The House approved the debt-ceiling/spending cuts deal after markets closed yesterday, and the Senate passed it today. The Dow is now down 176 points on the day, as the fact that we have a terrible economy, now accompanied by negative stimulus, begins to sink in—never mind the fact that we’ve averted a potentially catastrophic crisis.
In the correlation-is-causation field of stock market reporting, I’d make my headline something like: Stocks Sink As Debt Deal, Data Point To Recession.
But here’s The Wall Street Journal:
U.S. Stocks Fall Despite Senate Vote
And The New York Times:
Stocks Fall Again, Despite Debt Vote
The idea that investors might a wee bit concerned that we’re slashing spending while the economy staggers along with 9.2 percent unemployment and no growth in sight? The Times reports it, safely ensconced in quote marks via an economist:
“We get no default, but the bad news is there is a growth trade-off,” he said. “They had to agree on fiscal contraction that would weigh on growth.”
But the Journal doesn’t even mention what almost all economists would tell it: That the debt deal is bad for the short-to-medium-term economy because it cuts spending at a time when demand is almost nonexistent.
Bloomberg gives us a nice view of the wreckage in a number of markets and its headline goes with the economy angle:
Stocks, Treasury Yields Drop on U.S. Outlook
But it doesn’t mention concerns about the drag the debt deal will have on the economy.
Meantime, yields on the benchmark 10-year Treasury bond plummeted today to 2.6 percent. That’s surely in part because the apocalypse hedge has been removed and because the euro crisis is getting worse (prepare to hear much more about that in the coming weeks and months) but it’s also signaling recession time. The economy is headed down, and any possibility of a stimulus has just been removed. In fact, it’s gone negative.
If journalists chose to, they could make the markets story about how markets are reacting negatively to the debt deal. That’s the great (if you’re doing the writing) and terrible (if you’re doing the reading) thing about markets reporting: The market’s movement is made up of trillions of individual decisions on all kinds of things you can’t know about.
You can make up your own narrative and no one can really ever prove you wrong: Heat Wave Has Investors In the Dumps. Markets Fear Arab Unrest As Syrian Massacre Unfolds. Regulatory Uncertainty Holds Back the Dow. Or more like it: Euro Crisis Jitters Hit Markets.
What you choose to pick says something about how you view the world.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.