Download Introduction to Business Reporting

Introduction to Business
Reporting
Ulan Bator, July 2005
Commonly thought of as boring
• Business/economic journalism used to be considered an
obscure and uninteresting subject. It was not a job
people wanted, people went into journalism to cover
Moscow or the West Bank not some boring old company.
(in the eighties this changed a bit as the wires expanded)
• But I think this attitude is all wrong. In fact if you care
about the world and international affairs then writing
about the trends of economics and finance is a
wonderful way to learn about what is going on. If you
look at the last six years some of the biggest stories
have been the Asian crises of 1997 and the ones that
followed in Russia, Argentina, Brazil and Turkey.
Can Be A Good Way to Get a Job
• Even in the US in the nineties with the doctom bubble
working for an internet publication replaced going to a
small town to cover school boards or zoning meetings. In
short learning about business and economics is crucial
to being a successful journalist today and for
understanding about the world and the way it works.
• On a practical note , it’s extremely helpful in terms of job
hunting. Being a trained business reporter has pretty
much always meant job security and even now a lot of
the people I know who have lost their jobs have wound
up finding jobs fairly quickly.
What Do Business Reporters Write
About?
• Almost everything: we write about
companies, markets, the broader
economy, new regulations, government
policies, scandals, debates.
• Overseas we write about commodities,
privatizations, banking, foreign exchange,
trade and development.
The Same Old Rules apply
• Everything you have learned about
reporting and writing stories is true of
business reporting as well.
• We use ledes, nutgrafs, colorful quotes,
kickers. We look for interesting people,
spot news and trends.
• We use numbers but try not to use too
many of them. We pick and choose.
Writing Rules Apply
• No matter who you are writing for, the
same rules apply:
• Write clearly, simply and avoid jargon
• Don’t write about what you don’t
understand
• Make sure you understand your story
before you write it.
Getting Information
• We talk to analysts, people in the market,
company officials, government officials and the
little guy.
• It’s very helpful to understand accounting and
corporate finance. If you are serious about doing
business reporting then it’s a good idea to study
these subjects.
• Reports, trade papers, newsletters
• the internet
• International organizations
Getting Information
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--getting all sorts of views little guy, small company, minority everyone ignored. You
get great stories by going to the people no one else talks to
---going down the food chain, not the minister but the low level guy, not the central
bank governor but the research guy
--reading up on other countries’ experiences as a guide to what could happen in your
own country.
--if you are doing market stories, it is worth reading and interviewing academics.
Often editors are dismissive of academics—too isolated and ivory tower. But they
know a lot about how things are supposed to work and can give a counter intuitive
view. While Wall Street was applauding the repeal of Glass-Steagall, academics were
predicting what would happen and the academics were right
--plus they come out with lots of interesting reports which you can get story ideas
from [email protected] is a great resource for new research
--research dept of World Bank often in the lead and new research from there can set
the way for later changes in policy. Example of this is the bank deposit insurance
debate.
--far fewer analysts being quoted now, more quotes from people on the buy side.
Says who they are and how much money they manage
--go back and see if people were right. Ticker now does this and does stories later on
what the analysts said.
Business Reporters are Vulnerable
• Beware of your sources. As with all stories they
have agendas
• The people that will train you are the people in
the sector you cover and they have agendas
• too easy to imbue the biases of your sources. If
the IMF/WB are the only people willing to take
the time to explain something you start to share
their views, the same with any complex subject
(I met someone recently who does i-banking in
chemical sector and said his firm always get
great press because they basically raised a
whole generation of reporters)
Many examples of Bias Creeping
into Reporting
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There is often a hectoring/moralistic approach to covering
economics/business. You would do well to avoid this sort of mind set as it
gets in the way of reporting.
In Vietnam IMF/WB always lecturing the Vietnamese on what they were
supposed to be doing. Reporters would take on the same tone of voice and
talk about “much needed reforms” . I once heard the FT reporter asking a
visiting director of the WB if Vietnam understood what it “needed” to do. I
find this patronizing but also unprofessional our job is to listen and
understand
Same thing in Europe. Coverage of French and German economy always a
bit derisive about the spa vacations for German workers, how the shops
shut on Sundays, the French retire young and only work 35 hours a week.
There is a sort of patronizing attitude: these people need to restructure their
economy, don’t they get it, they don’t work as hard as we do in the US.
Articles about corruption all the time and cronyism. Yes, developing
countries have a lot of corruption but also no question that it’s the richer
countries who pay the big bribes.
Media in developing countries often take an anti-foreigner view. This is just
as destructive to good reporting.
