A Dash of Insight

Popular and Critical Acclaim

Over at The Big Picture Barry Ritholtz has some great suggestions about improving financial television.  We agree with the entire list, but especially like the following:

1. Stop Yelling. Stop interrupting. Stop Talking Over Each Other:  This is not Jerry Springer, its serious business. People’s retirement and investments are at stake. Please treat it that way.

5.  Lose the Octobox. Fire whoever came up with the Decabox.   ‘Nuff said.

6. Separate the Signal from the Noise.  Understand that most of the day-to-day action is simply noise. Look at a long term chart, you can barely see 9187 or 9/11. If those major events get lost in the long term trend, what does the intraday jags, kinks and reversals mean? Very little. Recognize that not every data release, slice of news, or rumor is at all significant. Stop treating them as if they were.

7.  Fact Check: An awful lot of things on air get stated with authority and confidence. Much of them are little more than junk or pop myths. Why is it that the more dubious a proposition is, the greater the confidence the speaker seems to muster? Consider fact checking as much of the statements that are made on air as possible, and making frequent corrections.

9. Bring Back Louis Rukeyser: Not the man, but rather, his style. Wall $treet Week — Rukeyser hosted it from 1970 to 2005 — was plain-spoken, thoughtful and accessible. Quiet, contemplative, discussions, with intelligent market participants, revealing helpful information. The investing public would appreciate something of that sort — again.

Improvements Unlikely?

There is a reason for the current TV programming:  Ratings!

The experts know what sells.  Everyone on TV is asked to state an aggressive and controversial opinion.  It is entertainment.

Would the current investing world give a high rating to Uncle Lou, no matter what the quality of the program?

Popular versus Critical Acclaim

We recently watched an old film for which a reviewer had noted that it achieved both popular and critical acclaim.

That is certainly great news for a movie, and one can easily see the distinction.  At nearly any time one can find a very popular movie (the "date movie" from back in the day) that has little artistic merit.  At the same time, there is something playing at the local Art Theater that scores high on artistic merit, but does not attract many teenagers.

It is a delight when a film can satisfy both criteria.  It is also a great challenge.

The Investment Audience

Here are a couple of key facts about the audience for investment news:

• Individual investors have dropped out.  (We'll get them back after another 25% or so in the major averages).
• Most readers are obsessed with the negative.  That is how to seem smart at a cocktail party.
• One can measure this with objective indicators, like our Seeking Alpha sentiment indicator.

The reader will note that we are moving beyond financial television, and considering all sorts of information.

The Conclusion?

With newspaper ad revenues disappearing, MSM are all turning to blogs.  Blog revenue is all about hit count.

If times were more prosperous, business managers could afford to think about the actual merits of analysis.  In times of stress, they look for the most popular.

So what happens?  We all know from behavioral finance that investors chase what worked most recently.   Today, that means that all of the doom-and-gloom predictors are geniuses.  Many of those writing and appearing on TV search relentlessly to find the most negative spin on any piece of information.

It is those people who are now featured.  It is not because of editorial bias on the merits.  It is financially driven.  These are the writers who are "popular."

This is what happens editors become pollsters.

Does Blogging Enable Market Manipulation?

The greatest strength of financial blogs is also a potential weakness.  There is so much information that readers frequently rely upon the interpretation of the writer.  Most people do not click through to the supporting links.  They go to their favorite sources for information, and generally rely upon the interpretation of the writer.

We know this is true from our own stats, even when we strongly encourage readers to check out an entire article.  Readers rely upon us to make accurate representations of source material.  We are expected to provide a fair summary and accurate illustrative quotations.

Fair enough.  No one has time to check out all of the sources, no matter how carefully we try to document.

This is in sharp contrast with mainstream print sources, where editorial procedures review material before it is published.  Not so in the blogosphere.

The issue can be simply stated:

Blogs with a wide following have a special responsibility to check and re-check accuracy before posting.  If the authors do not do so, there is an easy means of manipulation.

Step one:  Get a dubious story out there somewhere -- anywhere.

Step two:  Get a noted blogger or pundit to mention the story.

Step three:  Mainstream media sources race each other to be first with this news.

Trust in link sources is vital.

Strong Sources

We feature several blogs where the authors provide plenty of links and summaries.  Some of the sources are anonymous bloggers.  We believe this conveys a special responsibility, since the reader does not know the background or skill of the writer.  It takes more evidence to be convinced of these sources, but the proof is evident in the work.  If one checks out the links, the accuracy proves out.

