The Oz says Citigroup makes “dire predictions” about NAB and ANZ, implies the two banks are rubbish.

The SMH says Citigroup is predicting the NAB and ANZ will lead the bounce back among the local banks, implies they are good shares to own.

And the bemusing thing is that both stories were written about the same Citi research report — not that you’d guess by reading them.

It’s beyond my understanding how Katherine Jiminez could file her Oz story without mentioning Citi upgraded its ANZ and NAB recommendation from “sell” to “hold”. Well, I suppose that fact would get in the way of the rest of her story. Or maybe the subs did it — the great “dog ate my homework” excuse of journalism.

Having dug out the actual Citi research, it does in truth say there are expectations of further write-offs — but the key part is that those expectations have already been more than priced in and hence there are better times ahead for ANZ and NAB. The SMH’s Exchange column got it right.

One can only imagine how the Citi analysts must feel about having their work so loudly misrepresented. Charmed, I’m sure.

But strange things can happen in the interpretation of facts when in search of a headline. The SMH headline writers seemed almost disappointed this morning that yesterday’s national accounts didn’t display a recession — so they manufactured one: Recession hits on the homefront.

If you can’t have a real recession, you just have to find one around the edges, with a tame economist obliging with a little stretching of text book definitions:

For the first time since 1993, household spending actually fell by 0.1%.

“The household sector, therefore, is midway through a recession,” said JPMorgan’s chief economist, Stephen Walters.

Oh please. And the one-armed VCR repair technician sector is no doubt in full-blown depression.

The reality is that the economy is doing pretty much what the RBA hoped it would be doing — a flat consumer sector making room for the commodities and infrastructure growth. Let’s not forget that we were running at the limits of our capacity before pocketing our collective credit cards in the last quarter.

And we still labor under massive amounts of consumer debt. The present trend of increased saving and curtailed spending is just what the headline writers were urging a crisis or two ago — but we won’t let those facts get in the way of a good story either.

Peter Fray

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