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Does the Media Overplay the Stock Market Slump?; Was Michael Jordan Comeback Speculation Just a Wild Shot?

Aired March 17, 2001 - 6:30 p.m. ET


HOWARD KURTZ, HOST: The market meltdown. Are the media overdramatizing the story? Did journalists help create the Wall Street bubble in the first place? And are they hurting the economy by being too sour?

And, a "Sports Illustrated" columnist speculates about a Michael Jordan comeback. Was it just a wild shot?

Welcome to RELIABLE SOURCES, where we turn a critical lens on the media. I'm Howard Kurtz, along with Bernard Kalb.

For the media, the stock market plunge had all the elements: big money, big drama, and winners and losers, mostly losers. Among them, millions of ordinary investors.


TOM BROKAW, ANCHOR, NBC NIGHTLY NEWS: Fear, anxiety, demoralizing. Those were just some of the words used today to describe what was a black-and-blue Monday on Wall Street.

DAN RATHER, ANCHOR, CBS EVENING NEWS: Wall Street investors ran for the exits today in one of the biggest and fastest sell-offs the U.S. has seen in a long while.

KURTZ (voice-over): Newspapers went to headlines large enough to trumpet World War III. But did journalists help inflate the market bubble in the first place? And then rush to pop it? Did the press buildup those Wall Street analysts who kept insisting that stocks were heading up?

UNIDENTIFIED FEMALE: Things are selling on Wall Street today. The Dow is now below 10000 on a closing basis. The Nasdaq, once again, below 2000.

KURTZ: And has the fourth estate been too sour about the fate of the economy, with help from the Bush administration?

ARI FLEISCHER: The president believes it would be a failure of leadership for the White House to put a Pollyanna-ish glow on the economy if the facts indicated otherwise.

(END VIDEOTAPE) KURTZ: Well, joining us now, Alan Murray, Washington bureau chief for "The Wall Street Journal" and author of the book "The Wealth of Choices."

From New York, Terry Keenan, anchor for CNN financial news.

Also from New York, Anthony Mason, business correspondent for the "CBS Evening News." Welcome.

Alan Murray, the 750 point drop in the Dow on Monday and Wednesday, as painful as it was, did the screaming headlines and the nonstop cable coverage at least overdramatize it?

ALAN MURRAY, "THE WALL STREET JOURNAL": Well, I think our job is to dramatize good stories and so I think it's no surprise that you got screaming headlines. But, you know, the interesting thing here, Howard, is that the market is not being driven by the little guy, by the average investor who would be most likely to respond to the headlines. It's being driven by the big investors. So, I don't think the media's playing that big a role in the direction the market is taking.

KURTZ: But, of course, lots of little investors, watching CNBC, reading your newspaper, and trying to figure out just how scared they should be. And, Anthony Mason, when the Dow goes below 10000, when the Nasdaq goes below 2000 after having been at 5000 just one year earlier, are you conscious of not using words or phrases that might unnerve or frighten your viewers?

ANTHONY MASON, CBS EVENING NEWS: Well, I don't want to scare them, Howard. But on the other hand, you want to make them aware that something pretty serious is happening. I mean, these are big numbers. The drops we've seen this week, you know, by any measure are significant. And there is a palpable fear on Wall Street. You've got to report that. How do you ignore it.

BERNARD KALB, HOST: But you don't want a stampede them, Anthony. There -- I just heard those words, like fear, anxiety, demoralizing, run for the exits. There was a cartoon in Thursday's "New York Times." Now, is this an accurate portrait, Terry, of television coverage of the stock market for the past year? "The growth in the tech sector has propelled us beyond the outmoded boom and bust into a new economy of virtual prosperity. I -- if the Dow doesn't hit 36000 within a decade, I'll eat my Palm Pilot."

That was yesterday. Today, "You see, this was a classic bubble market. Investors had to be delusional to believe was worth more than several major airlines combined."

Is that an accurate, although heightened, portrait of television coverage of the market for the past year, Terry?