Here are examples of sources where the links are fairly interpreted with very high reliability:

• Abnormal Returns.  The summary tells you what you will see.  You can choose whether to read it.
• Charles Kirk.  Always interesting, always accurate.  Many interesting links.
• Alea.  Anonymous, but with special insight on credit markets.
• Calculated Risk.  Respected by everyone -- earned through accuracy.
• Paul Kedrosky.  Especially useful in finding interesting academic papers.
• The Big Picture.  Barry has a viewpoint, but his sources are always carefully documented and accurate.
• Muckdog.  We like the "everyman" viewpoint, which often captures the spirit of the market.  The links support his statements.
• Dr. Brett.  Unchallenged authenticity, with widely varying interests.
• David Merkel.  What you see is what you get in links at The Aleph Blog.
• Adam Warner.  The quotes are always representative.

We are leaving out many, of course, but this is designed to illustrate.  The WSJ blogs, for example, are carefully sourced.

The Jury is Out for Some

Like many others we follow the work of the anonymous blogger "Tyler Durden."  Seeking Alpha assures us that this person is an authority. He has rocketed to a high level in the new Seeking Alpha rankings -- a position of influence and responsibility.   Many of the articles display interesting and informative insight concerning the inner workings of big firms and hedge funds.

Since there does seem to be a viewpoint in the Durden work, we have great interest in the sourcing and evidence.  Let us look at an example of links from the prolific Durden.

Must read on CNBC propaganda: "Immelt and NBC Uni CEO Jeff Zucker supposedly told top CNBC executives and talent to be less critical of President Obama and his policies" This explains why nobody with half a brain watches CNBC anymore (THR hat tip Guest)

Since we have opined on CNBC politics, this was of great interest.  Our viewpoint is that opinion shows like Kudlow's in the evening are interesting and informative.  Viewers know what they are getting, and it is a lively debate.  We do not like the intermingling of politics and journalism during the business day, when CNBC anchors get to interview authoritative guests.  We are not very interested in the opinions of the journalists, and viewers should not be either.

If one reads the link, one can readily see that the quoted section does not accurately represent the article.

First up was a woman asking about a reported meeting in which Immelt and NBC Uni CEO Jeff Zucker supposedly told top CNBC executives and talent to be less critical of President Obama and his policies.

Immelt acknowledged a meeting took place but said no one at CNBC was told what to say or not say about politics.

During the woman's follow-up question, her microphone was cut off.

The key point is that Immelt denied the charge in the Durden quote.  Perhaps he suggested that journalists should be journalists in non-opinion shows.  We do not know, of course, but that would be a good thing.  Helping investors to separate political decisions from their finances is good advice, as we have frequently suggested.

Even more telling is this section from the rest of the article:

Later, during the umpteenth question about MSNBC, another shareholder's microphone was cut, according to multiple attendees.

"The crowd was very upset with MSNBC because of its leftward tilt," one attendee said. "Some former employees said they were embarrassed by it."

One specific complaint about MSNBC concerned Keith Olbermann's interview of actress Janeane Garofalo, who likened conservatives to racists and spoke of "the limbic brain inside a right-winger."

We spend very little time on MSNBC, but from what we have seen, we can understand the criticism.  Once again, the key is whether the program purports to be journalism or opinion.  This part of the article is exactly the opposite of the theme of the Durden quote.

Briefly put, we do not think that the Durden summary of the link is a fair and accurate representation of the article.

Another recent  example is the unsourced claim that SPY is hard to borrow.  This was challenged by Doug Kass (full disclosure -- Kass is a valued colleague at TheStreet.com).  Kass checked this out and found no problem with a borrow.  Here is the Durden response:

Update 4: Doug Kass disagrees:

I have received emails from several trading sources, stating that the market is rising because the SPDRs (SPY) are hard to borrow now and arbs are being squeezed.

This story is hogwash, as I just tried to borrow 500,000 SPDRs and had no problem doing so!

Position: Long SPY; short SPY puts and short SPY calls

Maybe Doug can disclose at what term and rate he got the borrow. Doug - I am dead serious - can I borrow 5 million SPY right now at 0% from you? Hell, will give you 1%

We expect to hear more about this dispute.  Meanwhile, anyone wanting to short the market can do so through a futures account.  There is no problem in "borrowing" e-mini's to go short, the method favored by those of us in Chicago.  There is an arbitrage opportunity with SPY.  The claim of a problem in shorting does not have face validity, so we look forward to some evidence.

