience. With comprehensive live news coverage, striking design, complete customization, dynamic browsing, human body interaction and many other unique features, Spectra brings A Fuller Spectrum of News to life in our most immersive extension yet.

(Who the hell writes this shit?)

Challenge for Economists: Positive GDP Recessions

Tuesday, May 06, 2008 | 10:01 AM

in Data Analysis | Economy | Financial Press

Several economists and pundits have unequivocally stated that, since there have been no negative quarters of GDP, there is no Recession.

This group of economic observers include former CEA Chair and current Harvard Prof Greg Mankiw, economist Brian Wesbury, economist/media pundit Larry Kudlow, and USNews reporter James Pethokoukis -- amongst a few others.

Here's my challenge for both BP readers and these economic observers:

Has there ever been a recession declared by the NBER, even where there was not 2 consecutive quarters of negative GDP?

Have there been past recessions where GDP was originally reported as a positive number?

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Readers can post their answers below.

I will post the definitive answer to this in 24 hours.

Video: Bear Stearns Bailout "Worst Fed Mistake in a Generation"

Wednesday, April 30, 2008 | 03:30 AM

in Derivatives | Federal Reserve | Financial Press | Video

On Monday, I pointed to a WSJ article, regarding the Fed's past head of monetary affairs comments on moves to prop up Bear Stearns. (Bear Stearns Bailout "Worst Fed Mistake in a Generation")

Here is the video that was the basis of that article:
click for video, then select Reinhart from list

Previously:
Bear Stearns Bailout "Worst Fed Mistake in a Generation"
http://bigpicture.typepad.com/comments/2008/04/bear-stearns-ba.html

Sources:
What Lies Beyond the Credit Crunch? Part II
AEI, April 28, 2008 2:00 PM
http://www.aei.org/events/eventID.1712,filter.all/event_detail.asp#

Our Overextended Fed
Vincent R. Reinhart
Wall Street Journal, Wednesday, March 26, 2008
http://www.aei.org/docLib/20080428_ReinhartOurOverextendedFed.pdf

Read It Here First: "De-Financializing" the WSJ

Monday, April 28, 2008 | 03:45 PM

in Financial Press

Last week, we noted that the new WSJ under Rupert Murdoch was being "De-Financialized;" that the coverage was becoming less business and money oriented, and more of a general interest paper -- kinda like what the Washington Post and the New York Times already do.

A rather similar sentiment was expressed in David Carr's column today:

"There is certainly no evidence that Mr. Murdoch has turned the newspaper into a tool of his business or political interests — something that had been widely feared and predicted. But there are clear signs that a sui generis business paper is fast becoming a very common general-interest paper, albeit one with a really dynamite business section.

Further changes were unveiled last week, but they seemed to reflect a broader range of stated interests without any additional staff or expertise. The Project for Excellence in Journalism completed a content survey last week and found that the newspaper’s front-page coverage of politics had tripled and that front-page coverage of business had been cut in half."

Interesting stuff . . .

Previously:
Murdoch's WSJ Changes Creates Opening for NYT, FT (April 2008) http://bigpicture.typepad.com/comments/2008/04/murdochs-wsj-cr.html

Source:
At Journal, the Words Not Spoken
DAVID CARR
NYT, April 28, 2008
http://www.nytimes.com/2008/04/28/business/media/28carr.html

Nobel Laurelates on the Economy

Sunday, April 27, 2008 | 09:30 AM

in Credit | Economy | Financial Press | Psychology/Sentiment

CNBC had three Nobel winners on Friday morn -- Joseph Stiglitz, Robert Engle and Edmund Phelps -- discussing Housing, Credit, and the state of the US economy. It was terrific television, and showed how good the medium can be when it sets its mind on it.

Incidentally, longtime readers may remember our amusing encounter with Prof Robert Engle back in 2003. If you haven't seen that, its definitely worth reading.

