CNBC's Schacknow: Yesterday, China; Today, Subprime; Tomorrow..?
Tuning The Radar
Stock market veterans often point out that the worry spotlight shines on different concerns at different times -- some legitimate, some not, some short-lived, and some long-lasting.
You may have already forgotten that the first market meltdown a few weeks back was caused by the big drop in the Chinese market -- a concern that seems to have disappeared from the radar at the moment.
Not so the subprime loan market woes. I can’t and wouldn’t try to predict how long this concern will remain at center stage, but I can say this: anyone working the Breaking News Desk had better have his or her radar tuned to all stories subprime. Whereas these stories might go by as a headline at different times, now, more often than not, they’ll cause a significant market reaction.
I’ve often pointed out that the most frequent question I get asked is, “Why did that happen?” -- when the market makes a sudden move in one direction. These days, any subprime market story is likely to be the answer, and worthy of special attention.
That happened several times today: first, when New Century Financialannounced it was the target of an SEC investigation, as well as the recipient of a subpoena from the U.S. Attorney’s office in California. Subsequently, the New York Stock Exchange announced the stock of New Century had been suspended and would likely be delisted.
We also had the case of Accredited Home Lenders, which plummeted at the open when the company warned of possible liquidity problems.
And these concerns were only exacerbated by the latest mortgage delinquency numbers, which showed a rise and caused a further slump in stocks -- even though they were for the fourth quarter of 2006.
I wouldn’t dismiss the potential economic fallout of extended subprime problems. I also wouldn’t be surprised to see Wall Street get over it in some short period of time, moving on to bigger, better, or at the very least, different concerns.
Don’t Sweat It
So says Warren Buffett, and who are we to argue with the world’s second richest man? CNBC’s Liz Claman got an exclusive interview with Buffett at the Washington gathering of business leaders. He wisely pointed out that it’s not possible over the course of an investing lifetime to skip the bad stock market years, and only experience the good.
Truth be told, the Breaking News Desk did none of the work in getting Buffett on the air, though we did play a small part in making sure as many people as possible got to see it. His words of wisdom seemed particularly relevant on a down day like this one, so we made sure the relevant sound bite got into our headline segments. It may not have been breaking news in the strictest sense, but hey, we’re a full-service desk here. If we can provide some calm to your life, so much the better.
Until it’s time to put the NEXT subprime story on the air.