Confused Market

Below, courtesy of my Google homepage gadgets, are screenshots of the current (as of this writing) stock index numbers and headlines from the Financial Times.

Stocks are up dramatically so far this morning. But the headlines sure as hell don't tell us why. Moody's is crying about eurozone debt. Okay, we can discount what the crediting agencies say; they're not the most trustworthy source of financial estimates (despite the fact that, um, they're supposed to be so). But the OECD "highlights eurozone contagion risk" and those darn banks have to "scramble to plug capital deficits (which usually leads to immediately reduced lending, thus hurting expansion).

Yet stock indices are up a lot. The one headline that would seem related is "Equities rally on hopes for eurozone," but what artificial substances are people ingesting to have hopes for the eurozone if Moody's and the OECD are both telling people to run for the hills?

It could mean nothing more than that the sell-off in recent weeks was overdone, so this is a correction to that overcorrection. Also, the fears that the eurozone problems were now affecting even super-triple-A Germany's economy could have evaporated upon further review (because Germany's economy is so strong and its credit so sound, it was offering extremely low returns, so its recent "failed" bond sale doesn't necessarily mean people feared that even Germany couldn't sustain its debt – it could have just meant that there are other places with better yields right now; that would actually be good news, because it would indicate a slightly increased appetite for risk).

No, the boost to Wall Street is likely due to reports of a possible new initiative by EU countries to tackle their debt problems. Initial sketchy reports are that it would combine the German tough-love approach with the French money-shoveling approach. Markets love that stuff, apparently.

But we've seen any number of new initiatives that are launched by Europe's leaders and, no matter how sound the initiatives are, quickly deflated by market fears. So I won't hold out hope that this is a long-term sustainable rally.

If you're more optimistic than I am, then also remember that America's ticking time bomb of municipal, state, and federal debts and unfunded obligations (of many tens of trillions of dollars) is still out there, as is the largely ignored big debts of China's cities and regions.

Happy post-Thanksgiving!

Stock Market Tumbles Again

Days like this make me glad that I am too poor to have a bunch of investments in the stock market. (And no, the above Apple dashboard gadget does not display my portfolio; merely stocks and indices of interest.)

So do we still want to put our all-critical Social Security retirement money into the stock market?

Oh, and just in the time it took me to write the above two paragraphs, the Dow dropped another 20 points.

Senate Passes Finance Regulation Bill

I know you don't come to this blog to get political news, so feel free to ignore this if you're not interested in the global economy. But I think the Senate did a very exciting thing today by passing sweeping financial regulation legislation. It still has to be reconciled with a House version of the bill, but in a few weeks, we could be having significant adult supervision once again of our financial transactions.

On this blog, I have occasionally dipped my toes into such areas, and I've been contemplating whether the world was waiting with baited breath for my comments on the European efforts to re-regulate financial instruments. (In brief: I think Germany has the right idea, though I'm not sure why they did the shock announcement on a ban on "naked short selling" -- which might sound weird, but when you hear the full explanation of what it is, you realize it's even weirder and you can't figure out why the hell it's legal in most places.)

So, I was taken aback this evening when I checked the news online and there was a big report about the Senate bill passage. I didn't know they would do it so quickly. But I'm very happy they did.

I'm no socialist. I'm certainly not anti-business. I have spent most of my professional life as a journalist covering commercial real estate finance markets, so I knew all about credit default swaps before you ever learned that they had caused your retirement savings to dwindle to nothing. But my view of successful market capitalism is much like German Chancellor Angela Merkel's and her finance minister, Wolfgang Schäuble's: The best option we have for making people's lives better, but it needs to be run transparently and orderly.

The Dow Jones has dropped hundreds of points the past couple days in response to the German actions (and, supposedly, if you read the financial press, because the markets are worried about "Greek contagion," but the same financial press a couple months ago was saying that the markets had already priced in the possibility of a Greek default on its debts, so who the heck is running the markets? Thirteen-year-old girls?). I wonder what they'll do tomorrow, Friday, in response to the U.S. Senate's actions. Granted, they have a better chance of buying off U.S. legislators than they do German Bundestag members. But they've got to understand that the foundation that's being laid is not anti-business, and once they understand the rules, they'll be better off -- as will be their customers.

Congratulations, Senators.

Yay, the Recession's Over, but Good Luck in the Job Market

Hooray, the recession is officially over. Hooray, our 401(k)s have recovered. As for the unemployed (and we're mainly talking about former business magazine staffers, apparently), not so good.

The economy grew by 3.5 percent in the third quarter (July-September) of 2009, and experts expect it to grow by about 3 percent in 2010. The Q3 boost was higher than economists had predicted, and it was helped aloft by the stimulus spending and incentives, such as the Cash-for-Clunkers car trade-in program. I'd love to learn whether this vindicates government stimulus spending in an economic crisis. I know plenty of people on both sides will argue the case, but I mean I'm interested in people who know what they're talking about and who've really studied the matter giving their verdict. My half-educated assumption is that this is somewhat of a vindication. I just wish there was more than Fox News or MSNBC shouting heads to explore the question. Probably the kind of informed explanation I'm hoping for can only be given with much passage of time.

In the meantime, it's important that 401(k) retirement accounts have recovered to break-even or better since the start of this economic debacle. After all, for people my age (41) and younger, that is our retirement account. Companies don't offer pensions any longer, and Social Security is not likely to be around when we retire. But I hope this past year inspires more people in this age range to start saving more, put more into long-range conservative investments, and stock up on canned food and Ramen noodles.

