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"The news makes the tape" is one of the most ancient, fundamental expressions on Wall Street, and what an old saw, huh?
As Business Press Maven readers know all too well, the tape makes the news.
In other words, it's not like the real news out there contributes to the prices that hit the ticker tape. Though careless and crowd-following, the prices on the ticker tape (or, in modern times, online) form the news.
Never was this on more pathetic display than in a
recent article by
. Hilariously, it took three reporters to put this abomination together, giving it the feel of one of those light-bulb jokes.
The story, which was published late Wednesday afternoon, started off innocently enough: "Retail sales, import prices surge." The Business Press Maven kept reading, expecting to find out more about these conflicting data. Though the market has been strong this week, rebounding from last week's worries, this was a mixed bag of data if there ever was one.
The fact that retail sales appeared strong in May, rising 1.4% and coming in well above expectations, is really good news. It seems to indicate that those fearful that the consumer is dearly departed are wrong. But those import prices? Yikes. The Business Press Maven, as you know, is not a fear-monger about inflation. But I'm carefully considering my position; a few too many numbers like this and, yeah, I'll start believing that the fungus of inflation is among us.
So how did the article handle this good-news/bad-news situation? You didn't really ask that, did you? See, the market has been strong. So, the news must be good.
Look at this loser of a lede: "Retail sales in May rose at the strongest pace since January 2006, while import prices surged, adding to recent data suggesting the U.S. economy is recovering strongly from a first-quarter slowdown."
Uh, those inflation numbers added to the suggestion? I guess one journalist's -- or, well, three journalists' -- addition is another's subtraction. Three sentences down, there was actually a mention of the inflation numbers and how they can potentially signal harm. This, of course, shows the lede as a lie, but the article went right on in the very next sentence to dismiss the concern.
Wear a neck brace as you read: "Import prices, which are monitored closely by
policy-makers as a potential source of inflation, rose in May for the fourth straight month on higher petroleum costs, the Labor Department reported. 'The economy is coming back stronger than anybody could imagine,' said Mark Vitner, economist at Wachovia Securities in Charlotte, N. C. 'We were probably one of the most optimistic groups on the street, and the economy is surpassing even our expectations.'"
Look, I don't want to spend too much time on such nonsense. But, please, reader, take this as the ultimate sample of how, when the market is up, everything is seen through a happy light -- even to the point where good retail sales
potential signs of inflation are seen as equally good signs. Hey, both numbers are up!
Ask and You Shall Receive
In such up times, if you are a company and want the tape to make the good news, there is one and only one way to do it: Ask. In other words, issue a press release. If the market is in strong mode, good stories will follow.
This was clear as crystal in the case of
( EK), which yesterday announced a technology -- a new sensor -- that just might make it easier to take photographs under low light. The Business Press Maven knows about photography and is, on the side, a photographer whose work has appeared in
The New York Times
and other publications. (If you have a wedding or Bar Mitzvah you want photographed for an obscene sum, do call.)
I say this because I know that the biggest problem for amateur photographers (and most are) is the inability to take good photographs indoors (where most are taken) because of lame light. Moving objects (like kids at play) are another challenge even outdoors, because only ideal light allows a fast shutter speed. And built-in flashes on most digital cameras are way insufficient.
So assuming that this press release is accurate, that the product can be rolled out successfully and that someone else is not about to release a separate but equally good (or even better) product, there is potential here. Eastman Kodak, though, is an $11 billion troubled company that came late to the digital revolution. Whether this new sensor can have a bottom-line impact -- even under a best-case scenario -- seems a little unsettled, even after a happy press release. The company, it is important to note, gave no firm guidance.
Well, you know what came next anyway. The stock popped and the headlines followed, essentially predigested versions of the press release. I hate to pile on
today, but it broke the mold. Instead of leaning on the press release, it leaned on
lean on the press release. Here was the
headline: "Eastman Kodak Could Be Undervalued -- Business Week."
, then, for
an article that calls the technology "interesting," but stresses the importance of "context."
While we're on the subject of business and news, let's end the week on the sad business of newspapers. We can talk until the cows come home about how bad the business media are at deciphering numbers, but this is an especially meaningful example. A business reporter misleads investors by reporting the overall number of
New York Times
through the month of May. Then a flip media blogger comes in ... and actually breaks the numbers down.
, "The company said TimesSelect, a fee-based product on NYTimes.com offering columns and archived articles, has about 741,000 subscribers,"
portraying it as a lone bright spot in a dismal month. Whoa! Almost three-quarters of a million and fee-based!
Then came Gawker.com, the snarky media site, to put the numbers in
proper perspective. The majority of "subscribers" get TimesSelect for free. Moreover, the growth of the fee-based minority has turned anemic, way too early in TimesSelect history for it to indicate anything other than a future spent stuck in the mud.
While we're on the subject of newspapers, can you imagine one of them raising prices right now? OK, newspapers are where they are in part due to bad strategic thought brought about from 100 years of having a monopoly on distribution. But at least when a good newspaper like
The Wall Street Journal
covers an announced price increase, it would measure out how that increase might affect demand, right? Uh, wrong.
raised newsstand prices. The
, in covering it, did not bring up the prospect of lower sales.
Read it and weep. But have a good weekend.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;
to send him an email.