TERRY KEENAN, ANCHOR, CNN FINANCIAL NEWS: Well, I think, if anything, journalists are guilty of talking-up this market, not talking it down. There was incredible euphoria. There was that "TIME" magazine cover, Jeff Bezos, man of the year, running a company that loses 10 cents for every dollar that, in books, that they've sold. And journalists, perhaps, along the way, weren't as skeptical and did talk-up the new economy, the new paradigm.

But, as Anthony was saying, we've seen incredible destruction of wealth over the last year. $4 trillion taken out of the Nasdaq. That's equal to about half of the U.S. GDP in one year. So, journalists, I think, are being responsible by using some of these words, like fear, to describe what is going on on Wall Street right now.

KALB: But, Terry, what about the responsibility? You're bringing in those analysts from Wall Street who, in fact, have puffed-up stories and now we're running for cover, we don't hear about them. There was no accountability held, just, bingo, everything is good, buy, buy, buy.

KEENAN: I agree. And I think that we've tried, on "MONEYLINE" and a lot of other journalistic outlets, to hold up some of these bulls and say, "Hey, how come a year ago you didn't tell us that stock prices, on a historical basis, were grossly overvalued"?

We've also tried, over the years, to find the bears to come out and give the opposite side of the story. Unfortunately, Wall Street fired a lot of the bears...

MASON: Well, I think that's a really important point here, because, you know, these analysts all work for companies that make their money selling stocks and there's clearly a much higher penalty to be paid for missing a bear market, or, excuse me, for missing a bull market, than there is to be paid for missing a bear market. There's a bias...

KURTZ: At the same time, at the same time, Alan Murray, there's a symbiotic relationship here, television in particular, but also newspapers, need celebrity analysts, big names, because they've become a piece of programming. People want to see what they have to say.

Let me give you a couple of specifics and then I'll give you a chance to respond. "The New York Times" a couple of weeks ago does a piece on Henry Blodget of Merrill Lynch, major Internet cheerleader, after he recommends a year ago eToys and, both of which have gone belly up.

Your paper, a couple of weeks ago, did a piece on Mary Meeker of Morgan Stanley after some of her top recommendations dropped by as much as 96 percent. Did we help make these people stars and now we're kind of slapping them around because they were so optimistic?

MURRAY: Oh, sure. I mean, people like Mary Meeker and Henry Blodget got their reputations because they had the media to play off of. But I can also point to you dozens of stories that were written way back when the market was only, when the Dow Jones first hit 8000 or 9000, stories that were written about how price earnings, ratios, were way out of line with historical comparisons. Stories that were written about how this may be a bubble, like Japan's, that can't really last... KURTZ: That was old...


MURRAY: An awful lot of -- yeah, well, that's right. Because, you know, but, an awful lot of skeptical journalism was done at the same time that these analysts were being given some play.

KALB: Anthony, isn't one element of this triangulation being left out of this discussion? You have these stars who have been brought in on the television shows. You have the television shows and the media puffing-up some of the analysts. But we've left out the other element, and that is the greed of those who are listening, myself included. There is, I looked at it through the lens of greed, and said, "Great, great, buy, buy, buy." What about the audience out there?

MASON: You're absolutely right. And, I mean, the important thing here, and Alan was alluding to it, is that you've got to remember, this buildup took four years. There were plenty of people over those four years who kept saying, "This can't last. It's not going to last. It's ridiculous."

KALB: I never heard that.

MASON: But over -- you never heard that? That's the point. People didn't want to hear that. They didn't. They took what they wanted, dismissed the rest, and ultimately it did collapse. But, one by one, over those four years, a lot of the negative people had to stop saying, "You know what, it's not going to last" because they were wrong.

I remember when Michael Metz at Oppenheimer finally said, "You know what? I'm not going to comment anymore because I just keep being wrong."

KURTZ: But, you know, Anthony Mason ...

KEENAN: And believe ...

KURTZ: Excuse me, Terry. I'm struck by seeing, and I want to get you in on this, too, struck by seeing everybody sticking microphones in peoples faces, asking the experts, "When will this end? How low can it go? Where is the bottom for the stock market?" when many of these same experts were so clearly and dramatically wrong in predicting the market for this year and for last year.