Gourmet Readers Go Hungry for More

Condé Nast is one of the big powerhouse magazine publishers in the world, home to GQ, Vogue, Architectural Digest, Glamour, The New Yorker, and many others. As of today, Conde Nast publishes several fewer titles, having given the axe to Cookie, Modern Bride, Elegant Bride, and -- in a move that shocked the publishing and the foodie worlds -- Gourmet magazines. The move followed a review of the company by an outside consultant firm, McKinsey.

Ruth Reichl, editor of Gourmet since 1999, spoke at The Commonwealth Club in Silicon Valley just last week, where she talked about some of the major trends in American cooking, such as healthier food and increased international influences.

But Reichl couldn't beat out a different trend in America, that of a precipitous drop in advertising revenue. Not all magazines are primarily supported by ads; some get more of their revenue from newsstand and subscription revenue. But advertising remains the lifeblood of most of the big glossies, and that's Condé Nast's field of play. It publishes magazines filled with high-priced ads from luxury goods and services companies around the world. And until recently, Condé Nast was famous (or infamous among its peers) for never deigning to discount ad space; if you wanted to advertise in its magazines, you paid full price. In return, the magazines were known for their high quality photography, printing, journalism -- and perks, such as limousines for editors. (If you have seen The September Issue, the great new documentary about Vogue Editor Anna Wintour and her top staff, you get the idea.)

The sense I get from looking at the past couple issues of big national glosses (not counting the giant September back-breakers in the fashion niche) is that advertising pages have begun to rebound from their lows of late spring and summer, but it will be some time before publishers are back in the black.

As for Ms. Reichl's future, it's not yet known, though it's still possible her fans will find her within the surviving Gourmet family. According to Advertising Age:

Conde Nast didn't have an answer Monday for the number of jobs that would be lost as a result of the moves, but the titles' mastheads suggest massive cuts are likely. Gourmet alone lists some 100 staffers, although the company will presumably keep some to help run Gourmet's books, TV and recipes activities, which will continue. It wasn't immediately clear whether Ms. Reichl or VP-publisher Nancy Berger Cardone will stay in some capacity or leave the company. Cookie's masthead numbers closer to 75.

Real Newspapers Include Magazines

If a newspaper has any pretension of being a true big-city daily, it has to produce its own magazine for its table-thumping Sunday edition. Now, Folio: reports that the Chicago Tribune (which, under owner Sam Zell, has seemingly been doing all it can to become a small neighborhood paper -- closing foreign bureaus, reducing national and international news, shrinking size and scope of the paper, etc.) is going to stop producing its Sunday magazine.

You know, at some point, you stop being a newspaper.

Counting Time at Penton

Penton Media, a major business-to-business publisher, announced that it is cutting its employees' pay and reducing the workweek from five days to four for the summer. Folio: magazine posted the text of a memo Penton CEO Sharon Rowlands wrote to staff announcing the change. Here's an excerpt:

From the week before Memorial Day through the week before Labor Day, the Company will reduce its operations from a 5-day work week to a 4-day work week. For many of our businesses this will involve closing our offices on Friday. Other businesses may need to take the reduction in blocks of days. The end result will be the same for every employee at every level however - it will equate to a four day work week and a corresponding reduction in pay to reflect this reduced work schedule. Whilst the reduction in work week will be contained only to the summer months outlined above, we will spread the pay reduction in smaller increments throughout the end of the year to reduce the immediate financial stress on you and your families.

That brings up the burning question: "whilst"?

Practically anyone who's in management at any company these days has had to make awful decisions like this. If you've escaped that responsibility, then lucky you.

I am reminded of the end of my own employment with Penton's late, great Internet World magazine back in mid-2003. The company was just about to begin what was called "summer hours," which meant that people could knock off early (3:30 pm, I think) on Fridays during summer months. But then Penton had to pull the plug on the long-suffering IW magazine. In a Wednesday conference call, the staff was informed, and we were invited to stay through Friday to wrap up loose ends. "Summer hours!" someone on the staff conference call joked.

And so it was.

24/7 Wall Street to Esquire: Drop Dead

Once upon a time -- well, four years ago, to be exact -- I worked with a woman who had previously worked at Esquire magazine. She noted proudly how that title had come back from a near-death experience the previous decade, when it had gotten dangerously thin and was largely ignored. But she pointed to its resurgence in ad pages (and for all I know in readers, too) in recent years.

It's always nice to see a magazine return to the front lines after being written off by all and sundry. And, though I have my qualms about the current Esquire's direction, it remains a powerful and historic magazine brand, and I wish it many decades of continued life.

But I don't think Douglas A. McIntyre agrees. McIntyre writes on 24/7 Wall Street that Esquire is one of 12 major brands that will disappear. He even calls his article "Twelve Major Brands that Will Disappear."

Many of the other brands are not in publishing: Chrysler, Palm, and he goes really out on a limb and lists AIG. But he does include Architectural Digest and Borders. Borders would be a shame to lose.

But Esquire? Frankly, I don't know what Hearst will use to decide its live-or-die choices, but killing a 76-year-old magazine because of a once-in-76-years economic collapse doesn't seem smart. And I don't think Hearst got stinking rich by being stupid. At the very least, wouldn't they sell the brand? Go online-only?

McIntyre notes the magazine's more than 25 percent drop in ad pages early this year, but that's actually not out of line from recent industry-wide numbers. If he's picked up a copy of Esquire's competitors such as GQ or Playboy recently, he's noticed that they're a lot thinner, too. And the "lad magazine" competitors aren't in much better shape, those that are still around. It's called the Great Recession for a reason.

Will Esquire die? Unlikely. Will Douglas McIntyre think of a meatier subject to write about for his next article? Hopefully.