Joseph Stiglitz, 2001 Nobel Prize winner and Columbia University professor

"The real important point from an economic perspective is the gap between the economy’s potential growth and its actual growth. And without a doubt, there’s a big gap. I think we’re probably in a recession. The real concern is how long, how deep. This is one of the worst—clearly going to be the worst ... downturns since the Great Depression.”

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Robert Engle, Nobel Laureate Economist winner 2003 and New York University professor

"I think that we've got a lot of strength that's going to come out of the export sector, the technology sector. We've seen good earnings reports from some of them. They're thriving on this weak dollar. It's giving them a chance to sell goods all over the world. And I think that's going to probably pull us out."

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Edmund Phelps, Nobel Prize winner in economics 2006

"The rise of the unemployment rate has been mild, and it started from a very, very low level of 4.3 just ten or twelve months ago. By that metric, this is a mild downturn.”

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Related:
A funny thing happened to me on the way to the studio tonight . . . http://bigpicture.typepad.com/comments/2003/11/a_funny_thing_h.html

Source:
Where's the Economy Going? Nobel Winners Weigh In
CNBC.com 25 Apr 2008
http://www.cnbc.com/id/24313079/site/14081545

Murdoch's WSJ Changes Creates Opening for NYT, FT

Thursday, April 24, 2008 | 10:00 AM

in Corporate Management | Financial Press | M&A

Is Rupert Murdoch's altering of the Wall Street Journal creating an opening for his competitors?

That was one of the topics we discussed at Tuesday evening's NYU lecture on media, business, and blogging. This morning, we are going to briefly explore that.

In the past, I have offered up advice to various media. I have offered solicited advice to the WSJ about their blogs, and unsolicited advice about their subscription model. I have also consulted for several magazines in the financial space -- a time wasting and frustrating experience.

Today, I am going to offer some free advice to competitors of the WSJ, the New York Times, and to a lesser degree, the FT. In particular, I want to look at how the changes at the Journal may be potentially creating a strategic opening for the Times. Free advice is worth what it costs, so take from it what you may.

When Murdoch took over Dow Jones, he had some very specific plans in mind for the crown jewels of the company, the Wall Street Journal. Murdoch recognizes that the WSJ dominates the space for business and financial reporting. Just imagine what we could do with that platform, went the thinking, if we could only extend that reach and influence beyond financial news. In short, become more like the NYT.

In my opinion, this is a deeply misguided and risky undertaking, driven more by ego than profit motive.

Allow me to explain.

The WSJ is, at present, a must read news source for the financial industry. At our NYU lecture, it was noted that nearly half of WSJ 2 million subscriptions are expensed -- meaning, the subs are a tool for the employee paid for by the office. NYT subs, by comparison, are expensed in the single digit percentages.

Its easy to understand why: The Journal has traditionally been a pure business paper, covering corporate activity, Wall Street, venture capital, business travel, investment banking, commodities, fixed income, currencies, corporate earnings, economic matters, SEC issues, etc. There was a smattering of related non business coverage easily justified by the advertising it brought in, along with a few odd stories that broke up the otherwise wall to wall business coverage.

Murdoch's changes are both ambitious and perplexing: He is seeking to shift the Journal's coverage to include much more politics, more elections, more general government activity. The Journal itself reported the move to "put short articles on the front page or the fronts of sections that would not continue on inside pages." The fear that paper might shift rightward in its news coverage has proven to be unfounded (so far); instead, it is the topics and subjects covered that is what is shifting. Coverage of Financial news is losing out to Mr. Murdochs true love: Politics.

In other words, Murdoch is "De-Financializing" the paper. The coverage looks to becoming less business and money oriented, and more of a general interest paper -- kinda like what the Washington Post and the New York Times already do.

In trying to extend the WSJ's reach, Murdoch has left open its flank. That creates the opportunity for shrewd operators to expand their Business news. Hence, the opportunity for would be Journal's competitors, and in particular, the NYT, to go after the Journal's audience. The business goal would be to capture a significant percentage of the Journal's expensed subscriptions.

