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We had big political change in the real world last night.
That means that this morning, in looking at how the future will pan out for investors, we are facing the start of a protracted news cycle filled with reports on what it all means, reports that will clank with a lot of qualifiers and perfectly calibrated on-one-hand-on-the-other nonsense.
Before The Business Press Maven gives you his clear-eyed take on what will happen under a divided government, let's look at a classic example of this split-the-difference form of business journalism, which takes balance to a cartoonish extreme.
I need you to beware and be on the lookout for the pallid stuff, which nuances the meaning out of everything, so you won't waste your time or be misled.
Take a National Public Radio
, which proves a classic example of the form.
It opens with the lead-in from the host, "For some on Wall Street, gridlock is not such a bad thing."
At that, The Business Press Maven was all ears.
But I wanted to plug them when I heard this feeble thesis line, right after the microphone was turned over to the reporter: "But not every economist thinks alike on this."
This may be the most worthless and weak line in business journalism history. Not every economist thinks alike on anything, even what day of the week it is.
Still, I had hope.
Maybe the point of the report was that though the stock market has been anticipating gridlock with such glee, it wouldn't turn out to be so good for stocks.
A contrary take? No such luck, as the report's conclusion shows: "The equity markets would fare well under divided government, say some analysts, but others say a Democratic win in the House could make things difficult for some sectors."
This is like a weatherman telling you that it might be sunny, unless, of course, it rains.
Balance, in such cases, is interpreted as needing to plant both feet firmly in the air.
When you see signs of such intellectual caution and laziness, beware.
And, look, here's the way divided government works.
Overall, it's better for investors, though no long-term look at stock-market performance (sorry kids, history goes back further than the 1990s) shows any relationship between gridlock and Easy Street.
The one real and meaningful positive is that an investor can have less fear that stocks in any one sector will be crushed by unfavorable government action being pushed through by a party emboldened by its tight control of Washington.
(Examples abound, but see: targeted moves against online gambling by President Bush -- were last night's results a poker revolution? -- to steel by Kennedy and health by Hillary, back when Mrs. Landslide was First Lady.)
Such attacks on any single industry are less likely in the new environment we find ourselves in this morning, and that is inarguably good for investors.
On the other hand -- ha, fooled you. No need to hedge the truth here.
On the topic of truth, let's take a quick look at two different articles on a recent takeover. One report captures it, the other misses.
for much money this week ($3.7 billion, exactly twice as much as The Business Press Maven is worth, counting his bicycle).
Anyhow, Abbott has been criticized for paying too much, about a 50% premium over where Kos' stock was trading at the end of last week.
The goal of the medical device and drug maker is to have basic control (for the time being, at least) of the market for drugs that raise levels of what is called good cholesterol.
Though the deal could work,
The Wall Street Journal
did well to
the size of the risk.
And it goes beyond what other drug companies might have in the pipeline.
After all, cardiologists are not totally certain that raising the level of good cholesterol with drugs works to lower the risk of heart attacks. It might, but it might not.
quotes a cardiologist who gives voice to current thought: "We know lowering LDL is good, and we
emphasis mine that raising HDL is good, but the database is not quite as firm."
Of this essential issue,
: "Good cholesterol is good business these days, and thus it wasn't too surprising to hear Monday that Abbot Laboratories will acquire Kos Pharmaceuticals, a drug company with two drugs which aim to raise levels of so-called 'good-cholesterol.'"
An analyst is quoted as saying that the market is growing rapidly, market numbers for all cholesterol drugs (not just these more controversial good cholesterol numbers) are given, more happy analysts are quoted.
The only real negative in the
piece is that emerging competition in the good cholesterol area; the outside, though real, risk that raising good cholesterol by drugs won't, in fact, be found to make a difference?
Not even mentioned.
And that, my friend, causes gridlock in The Business Press Maven's soul.
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.