Financial news is biased

Self-serving "news" is not news, just the same old stock promotion scams

Gina Martin Adams, Chief Equity Strategist for Bloomberg Intelligence, was on BNNBloomberg this morning telling investors that half of U.S.disposable income came from sources other than wages and salary, arguing that consumers had plenty of money to spend and an economic downturn was not imminent, and the market should be fine. She commented that pensions, dividends and interest make up half of disposable income.

Adams was correct on the approximate ratio, but wrong on the implications.

Disposable income per capita was just under $56,000 as reported by the Federal Reserve. That amounts to $56,000 x 337 million, or ~$19 trillion. Wages and salaries comprise almost $10 trillion annually, according to data from Trading Economics.

U.S. companies paid $574 billion in dividends in 2022. The vast majority of those dividends went to pension and institutional investors, not to consumers. The skew of the disposable income is extreme, with lower and middle income households making up the bulk of consumer demand but struggling to make ends meet. Adams error is often referred to as the fallacy of division, the assumption that what is true for an entire group must be true for its individual members.

It is easy to grab a ratio or a fact in isolation and generalize it on mainstream media to both garner headlines and encourage an outcome that benefits the speaker or their employer. The Chief Equity Strategist has a vested interest in market activity and sustained trading, which benefits fund managers and financial institutions but damages individual investors who, as a class, are punished by trading fees, commissions and interest.

Adams employer, Bloomberg, in a May 2023 article noted that 38.5% of Americans are having trouble paying their bills. Bloomberg published this article alongside a bold Fidelity advertisement with the tag line “Accelerate your dreams” implying that giving what little money you have to Fidelity will improve your household economics. It is galling to see the largest money manager in the world (or a close second, depending on where Blackrock or Vanguard is these days) put an ad for their parasitical services next to an article acknowledging the stress on households. Paying fees to “wealth managers” will make matters worse, on average, even if a few end up better off.

Reality is setting in. Bidenomics is a scam. Americans are a lot worse off with high interest rates, high home prices, high rent, high food costs, and massive government deficits exacerbating all of these problems. In about a year’s time, Americans will have the opportunity to change administrations if they wish, the Presidential election. If they have any sense, and the polls suggest they do, Biden will be spending the rest of his life defending corruption charges which are likely to stick, and a Republican will occupy the White House.