Media Boilerplate On Market Corrections

Eddy Elfenbein submits: The New York Times ran an article saying that the bulls' retreat was turning into a "rout." Not to be outdone, Barclays Capital put out a report which compared the current market to the one in 1987. Yikes! And the Financial Times piled on saying that the sell-off "appear to have been exacerbated by an unusual wave of derivatives activity on the part of hedge funds and big banks."

Heavens! Scary stuff. The good news is that all these articles came out during last spring's correction.

You say you forgot about that one? Well, I don't blame you -- it only lasted a month, but no matter. The media can easily recycle these stories. Just use the "find/replace" function. Take out May, add September and...Presto!...you're on your way.

On the bullish front, the FT's Alphaville Blog notes some recent comments by Abby Joseph Cohen:

• No changes to Goldman’s baseline forecasts."These already reflect a notable deceleration in economic and profit growth in 2007, but there is no recession on the horizon."

• Valuation support is intact for U.S. equities. "Our estimated fair value for year-end 2007 remains 1550, suggesting that the S&P 500 is now about 11% under priced…The strength of U.S. corporate balance sheets, especially among the companies in the S&P 500, and strong ROEs, should also offer some ballast in a rocky market environment. We assume that margins will move lower in many industries this year, but from record-high levels to still-high levels."

• GS forecast has long presumed a deceleration in economic growth this year. "Importantly, core inflation is not expected to rise dramatically."