Our Take

It is easy for investment readers to be swept up by apparent authenticity, especially from a source that everyone seems to follow.

We hope that "Tyler Durden" will balance frequency of posting with accuracy in representing links.

We have a continuing concern about the "leaked stress test" story, where he is a supporter of a dubious source.  That is a question for another day.

The Wide-Ranging Thoughts of Dan Niles

We always turn up the sound and back up the TIVO when we see  Dan Niles on financial television.   He has a well-deserved reputation for great knowledge of what is happening in technology, especially semiconductors. He combines this information with superior analytical skills.

We were treated to several of these conclusions in his CNBC interview today with Maria Bartiromo.  Niles continues his bullish stance on technology for the remainder of 2009, while allowing for some pullbacks.  In particular, he suggests that we look for companies that have already guided down significantly on revenues -- 50% or so -- since these are the firms that will now be guiding higher.  Watch out for those that did not reduce earnings forecasts enough.

The interview then continued with a list of his biggest concerns. He offered opinions about how much further home prices would decline, the amount of "toxic assets" remaining to written down and long-term debt issues.

Everyone is  familiar with these issues, but there was nothing special in the analysis.  It is a story that one can read anywhere.  Does it make a difference that Dan Niles believes this everyday story?

Perhaps.  To the average listener he sounded just as much an expert on housing as he did on technology.

Six months ago we had an article featuring the famous picture of Ted Williams and a strike zone filled with baseballs. It showed his batting average when he stayed in what he called his "happy zone" and what happened when he did not.

(Full disclosure -- we are long INTC in personal and client accounts).

With the start of the baseball season, fans might enjoy a look at this, but the article is more about how to parse information. Everyone is entitled to an opinion, but why listen if the expert is reaching for a pitch in the dirt?

A Problem: Business Journalists and Political Opinions

At "A Dash" we take the investor perspective.  Put very simply ---

We seek credible news sources where astute journalists draw out the expert opinions from leading experts.

We frequently express dismay when business journalists substitute their opinions for a presentation of facts, when columns have a clear slant, when bloggers start with a conclusion, and when anchors intermingle opinion with questions.

A New Voice

It is important to identify these errors.  They are not obvious to the average listener.  This intersection of political comment and business news has stimulated a reaction.  There is now a new fact-checking source, Financial Media Matters.  Readers following politics may already be familiar with Media Matters, which describes its mission as follows:

Media Matters for America is a Web-based, not-for-profit, 501(c)(3) progressive research and information center dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation in the U.S. media.

We should all understand the approach and possible bias.  Having said this, the reports are factual and worthy of evaluation.

We do not engage in political advocacy, but the intersection of political discussion and the economy is crucial right now.  Investors need to understand what is factual and be willing to consider fact-checking in an open-minded fashion.  This is a new source, and a valuable one.

The First Impact

Media Matters challenged CNBC, suggestion that Larry Kudlow was using his platform as the basis for a possible Senate race.  CNBC responded with a clear denial of a Kudlow Senate run.  This is positive and important.

We have been long-time fans of the Kudlow show, which brings together many experts and draws out opinions.  We have also been concerned about political commentary in Kudlow's anchor segments on CNBC.

The clarification of this point is a good positive step.  We followed these developments via the excellent blog from the University of North Carolina, Talking Biz News, now added to our featured sources.  We commend the work of Chris Roush, the distinguished journalism prof at North Carolina.  This is a good time for investors to monitor his work, and that of his team.

Conclusion

Successful investing means putting aside personal political viewpoints.  The election is over.  It is time to consider the investment implications of the policies in place.  This is not a discussion over cocktails -- it is about your money and your investments.

The overwhelming trend in market commentary is that no government program will work.  The criticism of each announcement is immediate and pervasive.

The critics often disagree based upon personal values or politics.  They are not engaging in a dispassionate analysis of the programs.  Government efforts are not perfect, but they will have an impact.  Mainstream economic forecasts recognize this, and diverge widely from those of the punditry, mostly non-economists.  Check out this disparity in a  nice pickup of some key observations by SF Fed President Janet Yellen at Calculated Risk, another of our featured sources.

Getting this right is the most important challenge for investors.

Politics and Markets Update

CNBC news anchors have reached a new high in politicizing daily market reporting.

Regular readers of "A Dash" are well aware of the danger of inferring causation when two events occur simultaneously.  In a market environment where we have intra-day moves of five percent, often with no apparent reason, it is silly to speculate about a gain or loss of 1%.