KEENAN: Yeah, I mean, not just a little bit wrong, but off by 25 percent. Take Abby Joseph Cohen, for example, she had a 1600 price target on the S&P 500. It's below 1200 right now. And going back to Anthony's point, I just wanted to mention that, believe me, you get a lot more negative e-mails and view phone calls when you do a bearish story than when you do a bullish story, even today.

KALB: Alan, is there any accountability held by media, by networks, by newspapers, etcetera, for the people who've been making these wrong calls? Or do they stay right there collecting their fees?

MURRAY: Well, that's a good question. I mean, Howie wrote a fascinating story about Henry Blodget, whose predecessor lost his job because he missed a bull market.

KALB: And how is Henry these days?

KURTZ: He was too bearish on Amazon...

MURRAY: He was too bearish...

KURTZ: Amazon went way up when Blodget recommended it. Amazon now, it's a great site, but not a good stock...

MURRAY: Right. And so the question is...

KURTZ: It's come down by 38 percent.

MURRAY: The question is, are any of these bulls going to lose their jobs because they missed the bear market?

KALB: What do you think?

MURRAY: I doubt it. I doubt it. But we'll see.

KALB: "The Wall Street Journal", on Mary Meeker, that you refer to, did she get $16 million? Is that what I remember, in commission?


KURTZ: Anthony Mason, just briefly, are you wary at all of the experts, the analysts, and do you think the press should be a little bit more hesitant about using people who's batting average now is clearly below 500?

MASON: Well, the fact of the matter is the one thing I learned very quickly in this job is there are a lot of very smart people who can be very, very wrong. You have to take everybody with a grain of salt. Nobody has the answer to what is going to happen and anybody who tells you they know what's going to happen tomorrow is a liar. You just have to be really careful and you just try to balance it out.

I'm much more cautious now than I was a couple of years ago because of what I've seen happen.

KURTZ: But, of course, people are still doing it. Here's "Smart Money" magazine, seven best mutual funds for this market. "Fortune" magazine, tech lives, 10 best trends to bet on in a down market.

MASON: You know, but this gets to what people want to do with their money. I had a fascinating conversation a year-and-a-half ago with a woman who runs mutual funds who was saying, you know, this market is way overvalued, there's nothing you can invest it. And I said, "Well, that must mean you have all your clients' money in cash" and she goes, "Oh, no, because we assume that if the clients want their money in cash, they can do that themselves." KURTZ: Real quickly...

MASON: When they give us money, they want us to invest it.

KURTZ: Real quickly, "Wall Street Journal" on March 10, 2000 after the Nasdaq hit 5000, "What could stop the Nasdaq's climb from here is anybody's guess. Now that investors have concluded the Fed and valuations don't matter, the sky seems to be the limit."

MURRAY: They were right. I mean, that was at 5000. Oh, I'm sorry, that was written when the Nasdaq hit 5000?

KURTZ: Right. A little bit ...

MURRAY: Well, look, that is a reflection of the sentiment of the market at the time. But I think you also have to -- we also wrote a page-one story looking at the valuations of these tech stocks and saying, hey, what's supporting this?

KURTZ: Well, that sentiment, obviously, a little out of control, irrational exuberance and all that.

When we come back, we'll ask the question is the press talking down the economy.



Terry Keenan, is the economy in as dire shape as the media seem to be suggesting? After all, unemployment is just over 4 percent, a level that was considered all but unreachable a few short years ago?

KEENAN: There's a lot of positives out there, unemployment one of them, though it may be a lagging indicator. But, clearly, the economy really slowed down at the beginning of November. A lot of people don't know why. The stock market, I think, has been telling us that there's something really wrong with the economy, and typically the stock market does that. Nasdaq started going down in April and six months later the economy seemed to follow.

KURTZ: Any danger, Anthony Mason, of excessive pessimism? I mean, people have the impression, because of the negative headlines and the corporate layoffs and so forth, that things, perhaps, are worse than they really are.

