BUSN410- Week 3 Assignment

Choose an editorial article (An editorial is an article that presents the writer's opinion on an issue supported with facts) from the New York Times or the Wall Street Journal. Browse the library and choose an editorial that addresses a business issue that interests you.

Instructions: Write an essay describing the following:

• Citation of the article and a brief summary of its contents

• What are the premise(s) in the article?

• What evidence is presented? Is it credible?

• Can you independently verify the evidence presented?

• How are counterarguments addressed?

• Does the writer represent a particular interest?

• How is language used to develop the argument?

• Do you detect any errors in knowledge, evidence, or thinking?

• Does the writer use any types of appeals or commit any fallacies?

• Overall, how compelling is this article?

Week 3: Editorial Analysis of ‘’ Recession Trade is On as Market Pain Spreads beyond Tech; Consumer-staples companies, which had been relatively shielded from the turmoil, have taken a hit.”

Summary

According to (Karen & Gunjan, 2022), there is a real danger in the stock market as shares of companies that are known to sell the consumer staple foods have stumbled. The investors are considering shares of companies such as Wal-Mart as a result of this drop in share price. Previously, it was only technology companies that were experiencing a huge turmoil in share price but even the relatively stable companies are not being spared. The authors also indicate that some of the major indexes such as the S & P 500 is experiencing a decline in volume causing the share price of companies to come tumbling down. The decline of the share price ranged between 18% to 3.1% and it affected some of the major stocks such as Kroger, Walmart, Kraft Heinz, and Coca-Cola Company.

Profitable companies such as Target and Walmart are beginning to experience the effects of the recession because of this decline. Inflation has continued to exacerbate the situation (Karen & Gunjan, 2022). The group of investors who were banking on the recovery of the major United States Companies due to the recovery efforts of the economy after the Corona virus pandemic is at a loss because their positive and optimistic projections may actually contribute to them losing some money.

The available solution is a double-edged sword for the Federal government which investors now claim may not have the capability of decisively tackling the problem of inflation without raising the unemployment costs. The Federal government may be tightening some of the financial conditions but as it stands, the growth of other sectors of the economy such as unemployment continues to paint a positive picture amidst all this turmoil. For example, in April 428,000 jobs were added to the economy of the United States and in March, the purchasing power of the consumers increased because of the increase in the amount of consumable goods that were purchased by the people.

The premise of the article

A premise is an assertion which when joined together with other pieces of evidence from the article can lead the people to make conclusions regarding certain points that prominently come out from the article (Gambril, 2014). The premise of the article is that while the economy has continued to show the signs of recovery and growth of sectors such as employment and consumer spending, the investors and the consumers need to exercise a cautious approach because market trade recession and drop in stock value of some of the major companies is on the horizon. The sharp in trade day swings and the sharp sell offs that seem to have characterized most of the trading for the better part of 2022 should make any prudent investor to be worry of the direction of the economy and more specifically the direction of the financial markets. For example, the shaky market in some of the Stable stocks such as Wal-Mart, Coca Cola etc. is not a normal phenomenon compared to the previous years when the stock market was more stable.

While the Coca Cola company posted really impressive results in the first quarter of 2022, analysts predict that the company may have taken a lot more debt as a means of satisfying the investors or boosting shareholders returns. The net debt of the Coca Cola Company is 2.4 times its Earnings before Interest Taxation and Depreciation (EBITDA). Simply Wall-street.com, an investor’s online journal also pointed out the challenge of insider trading and too much debt as an area of concern for any person interested in the Coca-Cola company stock.

Evidence presented in the article

The evidence presented in the article is as follows: The article is not just a narration of the economic situation and the stock market situation in the United States. Apart from the careful narration of the article, the author has gone ahead and mentioned figures. For example, the author mentioned the decline in the boom in the overall manufacturing activity which fell by 14% in March 2022 (Karen & Gunjan, 2022). The number of new jobs that were also posted during the current financial year was also posted.

