TrendPointers Sentiment Signals ©

Sentiment Signals is a proprietary method for interpreting the content of public news with regard to the message, advice, warnings and other aspects of “sentiment”. The cumulative flow and impact of sentiment influences decisions.TrendPointers is the first source to capture sentiment shifts.

April, 2008-Current Release

                                                          TrendPointers Sentiment Signals ©

Sentiment Signals is a proprietary method for interpreting the content of public news with regard to the message, advice, warnings and other aspects of “sentiment”. The cumulative flow and impact of media sentiment influences decisions. TrendPointers captures the sentiment shifts first.

April 2008: The Recession Question Has Been Settled, Recovery Speculation Has Begun.

 Truly negative sentiment in the media remains at a near record low level, but the very first musings about recovery have started.

For many years market observers have been noting and lamenting that the investing world is driven more by psychology and emotions than substantive measures of value and opportunity. In the midst of the current mood of fear and recession gloom all that left is to speculate about is when the economy will begin to improve.

Media Sentiment:

The great majority (78%) of the business media sentiment is at best uncertain or more often acknowledges that the economy is in a recession, but this is a decline from the 90% who expressed the same views last month.  TrendPointers’ Sentiment Signals has reported the predominantly negative/uncertain mood since April of 2007, it took a turn for the worse in the fall of 2007, and the reality has now caught up with the news.

The evidence of the lag in sentiment by different media is apparent in the guru and mass media. Since last month the Guru Media have finally conceded the recession, with such views increasing from 35% last month to 48% currently. The Mass Media have followed suit with Recession Acceptance increasing from 39% to 47% this month. The most optimistic view of the data is that the Business Media, who sometimes lead the overall Sentiment trends, are now thinking out loud about how long and how severe that recession might be, and studiously comparing current conditions to past recessions. Most of the market observers have basically written 2008 off, and are, for now at least, projecting/hoping that the recovery will be realized in 2009.

The deadly combination of high oil prices, the drip-drip-drip of the mortgage and related housing crisis, the falling dollar and deficits makes confident forecasts very difficult to find.

But, now that the “Recession” moment has arrived there is also acceptance and sigh of relief, because the anticipation part is over, and the observers can focus on the recovery hopes.

We track sentiment in the three major media sources, but the business media is the one I watch most. The gurus may be early, but t hey are sometimes reluctant to commit because that may jeopardize their guru status if they are wrong. But once the trend becomes apparent in the business media its time to think about some actions. Still, media sentiment across the board is definitely negative.

• Guru Media Sentiment: Positive 12% vs. Negative 48%
• Business Media Sentiment: Positive 22% vs. Negative 40%
• Mass Media Sentiment: Positive 8% vs. Negative 47%.

Sector indicators: Trendpointers monitors three barometers of sentiment; the housing market, China and our “Recession Watch”. All three remained at very depressed levels, but have eased off just a bit from last month because, as we read between the lines, if we are in a recession then there will be an eventual recovery

Trend Impact Score (TIS): Trendpointers maintains the TIS has index, a composite of 25 key indicators that represents the overall performance of the economy and confidence. As of the beginning of April, 2008, TIS has turned up from its lowest level ever, but still at a near all time low. 

TrendPointers reviews thousands of articles every reporting cycle which are coded to reflect the overall intent and mood of the articles, using a five-point scale for broad economic issues and a three-point scale for business sectors. The sentiment index shows the actual percentage of news in each sentiment category to track the subtle shifts in mood from period to period.

It's rare that sentiment flips totally from positive and negative or vice versa at a single point in time, but typically shifts from one view to another in stages. Only a true sentiment scale as used by TrendPointers can show both the direction and intensity of sentiment shifts. The monthly reports show the actual sentiment distribution in the mass, business and guru media.