MASON: Well, I think, I think what's happened, and this is the feedback, I'm not an economist, I just talk to them and I try to tell people, you know, what they're telling me. A lot of people missed this. And that's one thing that made me be extra cautious. A lot of experts missed this, didn't see it coming, and all of the sudden, in January, they started spinning in the opposite direction. So I had to start spinning my coverage in a different direction, and now I'm being really cautious and I'm saying, you know what, this could be worse than it looks right now, because now that's what people are telling me. You've got to prepare people for what might be out there.

KALB: Let me pick up this caution that Anthony is talking about and ask you, media people are, have to be as precise as they possibly can with each word.

Alan, is the word "recession" accurate now?

MURRAY: No, I don't think it is. I think Howie is right. I think the press has gotten ahead of the story on this one.

If you look at numbers, if you look at the real data that's out there, there is no -- there is not yet any clear sign that we're in a recession. Employment is growing, it's growing very slowly, but it's growing. Consumer spending is growing. If you look at, sort of, January, the numbers for January and February and try to make sense out of them, it seems to be continuing to grow.

Now, you see a move like this in the stock market and that can cut back on consumer spending pretty quickly. But up to this point, the media and public opinion seemed to be ahead of the facts.

KALB: You're talking reckless journalism now. I mean, you're talking about the media -- shock, shock, shock. But, the media being guilty of, sort of, throwing high octane on the word.

MURRAY: Well, I think part of -- I think part of what happened was the economy, we got so used to the economy growing so rapidly that when growth slowed down, it was such a difference from what we were accustomed to, and you started reading about layoffs in technology companies and so forth, and the market was down so much, that people started throwing around the word recession.

But I'm, I think it's far from clear that we're in one.

KURTZ: Also, the longest peacetime expansion became an old story. And this is a new story.

Terry, you were going to jump in?

KEENAN: Yeah, you have other signs out there, Alan, that signal that we may perhaps be in a recession, or going into one, at least in the first quarter, here. You have credit spreads widening. You have Cisco laying off 17 percent of it's work force. Technology earnings down 25 percent. If Alan Greenspan -- if he's not panicking, he certainly rushed to cut rates on January 3 and then again at the end of the month and probably again next week, so ...

KURTZ: Alright. Let me jump in there, Terry.

KEENAN: All the signs are out there.

KURTZ: Terry, I want to bring back Anthony Mason. When President Bush keeps saying that the economy is not in great shape, as he has done repeatedly, in part in an effort to sell his tax cut, is it the media's responsibility to dispute that or to point out that there are some stronger signs in the economy as well?

MASON: I think it's the media's responsibility to point out that he's trying to sell a tax cut and he's using that argument to do it. I mean, and I think that's certainly something that we've done on our broadcast repeatedly.

I think you have to be careful. I mean, there is a big debate about whether the President has helped talk down this economy and helped, sort of, put a cloud of pessimism over it and, to some degree, I think that's accurate.

But, I think you're right. I think we have to be careful and say to people, you know what, housing is still incredibly strong. Unemployment is still at 4.2 percent. But there are an awful lot of economists out there who have changed their tune and are scared.

KURTZ: OK. We'll have to leave it there. Anthony Mason, Terry Keenan, Alan Murray, thanks very much for joining us.

And when we come back, the Michael Jordan story. Did "Sports Illustrated" put up an air ball?


KURTZ: Welcome back.

A single reporter, a single source, and one slam-dunk of a fuss this week over basketball mega-celebrity Michael Jordan.

A "Sports Illustrated" columnist, Rick Reilly, wrote that Jordan, who bowed out after his sixth Chicago Bulls championship, could be coming out of retirement.


RICK REILLY, COLUMNIST, "SPORTS ILLUSTRATED": I don't think you could get a better source, and this source says that Jordan is 90 percent committed...


KURTZ: Jordan, now the basketball chief and part-owner of the woeful Washington Wizards, pretty much ruled it out as he has in the past.

The only evidence, Jordan's been playing in a few pickup games. His alibi? He's gotten fat.

No matter. The media picked up the ball and ran with it. Lots of speculative chatter about a Jordan comeback at age 38.

"Washington Post" columnist Tom Bowell notes that Jordan would have to give up his 5 to 10 percent stake in the Wizards. Boswell calls the report "an inane rumor and a fantasy."