How? First, I would beef up the business pages. Hire additional staff, especially the reporters at the WSJ itself. Second, raid the most popular WSJ blogs. They have some terrific coverage there, and that would carry over well to the NYT.com site. Even if unsuccessful in the hires, it makes the operation of the WSJ more costly -- a technique not unfamiliar to Murdoch. Expand the business video coverage, using embeddable flash. Lastly, take the very successful Dealbook model -- close integration of the blog, newspaper columns, and email list -- and clone it to other related business issues: Marketbeat, RealTime Economics, etc.

When a great General extends his army in reaching to conquer far flung lands, a flank gets open. It creates strategic opportunities for competitors. How, and when they take advantage of the opportunity is up to them...

UPDATE: April 24, 2008 1:14pm

I totally agree the the FT is a viable competitor also; indeed, the opportunity is there -- the "flank" is exposed -- but I don't know if the NYT has the capability to respond in an aggressive manner. (I'll add FT to the title)

Once the WSJ jumps from CNBC to Fox Business, it will be a race between NYT and FT to see who else slips into that slot.

UPDATE2 : April 24, 2008 11:04pm

Ya can't go wrong with a good bar chart:

via Journalism.org

Previously:
WSJ Joins the Blogging Crowd
http://bigpicture.typepad.com/comments/2006/03/dow_jones_blogg.html

WSJ: Free or Paid? (Yes)
http://bigpicture.typepad.com/comments/2007/10/advice-for-murd.html

The Media Goes Blog Crazy!
http://bigpicture.typepad.com/comments/2006/06/the_media_goes_.html

MSM Blogging Review: NYT Starts Blogging too
http://bigpicture.typepad.com/comments/2006/03/blogging_review.html

>
Sources:
Editor Out as Murdoch Speeds Change at WSJ
JESSICA E. VASCELLARO, MERISSA MARR and SAM SCHECHNER
WSJ, April 23, 2008; Page A1
http://online.wsj.com/article/SB120887959358334849.html

Graphic courtesy NYT
http://www.nytimes.com/imagepages/2008/04/23/business/20080423_PAPER_GRAPHIC.html

The Economist: The Debate We Would Like To See

Thursday, April 24, 2008 | 06:34 AM

in Financial Press | Politics

The Economist offered up another free 4 week trial for Big Picture readers, so I am passing it along.

As I was kicking around their site, I came across this brilliant animated video:

Here's your link for the free trial

Tracking NAR Spin

Wednesday, April 23, 2008 | 11:00 AM

in Financial Press | Psychology/Sentiment | Real Estate

Yesterday saw a subtle shift in the reporting of existing home data from the NAR (Existing Home Sales Down 19.3%). While they haven't quite fully embraced spin-free data reporting, we suspect they may be starting to get religion.

Its about time. As the chart shows, the NAR has a long history of pollyannish calls for a bottom in Real Estate, going on now for about two years.

James Bednar of the New Jersey Real Estate Report send me the following set of their comments, plotted against the Existing Home Sales reported over the same period.
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NAR Existing Home Sales

Each quote below corresponds to a numbered circle above.

Tracking NAR Spin

1. "There's no question there is a strong demand for housing from a growing population." -David Lereah, NAR Chief Economist

2. "For the foreseeable future, the demand for homes will continue to outstrip supply" -Al Mansell, NAR President

3. "We've been expecting sales to remain at historically high levels, but this performance underscores the value of housing as an investment and the importance of homeownership in fulfilling the American dream." -David Lereah, NAR Chief Economist

4. "We are returning to more balanced markets between home buyers and sellers… We feel confident that housing is landing softly as rates continue to rise." -David Lereah, NAR Chief Economist

5. "This is part of the market adjustment we've been discussing, with a soft landing in sight for the housing sector. The level of home sales activity is now at a sustainable level. Overall fundamentals remain solid…" -David Lereah, NAR Chief Economist

