I was stunned last week by this event. Not the event itself but rather coverage of it. To help me keep abreast of market activity during the day I keep CNBC on in my office (albeit on mute after nine am). However, I was driving in my car listening to CNBC when the outage was reported. At that point the NASDAQ had been halted for about 12 minutes and the anchor for CNBC was already ballistic, not about the outage mind you, but rather about the fact that no one from NASDAQ had yet contacted them. How dare they?! His rant was something along the lines of: We are the undisputed leader in business news. Investors look to us and someone had better call us fast if they know what’s good for them. From there CNBC just ran with the story. They now had a legitimate “something” to fill their 24/7 news cycle during the perennially slow trading days of later summer. This story carried the station for the rest of the afternoon, hours after, and has now turned into days.
Let me be clear, the outage is a serious matter. However, the level of crisis CNBC attempted to create and the ridicule the anchors laid on the NASDAQ for not keeping “the public” (i.e. CNBC) informed for the first hour or so as the NASDAQ worked with cooperation from other exchanges to investigate and resolve the issue is Made-for-TV 24/7 news cycle drama. In my opinion, CNBC’s coverage has done more damage than the outage. While the cause of the outage may be known, it has not yet been released to the press.
In the meantime, the continual high-pitched drama discussion about the outage and the horrible way the NASDAQ handled the information flow is a blow to the investor psyche. The individual investor has been slow to return to the equity markets. Their participation in these markets is critical to their long-term financial well-being. While CNBC holds itself out as a premiere provider of information to help the investing public, their endless dramatic coverage of this story is anything but helpful. Make no mistake, we, as well as other market participants, are anxious to learn the cause of the outage and the actions being taken. However, we could all do without the drama.
All questions and comments are welcome.
Denise M. Farkas, CFA