New York Times goof

The New York Times did a puff piece on "Money Honey" Maria Bartiromo on Monday. She came under intense criticism in January for conflicts of interests, under circumstances that suggested hanky-panky on a corporate jet. That's all settled down, though, and as the NYT story suggests at length, she's had a good year since.

Why do I care? I don't. But this is what I care about. The reporters transcribing her interview evidently didn't know enough about contemporary finance to know what a "sovereign fund" is.

“I love this thing now called sovereign funds,” she said, meaning the large pools of capital amassed by governments in Asia and the Middle East, and managed by groups like Cutter Associates, an international investment firm. “I had the head of Cutter on and he said: ‘Look, we have $60 billion we want to put to work.’ I find that kind of stuff so exciting. I find it so sexy.”

(That's how the final graf of the story read when it first ran. It's been changed since, so that's not exactly what you'll see if you look for the online version. I'm getting to that.)

A "sovereign fund" is by definition an investment fund operated by, and in pursuance of the policy goals of, the government of a sovereign nation. Usually a nation that's got way more revenues that it can spend on ordinary government operations, and it needs to figure out what to do with the surplus. Oil exporting nations are often in that situation.

It seems pretty obvious, if you know that much, that she wasn't talking about Cutter Associates. That's a research/consultancy. http://www.cutterassociates.com/cutter_research/index.html

I doubt Cutter has $60 billion lying around. And even if it did, it wouldn't be a "sovereign fund."

No, the Money Honey was talking about the Qatar Investment Authority. Qatar is pronounced much like Cutter, at least by those of us unaccustomed to the phonetics of the Arabic tongue. I can only hypothesize that the interviewer heard "Cutter something something," wrote it down, and did a google search later. What do you know? google doesn't recognize "Cutter" as being "Qatar," but it would refer the inquiry to Cutter Associates, which "must be what she meant." So that's how it got into the story.

I'm not a reliable reader of the New York Times. I read something when I have a reason to. In this case, a couple of blogs I check out regularly jumped on it, and I followed the link from one of them.

Surely, you might think, this would be easily fixed, right? It would come to the attention of some editor who knows what a sovereign fund is, and "Cutter Associates" would be changed into "Qatar Investment Authority." Heck, Maria might give them a call and say "that's not what I said or meant" if she had a moment.

Well, I don't know whether Maria called. But somebody at the NYT recognized the problem. And there was a change. But not really the right one. If you surf over to the on-line version of the story now (unless they change it again between the time I'm writing this and the time you read it) it'll say "Qatar Associates." You'll also find a "For the Record" correction pointing this change out.

There is no Qatar Associates. At least when they printed "Cutter Associates" they were referring to a real institution, even if it's the wrong one. On the third try, they might actually check out a link like this: http://www.zawya.com/cm/profile.cfm/cid1003480

and learn something about the Qatar Investment Authority.

I think Felix Salmon draws the right lesson from all this, so I won't make any puns about his feline/fishy name. Here's his take.

http://www.portfolio.com/views/blogs/market-movers/2007/11/06/nyt-bartiromo-the-comedy-of-errors-continues

Fossil Fuels

I'm going to give you the benefit of three stories hot off the wires without much of a common thread to them, except that (a) if you get your news from television, or just from the front page of your local paper, you probably won't hear of any of these, and (b) they all involve the world's fossil-fuel energy industries.

1) Moody's upgrades Qatar. Moody's Investor Service said that it now regards Qatar Petroleum's senior unsecured bonds as an Aa2 investment, an upgrade from an Aa3. Qatar Petroleum is a government-related business, but its bonds aren't sovereign bonds. Still, Moody's says the reason it is more confident in Qatar Petroleum now is that it is more confident in Qatar. More confident than ... when? Well ... more confident than it was in February, which was the heighth of a Qatar-related terrorism scare.

2) China to go homegrown. An agency headquartered in Beijing, the National Development and Reform Commission, has put out a draft report on how to encourage the homegrown petroleum and petrochemical equipment industries. It isn't obvious how much clout within the government as a whole this commission has, or what effects this development will have upon the huge energy market that the PRC is, and the even more huge market it promises to become. Still, it is evidence that "energy independence" as a policy goal isn't a distinctively American idea.

3) Civil actions against Amaranth, some of its traders. Meanwhile, in the US, both the Federal Energy Regulatory Commission (Ferc) and the Commodity Futures Trading Commission (CFTC) have this week brought actions against the corporate shell of Amaranth, and against its infamous 6-billion-dollars-losing trader, Brian Hunter. Hunter's disastrous trades were in natural gas futures. FERC has jurisdiction over the markets for the gas itself, the CFTC has jurisdiction over the market for commodity futures contracts. Mr. Hunter seems to have been trying to play them off against one another to avoid such an action, but to no avail. He seems only to have persuaded them to team up.

To what does all this add? Damned if I know. I put them together because they illustrate the difference between the speculation around an industry and the fundamentals, between the wagging tail and the standing dog. My instinct is that the speculators (like Mr. Hunter) don't really drive the fundamentals. Whether or not Qatar's energy-related facilities are well-protected from terrorist strikes: that's a fundamental. That's the dog that wags the tail of speculation.

The news from China is somewhere in the middle of the spectrum: whatever plans they have for stiffening up their home industry are too tentative to be fundamentals yet, but the issue that commission addressed does seem to be more real than the personal fate of Mr. Hunter. So I guess the lesson from my three random tidbits is simply the difficulty, in the crush of industry news, is distinguishing which is which. What's the dog, and what's the tail?