What We Are Thinking (WWAT?)

The curious flirtation with statistical normality which we noticed in last week's Shocks & Surprises is echoed in the pattern of Google searches, as regards growth vs recession, and inflation vs deflation.

This is particularly noticeable in the change of search patterns for 'inflation' relative to 'deflation'. As the chart below shows, the re-eruption of the Eurozone crisis in early and mid-May got people thinking more actively about deflation than inflation, with the peak of the change coming in the ten days to May 13^th. If that change in search patterns was driven by fears of deflation -as seems likely – then the chart also suggests the worry was short-lived. We are currently back to a pattern which is, perhaps, 'normal'.  

There is a similar recovery in search patterns of 'growth & recovery' compared with 'recession & depression.' The tilt towards 'recession & depression' interest captured by the pattern of Google searches started at the beginning of April, and climaxes at the beginning of May. Quite dramatically during the last 10 days, that pattern has changed again, until once again, we are back with a pattern of interest which looks 'normal'.

But there is something worth pointing out: if the world's sudden surge in interest in deflation and depression was short-lived, its impact on US bond markets has not been. As we have previously pointed out, US bond markets have previously seemed very alive to shifts in global sentiment (if that's the beast we're tracking with these Google search analytics). Not this time: so far US bond markets do not believe in a recovered 'normality'.  Not so far. . . .