What We Are Thinking (WWAT?)

• The changing shape of Google searches are a gigantic rolling global survey of interest and opinion probably unrivalled even by financial markets. There's never been anything like it in human history, and its relationship to that other great 24hr global survey of opinion – financial markets – has yet to be explored. So let's get to work.

Google publishes data daily on the the frequency of a particular search-word being used for financial searches. The data is normalized and re-normalized relentlessly, with words assigned a score according to frequency of search, from zero to 100. This repeated normalization means one should not use the numbers directly as a series. But if one is interested less in the exact score, but much more in the difference between contrasting sets of lookup searches, the problems are not so great.

For example, in this first WWAT? I'm recording the scores for 'Growth' and 'Recovery', and subtracting from them the scores for 'Recession' and 'Depression.' The point is to reveal changes in our relative interest between the two as revealed by global financial search patterns. Here's how it looks since February, smoothing to a 10-day average.

Broadly, one can divide the year so far into two phases:

• The first, up to late March, when searches for 'growth' and 'recovery' were dominant.
• The second, since late March, when that salience collapsed, with interest in 'recession' and 'depression' peaking in early April, and again at end-April.

The first downturn in the balance of interest came as the first wave of disappointing/shocking US regional surveys began to appear. The second wave appears to have been coincident with an not just with the acceptance of a US soft patch, but also the shocking discovery that the price of the Eurozone's fiscal pact is Southern European Depression.  

In the very short term, early May is seeing some stabilization of the flows of interest which involves a recovery in interest in 'growth' and 'recovery' relative to 'recession' and 'depression'.

The temptation to 'interpret' these results is hard to resist. But it would be surprising if there were no correlation between what the financial world is musing about as it consults Google, and the direction of key markets. For example, how this series compares to the movement in US bond markets. We do not yet have sufficient data to be certain, but it looks as if the two may indeed be related – as one might instinctively expect.

Or consider also this chart, which compares the series with changes in movements of the dollar, expressed as movements in the dollar vs the Special Drawing Right basket (again, both are averaged over 10 days). Once again, it is too early to be conclusive, but the two series do seem to share changes in direction.

There's not enough here yet to draw absolute conclusions – but there's more than enough to suggest they are worth keeping an eye on.

My intention is to develop a series of these WWAT? series to track the relative frequency of various contrasting ideas, with the results to be published each Tuesday. My early ideas include: 'Inflation' vs 'Deflation'; 'Oil' vs 'Shale Gas'; 'Fiscal Pact' vs 'Growth Pact'. But please feel free to suggest possible pairings.