By Marek Fuchs
Running out the line on what is normally one of the year’s quietest weeks, we are used to facing a pre-holiday sleepiness that, under normal circumstances, can cause overreactions and mistaken conclusions.
Labor Day week – along with Christmas and any Zombie Day – has a circadian rhythm all its own. But the rest of this quiet interlude is shaping up unlike any other.
Many experienced traders and journalists are pruned from the scene, already starting in on their vacations. Thus the more-novice traders are putting their lack of perspective to work in a thin-volume market. And if you think experienced journalists indulge in idle talk and overwrought conjecture – well, the cub reporters tend to make it a science. So this week looked, at the start, like one that would be fairly uneventful but prone to hyperbole due to the simple fact that its less-populated nature would allow it to be.
A hit to stocks
All this, of course, was before the situation in Syria heated up, hitting stocks in late trade Monday when Secretary of State John Kerry said the U.S. would hold Syria accountable for its use of chemical weapons on civilians. We were expecting public discussion about little more complicated than “Long Beach Island.” Instead, we’re getting “Strait of Hormuz” chatter. Wednesday saw a day of steep losses for all major indices, along with a rise in WTI oil to two-year highs, amid worries over a possibly imminent U.S. strike in Syria.
But before Middle East events became a consuming focus, it was apparent that lower standards in the public square were close at hand when Monday’s top story on TheStreet (TST) was how cool it would be if Microsoft (MSFT) bought Netflix (NFLX). Not, mind you, that Microsoft will buy Netflix. Or even might. Just that it would be cool if it did.
Then take the instantly misdrawn conclusions over Tiffany's (TIF) second-quarter earnings, reported first thing Tuesday morning. At 83 cents a share, earnings were above expectations, which FactSet held at 74 cents, but revenues trailed by a considerable margin: $925.9 million versus $941.5. This indicated that business was fairly lame, but the company did an admirable job cutting costs. The media, though, thinly staffed and with little else to distract them, wove it into a macro-tale. Said CNBC: “Luxe is back in black.”
Mistakes can come fast and furious on a week like this.
Also, within hours of each other on Monday morning, we saw reports on how oil prices are going to fall through the floor on weak manufacturer data and rise to the heavens on Syria trouble.
Simply put, throw into the usually narcoleptic lead-up to Labor Day Weekend the raw fear that the Middle East is standing at the lip of a cliff and you have a new and even more toxic environment. Many traders and more-experienced journalists are at the beach, anticipating a nap of a week, and the unexpected occurs. Junior traders and reporters are left with their first big decisions...
So consider yourself warned.
Whether war starts Thursday, as NBC posited, or never, hyperbole – that tool of bad journalists everywhere – will be particularly ascendant. That’s how it tends to roll in the lead-up to Labor Day, but this week suffers that strange and potentially dangerous new dynamic.
In other words, it’s like every other week on the calendar – only more so.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers before becoming a journalist who wrote The New York Times' County Lines column for six years. Fuchs speaks regularly on business and journalism issues at venues ranging from annual meetings of the Society of American Business Editors and Writers to PBS to National Public Radio. His recent book, "Local Heroes: Portraits of American Volunteer Firefighters," earned widespread praise. He is on the writing faculty at Sarah Lawrence College. When Fuchs is not writing or teaching, he serves as a volunteer firefighter. You can contact him on Twitter: @MarekFuchs.
- Labor Day