Bernie, what's your score card on the "Sports Illustrated" story? KALB: Well, it's a single source. And all of us like not to go with a single source. We'd like to have it doubly checked. Sometimes there's the old credo "follow the money", but in Michael Jordan's case you don't have to follow the money, money is not an issue.

I'd rather have a second source but, as he wrote, a source very close to Jordan -- if you're absolutely confident as a reporter, you go with it.

KURTZ: Although Jordan did come out and deny it, we don't know what he's going to do next year.

I think that, in watching this on every network, including CNN, people don't really care whether it's true. They just like the idea of showing those old films of Jordan and having a chance to talk about him. It's like Hillary Clinton running for president in 2004. It's a lot -- whether it's true or not, it's great fodder for the networks.

Well, now for a check on other RELIABLE SOURCES media items, CNN financial news anchor Stuart Varney jumps ship this week. Word is, it was a series of concerns including the extent of Varney's co-anchor role on "MONEYLINE," and not just his resentment from comments by CNN founder Ted Turner, calling some employees Jesus freaks on Ash Wednesday.

Turner later apologized for the remark. No "MONEYLINE" replacement for Varney has been named.

And "The New Yorker" leads the pack with 11 nominations for national magazine awards. "Esquire" is second, followed by "The Atlantic," "Rolling Stone," "The American Scholar," "Harper's," "Nest" and "Texas Monthly." We'll learn the winners in May.

Now, checking our e-mail, our discussion of news coverage of Vice President Cheney's health stirred up some reaction.

From Cape Girardo, Missouri: "This feeding frenzy about the vice president's heart problems is ridiculous and offensive."

From Meadville, Pennsylvania: "Clinton refused to disclose his medical records. For some reason, a Republican VP doesn't have that free pass from the press."

Bill Clinton did release many of his records.

And, about coverage of the Clinton scandals, a view from Minneapolis says, "The press is very conservative and it's a shame they avoid real stories while harping on minor issues. James Carville was right on this one."

We want to hear from you. What do you think of the media's coverage of the stock market and the economy? Our e-mail address,

And when we come back, "Bernie's Back Page".


KURTZ: Time now for "The Back Page". Bernie.

KALB: Something's happening just across the border to the north that could determine the future of television news. Stripped down to it's bare essentials? This is the story.


KALB (voice-over): But first, let's take a historical view, back to this couple lounging innocently in the Garden of Eden. Really, the first big story of Western Civilization, alas, no TV cameras.

But when the first anchormen finally emerged on the scene, they were fully dressed; suits, shoes, matching ties. That was half a century ago, and TV was so new then, so science fiction, that the spectacle of someone talking to you from a box in your own living room, well, that was enough to keep you riveted to your couch.

They brought you the news every night, 15 minutes, then 30. The Sunday morning talk shows. All this very well behaved, no raised voices, even though they were all fiercely competing for bigger audiences.

When cable first crashed the party 20 years ago, competition got even tougher and that triggered the search for something new, different, spectacular.

Enter theatrical combat, nonstop chatterers, deafening volume, all sorts of antics to boost the audience.

UNIDENTIFIED FEMALE: The Kremlin maintains it's trying to promote regional stability and renew ties with Iran.

KALB: But now, Canada, with the flick of a brassiere, has demonstrated that the super power to the south is only a paper tiger, no guts. They've got an Internet news show up there called "Naked News" with a trail of anchor-ladies bringing you news, sports and weather while they strip their way down to ground zero, which we are not showing here.

It's sure bringing in the news junkies, reportedly almost 6 million a month. "Nothing better than a cup of coffee and the `Naked News' in the morning," says one viewer in the "Washington Post" story headline, "The Six O'clock Nudes."

Makes you wonder how Adam and Eve might have done as co-anchors.

And with declining TV audiences, what does all this mean for Tom, Dan and Peter?


KALB: Just imagine: naked anchors. What will they think of next? I'll leave that to your imagination.

KURTZ: The always dressed Bernard Kalb. Thanks.

Well, that's it for this edition of RELIABLE SOURCES. I'm Howard Kurtz. Join us again next time for another critical look at the media.

"CAPITOL GANG" is up next.



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