Three days on, there is still plenty of disagreement over who is to blame (and for what, exactly) in the low drama that “traders are calling… ‘The Bartiromo Affair’” (per the Financial Times) or, what one analyst dubbed the “Ben/Maria tête-a-tête” (per the Chicago Tribune, registration required).
The facts of BartiromoGate (or BernankeGate, if you prefer) are, in a nutshell, as follows: Last Thursday, Federal Reserve Chairman Ben Bernanke testified before Congress. The markets reacted strongly (upward) to his testimony. On Monday, CNBC’s Maria Bartiromo (aka, The Money Honey) reported —“Scoop!”— that Bernanke made some comments to her at the White House Correspondents Dinner on Saturday night indicating that the markets had misinterpreted his testimony. The markets again reacted strongly — this time in the other direction.
Here is how the blame is being apportioned:
1) There is the “Blame Bernanke” contingent, consisting of bewildered Wall Street economists/strategists/consultants as quoted in assorted media reports and summarized as follows: The new Fed chair shouldn’t have talked out of school to a reporter at a boozy Beltway gathering. Let’s call it a rookie blunder…unless, of course, Bernanke wanted to get a corrective message out to the markets. And in that case, shame on Bernanke for not speaking out publicly himself and instead playing a game of telephone with The Money Honey.
2) Blaming both the markets and the Fed chair is none other than Henry Blodget who chimed in at The Huffington Post yesterday to remind Bernanke (and the rest of us) that Wall Street hears what it wants to hear rather than what is being said. “Last week, Bernanke gave a speech to Congress in which he said, clear as crystal, that, instead of raising rates every meeting, the Fed would now make decisions on a meeting-by-meeting basis,” writes Blodget. “What did Wall Street hear? Rate increases were over. Stocks skyrocketed.” But to Bernanke Blodget scolds, “Don’t explain yourself in plain English to journalists at dinner parties.”
3) Then there are the “Blame Bartiromo” folks who contend that the CNBC anchor should not have reported Bernanke’s comments at all because the White House Correspondents Dinner is an off-the-record event. (See Bloomberg News columnist John M. Berry and Brett Ferguson of BNA Daily Report for Executives).
No conversation is off-the-record unless and until the reporter and interviewee together make those specific arrangements before they start talking. What interests us about Bartiromo’s (and CNBC’s) behavior is how she and her network played what CNBC’s Larry Kudlow called “her important scoop.”
Our beef can be summarized as follows: after hyping an “interesting” scoop and teasing viewers about the “surprising comments” you are about to report, don’t feign surprise when your viewers are actually surprised by what you report — and then don’t take a victory lap on a colleague’s program to further celebrate your “surprising” “scoop,” while still insisting it wasn’t very surprising.
Allow us to explain.
Fifteen minutes before Bartiromo’s show, “The Closing Bell,” began on Monday, she appeared on-air to tease her “scoop” thusly: “Over the weekend I had an opportunity to talk with Ben Bernanke, the Fed Chairman. You won’t want to miss what he told me about the markets and how the markets and media covered last week’s testimony in front of Congress. Interesting comments to say the least.”
(Lumping “the media’s” handling of Bernanke’s testimony last week in with the markets’ handling of it is misleading. Much of the media focused on Bernanke’s oil-prices- related testimony, but those who did cover his comments on raising rates generally did so fully and with minimal speculation — like, for example, the Washington Post’s Nell Henderson who last Friday wrote: “Federal Reserve Chairman Ben S. Bernanke told Congress yesterday that he and his central bank colleagues may pause in the process of raising interest rates to restrain inflation but that would not necessarily mean they were finished.” The markets? They fixated on the “pause” part of Bernanke’s comments.)
Twelve minutes into Bartiromo’s show she ratcheted up the hype, talking about how at “the star-studded event” known as the White House Correspondents Dinner she “had the chance to talk with Fed Chairman Ben Bernanke…and he had surprising comments about the media’s coverage of his congressional testimony last week. I’ve got those details…coming up…”
Four minutes later, Bartiromo finally spilled Bernanke’s “surprising” comments at the start of an interview with the president of the Chicago Federal Reserve on the floor of the Chicago Mercantile Exchange: “Ben Bernanke told me over the weekend the media and the markets got it wrong last week in speculating the Fed is done raising interest rates and I asked him whether the markets got it right after his congressional testimony and he said, flatly, no. Bernanke also said it is worrisome that anyone thinks of him as dovish [on inflation]… He said he and his Federal Open Market Committee members were trying to basically create some flexibility for the Federal Reserve, saying the Fed may pause but the data will really dictate whether more rate hikes will occur at future meeting.”
