There has been really bad news on the Chinese economy almost daily as its industrial profits fall to the lowest level since 2011, when the US stock market had its last 10 percent "correction." Indeed, CNBC has finally got the market "correction" the business network has been promoting since this past spring. Remember, CNBC reporters can't own individual stocks; some of its personnel are virulently biased (one, Rick Santelli, started the Tea Party) against both the Fed Chair Janet Yellen and President Obama and thus would love to see them both embarrassed by a market crash. This could, at least for a short term, help the network's ratings, which have been so poor that they fired their rating agency.
A crash could also help Donald Trump's campaign by validating his thesis that the US economy is really in a mess despite GDP growth in the last reported quarter of 3.9 percent. Indeed, CNBC splashed the headline that Carl Icahn, Trump's ally and proposed Treasury Secretary, was forecasting an economic "catastrophe".
Let's put aside the question why CNBC and most market commentators only define a market "correction" as a downward move (as if the only way a market can be wrong is being priced too high and never too low). And even put aside the fact that many, if not most, retail investors do not engage in short selling strategies--which are certainly legitimate market activities--so that they don't recognize how the scores of pessimistic Cassandras whom CNBC trots out to talk down the market on a repetitive basis (e.g., Bill Fleckenstein, year after year) may well be just "talking their own book" of short positions, and thus are not inherently more credible than well-known stock promoters, even if now they turn out to be right with a little push from CNBC.
Put aside even Rick Santelli, who thinks he knows more than everyone, including the Fed Chair, because he resides on a trading floor, exemplified by his daily 'Santelli Exchange" anti-Fed diatribes. Rick also tends to shout down anyone who has the temerity to disagree with his views, even the respected reporter Steve Leisman, who has genuine expertise on Fed policy and obviously tries to play the news straight down the middle.
CNBC's trader programs (Half Time Report and Fast Money) are stacked with players who tend to take a negative view of market developments to matter what: Scott Brown, who persistently warns viewers that the market is bound to re-test its lows, which of course leads viewers to sell before that happens. Guy Adami takes the same view, but he takes pains be fair and not dismissive of other opinions. Dan Nathan also tends to see any stock as on its way down. And Brian Kelly, a shouter and bully, repetitively constantly refers to himself in the third person while spinning his decidedly negative views of market direction and broad-brush reading of the lack of growth in the US economy, notwithstanding much data to the contrary.
As for Brian Sullivan, he just delights in playing the wise simpleton but with a bias toward calling the next Armageddon, while Michelle Caruso-Cabrera spends most of her time auditioning for Fox News with diatribes against anything that might be viewed as contrary to her "You Know I'm Right [Wing]" views.
One almost hopes for more appearances from the conservative economist Larry Kudlow, who clearly does not pose as a "reporter" like Cabrara or Lee or Santelli and delivers his predictions and prescriptions with wit, good humor and acknowledgement that there is often another side.
What CNBC's market-negative bias gets down to is the "headline tilt" that shows up, most acutely on its website home page news feed, often oversimplifying market developments in a negative tone. Here are some examples of stories headlined on CNBC in the past week:
All of these stories and others aim at undermining market confidence in the Federal Reserve Board and the government in general (read Obama). As expected, CNBC had known Fed critic Peter Schiff was ready to re-launch his criticism of what he called the Fed's "con" on the markets that will provoke a "currency crisis" and a "bond market collapse," and presumably take stocks down precipitously as well.
Add to these dire warnings Jim Cramer's September 24 call of the end of the Bull Market, by pronouncing on his show that we are now in a classic Bear Market, no matter how well companies are in fact doing. This despite the fact that, while several market sectors are down by 20 percent or more from their highs, the usual "tell" benchmark for the onset of a Bear Market, the broad market, is barely down by the 10 percent "correction' metric.
Cramer has stuck to his guns, although curiously CNBC did nothing to expressly trumpet his Bear Market call for a few days.
If you don't believe this observer, I challenge you to just watch CNBC from start to finish on any given trading day this week or next. And who is advantaged by CNBC's bias?
Consider this: on Friday, October 3, the monthly jobs report will be announced for September. Given the active promotion of "we're heading to recession" theories on CNBC by folks like Santelli and others, one might expect that job creation will be taking a downturn and unemployment an upturn. This would confirm the theory (made up by some CNBC commentators out of thin air) of the Federal Reserve allegedly surprise decision to hold off a rate increase at its last meeting (which by the way was not expected by market sentiment as measured both by debt market yield levels or surveys of traders) because it had lost confidence in the economy and perhaps saw a recession on the horizon as well.
But if the jobs report further confirms the 200,000-plus pattern of job creation (and--as viewed likely here--also adjusts the weaker August report to upwards of 200,000), then most of the "confusion" CNBC accuses the Fed of perpetrating on the markets (joined by this weekend Financial Times which directly accused the Fed Chair of lying--"prevarication"--to the markets about its intentions) will dissipate. See the web-current version of the following article: http://www.ft.com/intl/cms/s/0/b65c519c-6355-11e5-97e9-7f0bf5e7177b.html - axzz3mzO1fCob
Note that the web-version of the article omits the sub-headline referencing "US prevarication", tied to a page-one headline about "Fed Prevarication" in the hard-copy home-delivered edition of the same weekend Financial Times edition. Perhaps the FT has more second thoughts than CNBC about stretching the truth of things, and good for them to correct the record.
Chair Yellen has made quite clear on multiple occasions lately that more strong jobs reports will trump (sorry!) transitory deflation worries and allow the Fed to get the first rate rise of 25 basis points over with by year end--even as early as its October 28 meeting!
If that happens, the stock market stands a good chance to go up strongly, and who will make a fortune? All those hedge funds that will be quietly scooping up cheap shares of all sorts of strong companies, dumped by 'weak hands" shareholders spooked by CNBC's constant stream of warnings about a potential market meltdown.
Having missed the crash of 2008, one can understand why CNBC wants to be their first to call one coming. But ratings are one thing, "fair and balanced" is quite another. Remember, there are plenty of seasoned professional traders laughing all the way to the bank right now as they listen to CNBC predict Armageddon yet again (see below) and give them a chance to buy great and growing American companies on the cheap. One hopes these speculators at least buy the CNBC folks a nice dinner or two with the proceeds.
Let's see how much, if any, focus CNBC has given to the latest report of improving financial conditions in China, China being the bell cow of CNBC's oft-repeated focus on the potential global recession China will provoke that will bring the US economy (and the stock market) down, down, down. For the moment, however, the network continues to focus on the most dire predictions: the "Fast Money" trader Steve Grasso said on Monday, September 28, that the market "could be" setting up for an "Armageddon situation".
On the same program, CNBC featured its on-call chartist Carter Worth declaring, like Cramer, the end of the Bull Market and that, "in my estimation, we're in a Bear Market." But investors should remember the Wall Street adage: charts are always right--until they're wrong!