<SPECIAL FEATURE>
August 17, 1999
He's Berry Good, But...
by
Berry earned his Ph.D. in Greenspeak in early April 1998, when he cut through the G-man's hemming and hawing to a gathering of the American Society of Newspaper Editors and focused on part of the Q&A where Greenspan suggested the stock market's ascent seemed justified by rising corporate earnings. As columnist and money manager James Cramer noted in Brill's Content, both Wessel and USA Today misinterpreted this frank admission of rational exuberance. The latter even carried the scare headline: "Greenspan leery of sky-high stocks." Only the Bloomberg Business Wire and Berry captured Greenspan's bullishness.
"I don't think it was as significant as Jim Cramer made out," says Wessel in an annoyed tone that implicitly acknowledges Cramer's long-running feud with Dow Jones <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DJ)") else Response.Write("(NYSE: DJ)") end if %>. "But if I had it to do all over again, I probably would have referred to the answer he gave because people seem acutely interested in everything Greenspan says about the stock market." Wessel admits that since he was watching the speech on TV, "I wasn't listening as closely as I should."
Nonetheless, Cramer clearly overstates the case when he asserts that "Berry's monopoly on interpreting the Fed is Microsoft-like." Berry may have a proprietary operating system, but it's both a little buggy and open to stiff competition.
For instance, Berry missed the hike in the Fed funds rate in April 1994, the last time the FOMC changed rates between regular meetings prior to the cut in October 1998. And like nearly everyone else, Berry failed to predict that October 1998 rate cut.
Also, on September 17, 1998, Berry "misinterpreted" something he was told following Greenspan's remarks to Congress and came out with a story that was just wrong: "The next meeting of Fed policymakers is scheduled for Sept. 29, but Greenspan's comments and those of numerous other central bank officials suggest that a rate cut at that meeting is unlikely." That meeting produced the first of the three rate cuts last fall.
What's more surprising is just how badly Berry blew the initial call on the most quotable nugget in the history of Greenspeak. On Thursday, December 5, 1996, Greenspan asked in his speech to the American Enterprise Institute, "How do we know when irrational exuberance has unduly escalated asset values...?" Like other reporters, Berry got an embargoed copy of the speech before the event. "I read it and thought, 'There's nothing new here,'" he confesses. So he didn't even bother to write a story for the next day's Post!
His editor called at dawn to say the Japanese market was tanking. Had Berry missed something? Berry contacted Joe Coyne, the Fed's chief public information officer, who was in the office early, preparing to travel with Greenspan by train to Philadelphia. Coyne conferred with two senior Fed staffers and told Berry he didn't think Greenspan's comments were directed at the U.S. market. Later that morning, Coyne called Berry from the train. As Berry explains, "He said he had spoken to the chairman and told him what he had told me. And the chairman said, 'Call him back.'" G had indeed intended to warn the market.
Berry describes the incident as "unique," a case of Greenspan intervening directly only because otherwise the Fed would have given him the wrong interpretation. Yet, the authoritative tone in Berry's article on December 7, 1996, is striking: "However, many investors and traders around the world misread the signal: Neither Greenspan nor other officials are about to raise rates." That sounds a lot like his article in April 1998 when Berry both confirmed and rebutted Wessel's story on a change in the FOMC's bias toward tightening. And that makes you wonder just how often those off-the-record conversations occur.
Then again, one could argue that Wessel totally scooped Berry on the irrational exuberance episode. On November 25, 1996, Wessel began a piece: "If you were Alan Greenspan, wouldn't you be worried about the soaring stock market?" While Wessel noted that the Fed was then avoiding any mention of "stock" and "market" in the same sentence, he added that "the Fed would welcome less exuberance on Wall Street." Greenspan is no plagiarist. The chairman had been working on the speech for a month. What did Wessel say about special envelopes in his mail?
Next -- Fed Schmed? Not Really