6. "Higher interest rates are slowing home sales, but we see this as another sign of a soft landing for the housing sector which remains at historically high levels." -David Lereah, NAR Chief Economist

"After five years of booming sales, we are now experiencing normal market conditions across most of the country… most owners can expect steadier gains in home values for the foreseeable future." -Thomas M. Stevens, NAR President

7. "Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing" -David Lereah, NAR Chief Economist

8. "Now sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it'll likely take some months for price appreciation to rise." -David Lereah, NAR Chief Economist

9. Existing-home sales stabilized at a sustainable pace in August -NAR

10. "…the worst is behind us as far as a market correction — this is likely the trough for sales. When consumers recognize that home sales are stabilizing, we'll see the buyers who've been on the sidelines get back into the market" -David Lereah, NAR Chief Economist

11. "It looks like we're moving beyond the low for the housing cycle last fall, and buyers are responding to historically low interest rates and competitive pricing by home sellers. In addition, a tightening inventory of homes on the market is supporting prices." -David Lereah, NAR Chief Economist

12. "Fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers," -David Lereah, NAR Chief Economist

13. "We also may be seeing some losses as a result of the subprime fallout. However, this is masking improved fundamentals in the housing market, with lower mortgage interest rates and motivated sellers." -David Lereah, NAR Chief Economist

14. "Buyers who've been on the sidelines may want to take a closer look at current conditions in their area – if they wait for sales to rise, their choices and negotiating position won't be as good as they are now." -Pat V. Combs, NAR President

15. "The rise in sales and prices in the Northeast region on a fairly consistent basis in recent months is promising because this was the first region that underwent sales and price weakness after the boom. Now, it appears that it will be the first region to climb back, indicating that other regions could follow a similar path." -Lawrence Yun, NAR Chief Economist

16. "The unusual disruptions in the mortgage market, including a significant rise in jumbo loan rates, resulted in a fairly high number of postponed or cancelled sales…Once we get through these disruptions, we'll get a better sense of where the actual market is in late fall as conditions begin to normalize," -Lawrence Yun, NAR Chief Economist

17. "Existing-Home Sales Rise in November, Market Likely Stabilizing" -NAR

18. "Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate," -Lawrence Yun, NAR Chief Economist

19. Existing-Home Sales to Stablize Before Upturn in Second Half of 2008 -NAR

Source:
Tracking Realtor Spin
James Bednar
New Jersey Real Estate Report
http://njrereport.com/index.php/2008/04/09/tracking-realtor-spin/

Question Everything

Sunday, April 20, 2008 | 07:30 PM

in Financial Press | War/Defense

Why so skeptical?

I hear that question way too often. The short answer is that after a few decades on Wall Street, you learn that when ~~a lot of~~ any money is at stake, people quite easily become completely and totally full of bullshit.

This is why I (to quote someone else) "consistently doubt everything, especially government and mainstream media, and asks questions that have readers asking their own questions."

The most egregious example in recent memory landed on the front page of the Sunday NYT:

Hidden behind that appearance of objectivity, though, is a Pentagon information apparatus that has used those analysts in a campaign to generate favorable news coverage of the administration’s wartime performance, an examination by The New York Times has found.

The effort, which began with the buildup to the Iraq war and continues to this day, has sought to exploit ideological and military allegiances, and also a powerful financial dynamic: Most of the analysts have ties to military contractors vested in the very war policies they are asked to assess on air.

Those business relationships are hardly ever disclosed to the viewers, and sometimes not even to the networks themselves. But collectively, the men on the plane and several dozen other military analysts represent more than 150 military contractors either as lobbyists, senior executives, board members or consultants. The companies include defense heavyweights, but also scores of smaller companies, all part of a vast assemblage of contractors scrambling for hundreds of billions in military business generated by the administration’s war on terror. It is a furious competition, one in which inside information and easy access to senior officials are highly prized.

Go read the full article -- but not on a full stomach . . .