Today's Example

It is dangerous to confuse your political views with your investment decisions.  Most financial journalists do not distinguish between analyzing events and offering opinions.  Let us turn to today's example.

President Obama was making a speech to the graduating class at a police academy in Columbus, Ohio.  While discussing today's terrible employment numbers, and the total job loss during the recession, he observed that the stimulus package had saved the jobs of this class.  Avoiding impending budget cuts in state and local government was part of the package for a simple reason: Most states have balanced budget requirements, constitutional or otherwise, and the federal government does not.  State policy is pro-cyclical, with increased spending in good times and lower spending (and perhaps higher taxes) in bad times.  This aspect of inter-governmental fiscal policy was addressed as far back as the JFK Administration.

The Obama speech was exactly what most investment pundits were asking for just a few weeks ago.  The chorus was that he was too negative, a note struck to get the stimulus package passed.  Now he is trying to restore public confidence and get people to look ahead.  Whether you like Obama or not, and regardless of one's opinion about the stimulus bill, this is what we are going to see.  It is a textbook example of Presidential leadership.

If this is the reality, what does it mean for the economy and the markets?

The CNBC Reaction

Starting their daily program on CNBC, Melissa Francis and Larry Kudlow began as follows:

Francis:   ...Stocks had been higher, and then as President Obama was speaking, not surprisingly the market fell.  It's down 30 points now.  It had been positive before he came on and started speaking....

Kudlow:  I didn't hear the word "capital formation" in his talk, Melissa.

Francis:  No, or tax cuts, I would think.

Kudlow:  Tax cuts.  I didn't hear that.  Stocks are off more than 20% since he took office.  Is he to blame for the weakening economy and the stock sell-off?

Our Take

We highlighted the excellent Jon Stewart segment on this topic as part of our series on why the market cannot find a bottom.  The financial punditry is setting up an unrealistic expectation about the content of every Obama speech.  Would Larry Kudlow really speak to the graduating police officers on the topic of "Tax Cuts and Capital Formation"?

Well.....maybe he would!

Why There is No Bottom: Economic Forecasts

Since the stock market seems to have no bottom, investors want to know why.  We shall consider this in a series of articles.  This is Part One, dealing with economic forecasts.

What People Read

We know that individual investors are frightened, a perception fueled by stock market results.  For most, the stock market is the barometer for economic forecasting.

Fueling this is the popular perception of the economic prospects.  The New York Times pulled together a number of op-ed pieces, asking When Will the Recession be Over?

This is powerful material, drawing together the opinions of many experts.  Readers should review all of the pieces.  We know from reader feedback, emails, and calls that it was an important article.

Jim Grant, erudite, polished, and persuasive, tells us, "don't ask when."

Stephen Roach, of Morgan Stanley, predicts late 2010 or 2011.

A. Michael Spence, the Nobel-Prize winning management Prof from Stanford says "unusually long and deep global recession through 2010."  That is if governments get their acts together.

William Poole of the Cato Institute rails against unwise government bailouts, which he believes are making things worse.

Eric Schmidt, Chairman and CEO of Google, expects signs of life later this year, and a resumption of normal lending in 2010, with the Internet playing a key role.

Financial writer George Cooper sees a financial drag extending into the next decade.

Harvard historian Niall Ferguson sees two years of contraction and two lean years after that.

Princeton Econ Prof and former Fed Governor Alan Blinder sees growth resuming in the fourth quarter of 2009, but with many caveats.

University of California-Riverside economists Marcelle Chauvet and Kevin A. Hassett take a probabilistic approach based upon past recessions, and see the probability of the current downturn lasting through 2009 at 50-50.

University of Maryland economist Carmen Reinhart focuses on a return to normal growth, setting out four years or more as the time frame.

NYU Econ Prof Nouriel Roubini sees a three-year recession, with chances for much worse.

A Different Approach

A different approach to the problem is to use a continuing panel, not selected for star quality.  The Wall Street Journal forecasting survey provides such a comparison.

The Journal article on the latest survey carries a gloomy headline, Economists' U.S. Outlook Dims.  The Journal surveys 52 economists, and reports on 2009 as follows:

The average forecast now sees growth in the third quarter at 0.7%, less than half the rate expected last fall. The fourth-quarter picture has also darkened, but just slightly, to growth of 1.9% from the 2.1% seen in November. Five economists see growth declining through the fourth quarter of 2009; they say the current consensus outlook, which says the recession will end in August as GDP growth returns positive, is far too optimistic.

