1. Deja Ever Have to Make Up Your Mind?
Ever experience deja vu?
You know, the feeling that you've seen something before, even when you're seeing it for the first time?
Well, if you're a reader of
The Wall Street Journal,
what you're actually experiencing this week is "deja vu deja vu" -- the experience of experiencing deja vu over and over again.
How do we at the Five Dumbest Things Research Lab know you have this condition? Well, it's because we at the lab read
The Wall Street Journal.
And we got it, too.
It all started innocently enough Monday, when a huge
headline proclaimed, "Stock Rally Seems Like Deja Vu." We shrugged our shoulders and moved on.
But on Tuesday, what once seemed unimportant turned sinister. First came the headline "Deja Vu at ABC: Summer Reruns." Then, in an essay about
hostile bid for
, we read, "Now, the corporate world, as Yogi Berra would put it, looks like deja vu all over again."
Ga-Ga for Deja
No, we told ourself. There's no larger pattern here. There's nothing to fear. Or so we thought until Wednesday morning, when we picked up the paper to read Cynthia Crossen's occasional column. The one called "Deja Vu."
Yikes! Forget about deja vu all over again -- what we've got is deja vu all over the place. Ubiquitous deja vu. A plethora of deja vu. A surfeit of it. Those
folks must be pretty serious about living in the past.
As for more useful conclusions re the source of d.v.d.v., we have our guesses. "Deja vu" is a fancy way of saying "history repeats itself," and it takes up less space in a headline. It also gives copy editors a chance to show off their mastery of accents grave and aigu. (Just so you know, that's an aigu over the "e" in "deja" and a grave over the "a.")
* Estimate based on occurrences through July 15, 2003.
As you can see in the accompanying chart, we at the lab decided to trace the popularity of d.v. over the past half-decade in the business press.
As shown in the chart, history appears to be repeating itself a lot more since January 2002, both in its traditional form and in the once-cutely-tautological-but-now-tiresome expression attributed to Berra.
At the Journal, oddly enough, the use of both variations seems to have stayed constant over the past few years. Like crop circles, this week's cluster remains an unexplained phenomenon.
2. Turning a Page at Motorola
For years, we at the lab have tried to decipher the inner meaning of press releases. What's the difference, for example, between an executive who resigns "to spend more time with his family" and one who leaves "to pursue other interests"?
This week, finally,
threw us a bone.
We got no help, unfortunately, on the executive departure front. But the telecom gearmaker did shed some light on the numerology of financial statements.
Yes, deep in the bowels of Motorola's disappointing results on Tuesday, we read this guide for the perplexed:
Within the segment reviews, use of the word "flat" indicates a variance of 0.5 percent or less. Use of the words "slight" or "slightly" indicates a variance of up to 5 percent. Use of the words "substantial" or "substantially" indicates a variance from 15 percent up to 25 percent. Use of the words "very substantial" or "very substantially" indicates a variance of 25 percent or more.
So now we know. Now we know the precise difference between falling substantially short of estimates and falling very substantially short.
One new question, however, gnaws at us. What adjective indicates a variance of between 5% and 15%, the unmodified gray area between "slight" and "substantial"?
We vote for "decent" or "healthy." But your results may vary.
3. America Is Bullish on Merrill Lynch
We at the lab have no use for the
price-to-earnings ratio as a measure of irrational exuberance in the market. We focus on a more scientific measure: the "congratulations" index.
Yes, yes, we're aware that Merrill, which reported second-quarter results Tuesday, really did have a bang-up quarter with surprisingly good numbers. We've got no problem with that.
What we do have a problem with is analysts who preface their questions on earnings conference calls with comments like, "Congratulations, guys, on a great quarter!"
Great Job, Guys!
And by this measure, we're wondering whether
is, um, getting ahead of itself.
See, we come from an old-fashioned school -- maybe a nonexistent one -- a school that believes analysts should analyze. Analysts should be objective judges for a company, not cheerleaders. And if they want to congratulate executives, they should do it in a brief, innocuous, nonlitigation-provoking email, not in the public arena of a conference call.
Anyway, back to Merrill. Ace brokerage reporter Matt Goldstein tells us that in the question-and-answer portion of Merrill's call Tuesday, three analysts congratulated the company on its "great quarter" and a fourth extended his congratulations for the company's "fabulous results."
One of the analysts even congratulated the company on its recent courtroom victory in beating back the claims of small investors seeking damages from Merrill's allegedly misleading research -- a gloss-over-moral-morasses attitude that extended to Sandy Weill's air-kissing farewell call at
later in the week.
As Marv, the research lab's crusty curmudgeon, is fond of saying, "When analysts congratulate, you go underweight."
4. Don't Spitzer Into the Wind
Speaking of keeping a sharp eye on Wall Street's analysts, you've got to love the
Securities and Exchange Commission's
recent move to restore faith in the U.S. stock market: limit the role of state regulators.
Spitzer, SEC Lock Horns
Yes. As reported by the
and other folks in the financial press, the SEC is trying to rein in the regulatory actions of folks like New York Attorney General Eliot Spitzer, a guy without whom we might never -- or at least not yet -- have learned the ugly truth about research conflicts on Wall Street.
Yes, yes, yes, we're sure there are reasonable reasons why reasonable people would think it reasonable to limit the actions of Spitzer and other folks at the state level. Blah blah blah. That's what lobbyists are for -- to explain, in reasonable tones, why stuff like this is in our best interests.
Well, we aren't buying that. As far as this new legislation is concerned, we consider it guilty until proven innocent.
5. The July Surprise
Finally, as we digest the Tuesday announcement that we're looking at a U.S. budget deficit of $455 billion in the current fiscal year, we can't quite figure out who's dumber.
Is it the Bush administration, for adamantly refusing to estimate the cost of an Iraqi war when the original deficit estimate came out in January? And for subsequently low-balling, by about $2 billion a month, the cost of remaining in Iraq? And for pushing through tax cuts at a time of increased spending? (Bush-pushed tax cuts now account for $177 billion of this year's projected $455 billion deficit, according to figures in
The New York Times.
Given all this and an economy that won't recover, it's no wonder that the onetime $300 billion deficit has grown 50% in less than six months.
Or is it investors who are dumber? Could they not see the inevitable deficit increase come lumbering down the road before they tanked the bond market this week? Was the bad-news budget a shock?
Unfortunately, we don't have to decide this question quickly. We're sure we'll be living with the ugly repercussions for years.
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