Doing what he does not do is the prerogative of the most important businessman in the world. “We don’t give mid-quarter updates,” wrote Apple chief Tim Cook in an email to Jim Cramer, star of the financial news network CNBC last week, referring to other companies’ practice of releasing performance data between quarterly reports. He then gave a mid-quarter update. “Obviously I can’t predict the future,” Mr Cook went on, with becoming modesty, before predicting the future: “the growth of the middle class [in China] over the next several years will be huge”.
By the standards of executive pronouncements from on high, the email was only mildly silly, and the bit of information it contained (iPhone sales in China are humming along) may have helped calm the churning market for Apple’s shares.
But hot-taking pundits took issue with Mr Cook giving his non-update update to a television channel, rather than issuing a press release. Some intimated that Mr Cook may have violated the Securities and Exchange Commission requirement that public companies disclose material information to all investors at the same time.
CNBC, which has America’s wealthiest television audience, is an unlikely commercial success. The advertisements range from the aspirational to arcane — cars, golf, electronic brokerages, exchange traded funds. The shows manage to be both at once. During one hour of programming on a recent afternoon, analysts discussed stock picks or the market (“I think we have another 10 per cent downside here”). They interviewed two former Fed officials about interest rates. A reporter described the competitive landscape for cholesterol drugs. Three minutes or so were spent on Russia (“The world’s cheapest emerging market — is this a market YOU should be investing in?”). A stock ticker streamed along the bottom of the screen, and when all else failed, the presenters scrutinised it with the superstitious intensity of a numerologist. “We are losing momentum as we approach the close,” one fretted. “What does this mean?”
When Mr Cramer takes the floor he seems to propel that ticker along by sheer force of will. Standing before the camera with rolled-up sleeves, he shouts and gesticulates like a savvy trader. His knowledge is encyclopedic but he never goes above the audience’s head. Once in a while, he throws a tantrum. “He has NO IDEA how bad it is out there,” Mr Cramer said of Fed chairman Ben Bernanke in the first days of the financial crisis. “He has NO idea! NONE!” he howled.
The channel attracts criticism of everything from its style to its stock picks (some of which, fairly or unfairly, might be flung at anyone who dares opine on the stock market — the Financial Times’s Lex columnists included). But the thoughtful attacks all reduce to a single truth: that actively trading individual stocks is a lousy way for non-professional investors to get richer. Too much money goes to broker’s fees and the tax man, and trying to beat the market in a few hours of trading after work is a fool’s errand.
Unlike the amateur traders who watch at home, no one on Wall Street cares much what CNBC’s pundits say — but they tune in all the same. When I started out as an equity analyst a decade ago, the channel was always on at low volume in my bosses’ offices as they traded or read reports. They rarely looked up until news relevant to our portfolio came on. “Armstrong!” They would shout down the hall to where I was sweating over a spreadsheet. “The Consolidated Widget CEO is on TV! And he looks like hell!”
CNBC’s audience has shrunk significantly since 2008. Last year its daytime ratings were worse than at any time since 1995, although they have bounced back a little since. Early this year, the channel announced it would stop using Nielsen, the standard industry measuring stick, to track viewership. Its complaint is that Nielsen fails to capture viewership outside of the home — particularly important for a business news channel.
The fact that social media provides a more personalised way to receive news is a threat. But perhaps the decline in its ratings also suggests that realism has broken out among the punters who once watched CNBC’s shouters from home. Passive investing is gaining popularity, suggesting that active trading and market timing are declining. But CNBC’s ratings fell after the dotcom crash, too, only to bounce back from 2005 to 2008.
Perhaps the terrible depth of the recession that followed the last crisis has scared people away from active speculation and from consuming the associated hype. I doubt it though. The speculative impulse, and the effervescent idea that one can get rich without doing a lot of grinding work, are resilient. The shouters will remain employed, as will, hopefully, those who try to inject quiet reasonableness into the raucous discussion.
As long as they do, live television will be as good a place as any for Mr Cook to update the market on Apple’s trading. This week’s message made its way to market participants as quickly from Mr Cramer as it would have done from the Apple website. And what better place to apply the soothing ointment of executive reassurance than the media outlet which serves as Wall Street’s furious id.
The writer is head of the FT’s Lex column