Briefly put, the economic panel has reduced estimates for growth, but is dramatically more positive (less negative?) than the New York Times group.  They see the monthly job loss for the year as 183,000 per month, much better than current rates, and unemployment peaking at 8.8%

A key difference is attention to the stimulus package, which they see as saving about 90K jobs/month.  Interestingly some say it was too large, and others, too small!

Our Take

The entire media approach is very negative.  The New York Times has an all-star cast of experts, but it leaves us wondering a bit.  When an article like this appears it creates an illusion of scientific sampling.  We are also bothered by the lack of attention to the dramatic government intervention begun many months ago, policies with known lags.  The peak of the crisis came right after the Lehman fall and credit freeze.

None of the economic models have any experience with the myriad of Fed programs, not to mention the stimulus package.

Models can be quantitative or qualitative, but are always based upon experience.  None of us have the relevant experience for this particular crisis, so our models are suspect.  It is also natural to highlight experts who have been right -- those who "got it" in the popular Street parlance.  The question is whether the skills involved in predicting the problem are also the right skills for identifying the possible solutions.

We find the WSJ panel to be an interesting counterpoint.  The investment prize will go to those who can identify economic indicators showing any bottoming signs.  With equity prices at depression levels, even a moderation in the depth of the recession could be good news.

Meanwhile, most investors are focused on the headlines.

The TARP Debate

We plan to cover this more extensively, since it is at the forefront of market concerns.  To get started, here is a summary of the situation.

Monday's Bernanke speech at the London School of Economics raised the  key  point-- the need to address troubled assets at banks, the original TARP concept. We are all getting an object lesson in what happens when valuation of financial assets becomes nearly impossible.  Despite evidence to the contrary, including the initial Bear Stearns assets, media coverage labels anything related to mortgage holdings as toxic waste and nearly worthless.

There is universal criticism of TARP since the banks "are not lending." Their required regulatory capital continues to be at risk whenever some other institution sells an asset. Until we address this problem, existing bank assets will disappear faster than we can thrown new TARP money at the problem.

Many vocal observers, including Meredith Whitney, insist that banks should disgorge these assets for whatever price they can get.  Rick Santelli, gaining stature at CNBC, endorses writing assets down and adding capital, whatever the cost.  Santelli is a champion of traders, so his viewpoint reflects most of those driving the market.

Is there an Alternative Solution?

The political pressure is to do something for Main St., since TARP One was for Wall St. Political compromises address root causes only by accident. It is not an analytical process. Bernanke is trying to refocus attention on the causal relationship between troubled assets and future lending. It is exactly what I wrote my own open letter to the President-elect the day after the election. Two months later, the need is becoming more obvious.

There are three good alternatives.  Investors should watch for some sign that any of the three is getting traction.

1. Suspend mark-to-market accounting, at least through the crisis.  Information about individual companies could be revelaed in SEC filings without forcing changes to regulatory capital.  This approach was rejected by the Bush SEC, but is likely to be raised in confirmation hearings for the Obama appointees.

2. Use TARP II for price discovery.  That is the message of our letter to Obama.  We beat Bernanke to the punch by two months.  Many rejected the idea in favor of public investment in banks.  How is that working out?

3. Adopt a good bank/bad bank approach.  This would put the troubled assets into one account, with government involvement.  It would permit resumption of normal bank lending.

Conclusion

This problem will not be solved until policy makers start to address causes rather than effects.

We are moving to a model where we make public investments in private companies, creating tension between the profit motive and regulatory oversight.  We are  engaged in instructing companies about salaries, bonuses, private planes, and mergers.  This is not a good task for Congressional oversight, since committees are not good managers.  Who knows best what it takes to get good managerial talent and to use it effectively?

Government aids private business best when it creates financial incentives, solves financial problems, and allows managers to manage.  Consider the examples of Fannie, Freddie, Amtrak, and the Postal Service.

Here at "A Dash' we emphasize investment knowledge rather than policy prescription.  Sometimes the two themes are congruent.

Oil Prices and Stock Prices

Yesterday we wrote about the link between oil prices and energy ETF's, including stocks that should be responding to long-term expectations, not the front-month spot prices.  There is a lot of "floating storage" right now.

There is an expiration effect, with a front-month imbalance.  Meanwhile, the effects drive down the prices of anything in the energy sector.

The Role of Speculation - a New Concept for Links Posting

Last night, 60 Minutes had a segment on oil prices, emphasizing speculation and the need for greater regulation.  There were some good points in the segment, but we found the overall impression to be quite misleading.