As she was speaking, a commotion flared up behind her on the floor of the Exchange. Bartiromo, according to a Reuters report, was “seemingly unaware that traders were furiously reacting to her reportage,” commenting calmly, “It seems like something is going on behind us” and “it did get sort of loud just recently.”
One hour later Bartiromo again played dumb, feigning surprise that anyone might have been surprised by the revelation of what she herself had characterized as Bernanke’s “surprising” comments. To the Wall Street Journal’s John Harwood, a guest on her show, Bartiromo said: “I don’t know why anyone would be surprised at Mr. Bernanke saying to me that he was trying to have a feeling of flexibility in terms of the Central Bank, not necessarily suggesting the rate hikes are done.”
But isn’t a “scoop” by definition — or at least by implication — something “surprising,” something juicy that no one else knows? For some reason, CNBC’s Larry Kudlow dedicated the first part of his show that evening to the further discussion of this “not-surprising” bit of news, promising readers that he would talk to Bartiromo about her “important scoop,” and about how she “shredded Bernanke.”
Here are some highlights from Kudlow’s obsequious interview of a preening Bartiromo [with our comments in brackets].
Kudlow: Maria, first of all, I want to say congratulations. Second of all, I made, I don’t know, half a dozen calls. People like us who have been down to that White House Correspondents Dinner many times, and every single person said, unless a public official tells you it’s off the record, or unless you specify it’s off the record that it ain’t off the record. That’s the deal. Now, is anyone criticizing you for this?
Bartiromo: Well, I mean, you know, I think that people want to know…why Bernanke spoke to me… there were so many reporters there, and they didn’t get the story and I got the story. [Translation: Fellow reporters are jealous of my jaw-dropping “scoop” — er, my not-surprising bit of information].
Later, Bartiromo again downplayed the “scoopiness” of her scoop. “Look, this is not brain surgery. Obviously the data is going to dictate it. I mean, give me a break. You know, he has said this before. Look at the minutes. You’re always looking at the minutes. Look at the congressional testimony. He said, `Sure we might see a pause, but that doesn’t mean we’re not going to raise again.’ Everything he said to me… So why are the markets going nuts over this?” [They’re “going nuts over this” because Bartiromo and CNBC are playing it up as the biggest news since the bombing of Pearl Harbor, and as Bartiromo acknowledged moments later, the markets “hang on [Bernanke’s] every word” — including the ones he whispered to The Money Honey (and, in all probability, to other people who considered it less of a “scoop.”)]
Bartiromo continued her “it’s no big deal” pretense, reminding Kudlow that “[Bernanke last week] said, `We’re leaving the door open for hikes down the road.’” Kudlow’s reply? “That’s the way I read it, by the way,” adding that he thought last week’s market reaction was totally off — or, to quote Kudlow, “I thought the consensus was completely wrong.” [Really? Why didn’t he share this with his viewers last week? Instead, Kudlow’s “Last Word” on Thursday’s show regarding Bernanke’s congressional testimony was that “Bernanke did an excellent job for the markets today” as the on-screen caption below Kudlow’s smiling face reported that “Markets Cheer Bernanke.”]
Bartiromo went on to tell viewers the following: “I think in [Bernanke’s] heart—I think in his heart I did him a favor. He wants the message out there that they want flexibility…” [Since when is it a CNBC reporter’s job to “do a favor” for the Chairman of the Federal Reserve?]
The segment ended with the two CNBC-ers praising one another.
Kudlow: I commend you. Right person, right place. Diligent reporting.
Bartiromo: Thank you.
Kudlow: I think the Street and the markets benefited. The more information the better.
Bartiromo: Thanks very much.
Kudlow: Well done, Maria Bartiromo. It is a pleasure. My first interview. I’ve known you how many years?
Bartiromo: You’re the best, Larry.
Kudlow: My first interview. Terrific stuff.
And the high-fiving continued into the evening on CNBC, with Bartiromo’s colleagues continuing to hype her market-moving “scoop.” For example, “On the Money’s” Dylan Ratigan had this to say: “The one thing Wall Street thought it knew about the future of interest rates was wiped out today at 3:00 p.m. That’s when our Maria Bartiromo shook the market with comments from the Fed boss Ben Bernanke.”
Market-shaking? Yes. But, please, not “surprising.”