Life on the Job
• Journalism is like an apprenticeship in many
ways. In this country you pretty much always
start at the bottom with the smaller pieces and
then work your way up, in the beginning you
cover markets and then later you get to interview
finance ministers. So we will begin with market
coverage. It’s the bread and butter of the wires
and the daily papers and every reporter needs to
understand a bit about how the markets work
before they write anything else about business.
Good training
• Can be a bit routine—at DJ we used to say you
are scared for the first two months and then
bored for the last two but in fact this kind of
reporting is important:
• --also it is great training for writing quickly,
• --quick reflexes, responding quickly to news
• --you build up sources you can use later for
other kinds of stories
• You cant write the big stories without coming to
grips with the smaller routine stories
Market Coverage
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Market coverage means writing about bonds, forex, commodities such as oil
and rice and the stock market. Major newspapers in countries where the
stock market is active and important will typically have one or two stories
each day about the market and where it closed. Wire services will put out
stories every two hours or so on the different markets they cover. At DJ we
had a forex comment every two hours around the clock, and in individual
bureaus we would have 2 stock market comments a day in somewhere
minor such as Amsterdam and desks of people covering major changes in
share prices throughout the day in somewhere major such as London or
New York. Typically in developing and transition countries the stock markets
are tiny and don’t have much liquidity and they just aren’t that important.
Companies don’t get money to expand from the capital markets, they get it
from banks and so banks are more important. (of course in the US most
share price issues are done to help companies do takeovers with stocks—
you buy a company by issuing shares and doing a swap--but we still have
this myth that the stock market is where companies raise funds to expand
their core business)
Market Stories
• Basically the point of a market story no
matter what the market is to:
• say where the market is and why
• predict where it’s going
• explain lede, nutgraf
• Some numbers that have to be in the story
include: where is the market, volume,
prices, news that affected trade
What is Market Moving?
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--weather conditions affect commodities. A drought can mean rice prices will rise
--the possibility of a war in Iraq means oil prices could rise and so prices go up on anticipation of
this
--if a company reports a better-than-expected financial result the share price could rise so any
news that could mean results will be good can drive up share prices on anticipation
--on the currency markets, traders are always watching to see if the CB will raise interest rates so
they look for signs of economic overheating. A drop in jobless claims or a rise in manufacturer
purchasing or housing starts can cause a rise in a currency as they expect the CB could then
raise interest rates. (This is an example of the disconnect between economics and market. There
is an economic theory that interest rates in one country = interest rates in another country plus
the exchange rate. This is called covered or uncovered arbitrage and the idea is that if there are
inequalities of interest rates, people will borrow from a country with low interest rates and then
lend in a country with high interest rates –by buying bonds for example—there is a big body of
literature on this but in the world of your average forex trader it’s sort of ignored. Traders believe
the money will go to wherever interest rates are higher. And so they spend a lot of time watching
indicators such as
--jobless claims
--CPI
--retail prices
--consumer confidence
--trade figures
In developing countries far fewer indicators are released. In developed countries you can get
everything, in Holland we were given pig figures, I seem to remember
Interest Rates
• In general interest rates rises drive down stock prices as people
assume that when the interest rates rise people will take money out
of the stock market and put it into the bank.
• They also drive down bond prices as when the bond yield goes up
(the interest rate on the bond) then the price falls down
• So all bad economic news that suggest economic growth is going to
be dampened means good news for the bond market
• Emerging market bond rates are usually done as a spread with
LIBOR, SIBOR and t-bill rates
• When there are crises in emerging markets then the risk is viewed
as high and the interest rates go up to compensate and the prices
fall. So in the Asian crisis of 1997 you expect to see spreads widen
on emerging market debt in Argentina or Brazil or Russia.
• So a lot of time is spent watching interest rates and where they
move.
Other Business Stories
• Anything that can affect a company’s earnings will move
the share price so all of these factors are considered
news:
• earnings
• New products, lines, marketing strategy
• Strikes, labor disputes
• Government intervention, regulation
• Moves in the broader economy
• Outlook for the sector
• Management reshuffles
• Mergers and acquisitions and sell-offs of divisions
• Stock splits, share issues and offerings
Disclosure
• Countries with markets have rules about
disclosure.
• Information that can move the market must be
made public.
• Companies need to release information that will
affect their earnings even if it’s outside the
earnings period.
• Developing countries often less transparent.
• In the US we have Reg FD and other laws.
Broader economic stories
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Trade agreements
Privatizations
Pension reform plans
Forex crises
Bailouts
Debt negotiations
Negotiations with bilateral donors and WB, IMF, ADB,
IMF
• Employment figures
• Government policy changes
• Infrastructure construction
Using Numbers
• Once you have your lede and nutgraf you will
know what you are trying to say, what your story
is.
• Then you pick the numbers that tell that story.
• Compare apples to apples
• Split them up so they don’t overwhelm the
reader
• If they look strange, they are strange
• Check, check and check again