The media vs. the market

James Freeman:

Skepticism toward the media is most often associated with conservatives in Middle America, some of whom eat something other than artisanal sandwiches. But this week brings more evidence that investors worldwide have become very reluctant to buy what many established news organizations are selling. How else to explain the collective shrug of the shoulders in financial markets to the latest breathless media reports about alleged collusion between the 2016 Trump campaign and Russia?

Such reports have dominated this week’s news as much of the professional commentariat has pondered out loud whether treason has been committed in the President’s inner circle. Yet after an ever-so-slight hiccup on Tuesday following Donald Trump Jr.’s release of emails regarding a meeting he took last June with a Russian lawyer, stocks drifted higher. Since then, investors have spent much of their time parsing the remarks of Federal Reserve Chair Janet Yellen.Reassured by her questionable suggestion that interest rates won’t have to rise very fast or very far in the years ahead, they continue to keep market indexes near record levels.

Investors in the aggregate obviously don’t believe that the republic is coming to an end, nor do they seem to expect a wrenching change in U.S. leadership. There have been similar episodes over the last several months of sharp divergence between the collective analytical judgment of journalists and that of investors. This era of reported turmoil has been marked by a striking lack of volatility in the financial markets. Stocks aren’t cheap by historical standards and corrections do happen.

Yet the world’s investors still like U.S. equities, despite constant media reports that U.S. constitutional governance is hanging in the balance. Now let’s look at the general population in the U.S. A new report from the Pew Research Center also suggests that the news media’s credibility problem reaches well beyond the hard-core MAGA crowd. A full 85% of Republicans and those who lean Republican have a negative view of the national news media. And even among Democrats and those who lean Democratic, the press corps is underwater, with 46% holding a negative view compared to 44% holding a positive one.

Each respondent may distrust the media for a different reason. And perhaps investors are not so much ignoring the reported news as they are trying to strike a balance between conflicting reports. For example, let’s say that an investor has concluded that the New York Times and the Washington Times are equally trustworthy. A reader of this story from the New York paper is bound to take away a very pessimistic view of the current White House:

As Air Force One jetted back from Europe on Saturday, a small cadre of Mr. Trump’s advisers huddled in a cabin helping to craft a statement for the president’s eldest son, Donald Trump Jr., to give to The New York Times explaining why he met last summer with a lawyer connected to the Russian government. Participants on the plane and back in the United States debated how transparent to be in the statement, according to people familiar with the discussions.

Ultimately, the people said, the president signed off on a statement from Donald Trump Jr. for The Times that was so incomplete that it required day after day of follow-up statements, each more revealing than the last. It culminated on Tuesday with a release of emails making clear that Mr. Trump’s son believed the Russian lawyer was seeking to meet with him to provide incriminating information about Hillary Clinton as “part of Russia and its government’s support for Mr. Trump.”

The Russia story has become the brier patch from which the president seemingly cannot escape.

But an investor reading this Washington Times story published the same day may conclude that the real danger to the republic was narrowly avoided last November:

While the mainstream news media hunts for evidence of Trump-Russia collusion, the public record shows that Democrats have willfully used Moscow disinformation to influence the presidential election against Donald Trump and attack his administration.

The disinformation came in the form of a Russian-fed dossier written by former British intelligence agent Christopher Steele. It contains a series of unverified criminal charges against Mr. Trump’s campaign aides, such as coordinating Moscow’s hacking of Democratic Party computers.

Some Democrats have widely circulated the discredited information. Mr. Steele was paid by the Democrat-funded opposition research firm Fusion GPS with money from a Hillary Clinton backer. Fusion GPS distributed the dossier among Democrats and journalists. The information fell into the hands of the FBI, which used it in part to investigate Mr. Trump’s campaign aides.

Mr. Steele makes clear that his unproven charges came almost exclusively from sources linked to the Kremlin and Russian President Vladimir Putin. He identified his sources as “a senior Russian Foreign Ministry figure,” a former “top level Russian intelligence officer active inside the Kremlin,” a “senior Kremlin official” and a “senior Russian government official.”

While investors may be unnerved to learn how many political operators of both parties seem eager to glean opposition research from Russian sources, they apparently still don’t see it as a threat to American prosperity, or the rule of law on which it depends.

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