Source:
Behind Military Analysts, the Pentagon’s Hidden Hand
DAVID BARSTOW
NYT, April 20, 2008
http://www.nytimes.com/2008/04/20/washington/20generals.html

NYT: Inflation Retreating

Thursday, April 17, 2008 | 09:15 AM

in Financial Press | Inflation

Media criticism day continues, with the following NYT laugher: U.S. Inflation Appears to Be Retreating.

The basis of this revelation? Quote: "The numbers could have been worse." As Jeff Matthews would say, "I am not making this up." (I guess I shouldn't complain too much: At least the Times bothered to include the year over year numbers of +4%).

The dueling headlines of the WSJ and NYT makes for interesting comparisons: WSJ: "Inflation is back" versus the Times Inflation Appears to Be Retreating. We can combine the two to construct this unique viewpoint:

"Inflation, which we didn't really recognize until it had runaway, is now back. Except its not."

That, I am making up . . .

Previously:
WSJ: "Inflation is back"
http://bigpicture.typepad.com/comments/2008/04/wsj-inflation-i.html

Source:
U.S. Inflation Appears to Be Retreating
MICHAEL M. GRYNBAUM
NYT, April 17, 2008
http://www.nytimes.com/2008/04/17/business/17econ.html

Economist Cover: The Great American Slowdown

Wednesday, April 16, 2008 | 10:30 AM

in Contrary Indicators | Economy | Financial Press

One of the things that people get wrong all the time is the contra meanings of magazine covers. This is a subject we have discussed for quite some time around here.

The assumption is that if something shows up on a mag cover, whatever the subject is must therefore be all over, hence, its time to go the other way. This is a fundamental misunderstanding of what the cover indicator is all about.

The short version is that when a long running trend, well represented by consensus opinion and stock prices, finally bubbles up to the front of a major magazine cover, THATS WHEN its very very late in the cycle. Hence, it is a contrary indicator.

A recent classic cover was the Time Magazine on Housing back in the summer of 2005. The timing was near perfect, as Housing peaked in August '05. However, when something is relatively new, such as the US economic slowdown (see Economist cover below), it is not a true contrary indicator.

Let's compare these two examples:

• Housing Boom
- Lasted almost 10 years
- Home prices increased 2 and 3 standard deviations from historical means
- Homebuilder stocks ran 500% to all time highs

• US Economic Slowdown
- (Un)Offically going on for less than 6 months; GDP still positive
- S&P 500 and Dow Industrials made all time highs six months ago
- Equities still within 10-15% of highs
- No consensus for a recession

When we compare these two quantitatively, the differences are pretty obvious as to which one is the true contrary indicator . . .

Previously:
The Magazine Cover Indicator
Big Picture Overview

uh-oh: Time Magazine on Housing http://bigpicture.typepad.com/comments/2005/06/uhoh_time_magaz.html

Source:
The great American slowdown
Apr 10th 2008
The Economist print edition
http://www.economist.com/opinion/displaystory.cfm?story_id=11016333

Herb Greenberg to leave Marketwatch, Dow Jones

Tuesday, April 15, 2008 | 02:45 PM

in Financial Press | Weblogs

Here's Herb's 2 weeks notice:

"On May 1, I’m leaving MarketWatch, Dow Jones and traditional journalism to start an independent research firm with my friend, Debbie Meritz, an analyst/accountant who has been a very good source of ideas in the past.

I’ve devoted my career to journalism, starting in elementary school by delivering copies of the Miami News from my bicycle, to my first job out of college in 1974 as the first business reporter for the Boca Raton News.

I’ve since been part of the evolution of modern business journalism, working from beat reporter to correspondent to columnist to blogger.

When Debbie and I first started talking about the idea of setting up a research firm, it seemed like the next logicial step, just as it did when I left traditional print journalism 10 years ago to join the fledging online world.

Change is never easy, especially leaving a place as great as MarketWatch, which has been my home for the past four years. But change is also exciting and I’m looking forward to the next adventure.

Until then… you’re stuck with me for a few more weeks"

Good luck Herb!

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