Examination of the Credibility of the Article

If something is credible, it is believable. It does not matter whether it is true or not or whether it can be trusted or not be trusted. The credibility of the article can be evaluated on the basis of source, accuracy, and currency. The recession trade and the pain experienced in low downs in stock trade of technology companies and the staple consumer goods compared is current as it belongs to the 2022 period therefore on that aspect of currency, it might elicit a perception in the mind of the reader that the information presented in the article is credible.

Independent Verification of the Evidence that has been presented in the Article

Furthermore, the authors have mentioned that Target’s share was down 30% in May 2022 and they have quoted the talk by the Federal Reserve Chairman, Jerome Powell who stated that his office in conjunction with the Central Bank will not hesitate to set the low growth rate of the economy in motion through the increase in interest rates if it is the only way that will lead to the stability of prices (Karen & Gunjan, 2022). The Federal Reserve and the information about the employment numbers and the stock price of Walmart can be obtained from Yahoo Finance and the websites respectively therefore a person has the capability of testing the credibility of the information that has been mentioned in the article.

According to the Committee on the Judiciary in the United States House of Representatives ( 2019), the evidence becomes credible if feedback can be sought, clarifications can be made and it is able to pass the established test of proof. In the Court system, a party may provide substantial request so that proof is sought in the Courts. Therefore, the ability of the reader to correspond with the author gives the article some credibility because in the event the reader is not satisfied with an issue it is easy to quickly write a letter to the parties requesting whether evidence can be examined afresh. The authors have given an email address at the end of the article with domains that links directly to the Wall Street Journal and they have requested users to write to them in the event they feel they need something to be clarified.

Presentation of Counter Arguments

In this article, counter argument has not been given equal priority and space compared to the arguments that the authors were trying to lay bare. For example, the opposing view to the rest of the ideas is only found in the last paragraph and it is stated as follows: A Chief Investment Officer at Cornerstone Wealth disputed the fact the recession is on the cards as far as the economy is concerned. While the Federal Reserve of the United States may be acting on the need to further tighten the economic conditions, this could be farther from the truth because the economy has not shown any signs of decline.

A particular interest presented in the article

Sometimes, even the giant corporations that act as safe pair of hands may not have the needed stability especially in the case of an economy that is reeling hard from the effects of the pandemic, trying to recover and the predictions in the economy do not seem to be so optimistic. Caution needs to be exercised when there is a lot of selling and disposal of assets of major companies. There is also the danger that the economy could significantly slow down leading to a situation where the purchasing power of the consumer is affected and corporate profitability is not a guarantee.

Conclusion

The writer has developed the article in a manner that makes it appeal to a wider consumer base and investors who are planning to invest or even take their investments so that they can diversify into other investments. It features a conversation tone where some of the top financial experts from major firms and even the respectable Federal Reserve Bank of the United States give their views regarding the economy and the possibility of recession. Language used is business like with little errors and the investor has the chance to independently verify information found in the article. The article is moderately compelling. Most of the issues talked about in the article are credible and seem articulate. However, the author does not seem to dig deep into specifics of the market. For example, the author does not fully address the impact of the futures on bond market volatilities.

References

Committee on the Judiciary in the United States House of Representatives, L. (2019). Federal Rules of Evidence Printed for The Use of The Committee on The Judiciary House of Representatives. Retrieved from https://www.uscourts.gov/sites/default/files/federal_rules_of_evidence_-_dec_1_2019_0.pdf

Gambril, P. (2014). Effective Argumentation: Premises and Conclusions. Retrieved from https://www.sjsu.edu/writingcenter/docs/handouts/Effective%20Argumentation%20Premises%20and%20Conclusions.pdf

Karen, L., & Gunjan, B. (2022, May 20). Recession Trade Is on as Market Pain Spreads Beyond Tech; Consumer-staples companies, which had been relatively shielded from the turmoil, have taken a hit. Wall Street Journal. Retrieved from https://www.proquest.com/docview/2666824488/fulltext/74ACF62B774C4791PQ/14?accountid=8289

Simpy Wallstreet. (2022, February 14). Is Coca-Cola (NYSE:KO) A Risky Investment? Retrieved from Nasdaq.com website: https://www.nasdaq.com/articles/is-coca-cola-nyse%3Ako-a-risky-investment