Regular readers know that we are big fans of those who are the gatekeepers of the Internet, and we feature the sites that do this well.

Here is a new idea:  How about pulling together links on a specific topic, providing the intelligent reader an opportunity to see a range of thought on the issue.  The articles do not always appear on the same day, the general format for the gatekeepers.

Let us give it a try.

Our own explanation about the over-emphasis on the front month.

Eddy Elfenbein's excellent take on what 60 minutes should have asked, but did not.  You can also see the complete video.

Barry Ritholtz analyzing what 60 minutes missed.

Todd Sullivan, looking at how actual supply and demand affected prices.

And most importantly, how a thoughtful economist, writing peer-reviewed work analyzes the role of markets and speculation in influencing prices.  This is not an easy read, because it is detailed and analytical, with plenty of charts.  It is quite clearly argued, and accessible to anyone willing to take the time.  Investors should follow the excellent work of Prof. James Hamilton here and here.  It shows the oil price influence on the recession, and what we should be watching.

Conclusion

It is always a challenge to look forward, but the information is there for those willing to make the effort.  The overall conclusion is that speculation is only part of the effect on prices, with a need to balance the various factors.  Our own view is that forward pricing is a good leading indicator.

Federal Commitments Total $5 Trillion

There is a rising tide of negativity about "bailout nation."  Public opinion has been in opposition each step of the way, most recently on the auto bridge loan, announced today and analyzed by us here.

The problem in the media characterizations is that everything is described as a "bailout" since that is the story that plays.  There is also special emphasis on what the taxpayer will get in return, judged on the basis of investment potential.

Get serious!  The government is not a hedge fund.  The purpose of these actions is not a specific return on investment, but avoiding the collapse of the economy.  Many of the commitments have specific collateral.  Many are short-term in nature and some have already been repaid.  Others are showing a profit.  These are not just grants, and certainly not all "bailouts."

It is typical media punditry.  Describing a program as a bailout is an easy and popular story.  The source attracts many readers, blog hits, or ratings.  Analyzing the public policy costs and benefits is more difficult and pretty boring.

Readers can get some clarification from this interesting interactive graphic from Slate, allowing you to see the timeline and terms of each decision.

Investment Take

The investment conclusion starts with the notion that almost no one has any confidence in the specific plans or the effects, one of our items on the Wall Street Truthiness list.

We plan more detailed discussion, but the broad concept is easy.  Few of the existing pundit opinions and none of the econometric models allow for much impact from these programs.  Meanwhile, we have efforts of unprecedented size.

There is a contrarian opportunity.

Let's Get Negative!

On occasion our business takes us out of the world of investments and face-to-face with management.  It is a good reality check.  So many of those in the punditry are convinced that they would do better than those in Congress, better than those managing auto companies, and better than those teaching at major universities.

Readers would be well advised to examine the credentials of those making such claims!

Our Experience

Here is what we have learned.

A highly-respected colleague -- an economist -- thinks that our profligate spending has caught up with us and forecasts a GDP loss of as much as 10%.

A highly-esteemed business associate, engaged in top-level sales in a cyclical business, sees a prolonged period of economic distress.

A respected colleague with broad experience in financial markets and connections to many corporate boards thinks this is the worst economic situation in his lifetime (back to WWII era).  He notes that many of his companies are cutting back on spending.

Fortune collects the views of some mostly bearish pundits, designed to scare the daylights out of readers.  After all, that is the story!

Many observers focus on any corporate announcement that discusses bad times.  FedEx (FDX) reduced estimates and the stock got trashed.  Jamie Dimon said that November was bad and December had not improved.

What Does it Mean?

A few years ago we challenged a young colleague to bring me a piece of information that I could not read in tomorrow's Wall Street Journal.  The point is clear enough.  If it is in the WSJ, it is in the market.

The biggest challenge is to figure out which pieces of evidence are concurrent economic indicators and which (if any) provide a glimpse of the future.

Hint:  FedEx is completely concurrent and always wrongly interpreted by the market.  The company has frequently stated that they have no great future insight.  Jamie Dimon also denied any ability to see into the future, and even complained a bit about the question.  Hat's off to him for observing that he was asked to step out of his "happy zone."

It is pretty clear that the negative sentiment about the economy has become even more pervasive.  At some point it becomes a self-fulfilling prophecy.  If businesses choose not to invest in new technology, the economy will get even worse.

If an investor thinks this is fresh information, it is time to sell.  If it is a time when all others are fearful, maybe it is time to buy.