Zurich 4 June, 2010. The Euro crisis and BP´s oil spill have seen financial analysts quoted heavily on the prospects of a weaker Europe, as well as the reason for developments in the gold price and possible future developments of oil prices. Media Tenor´s systematic tracking of financial sentiment in international business media also suggests that the Euro‟s perceived decline is giving birth to the revival of dollar sentiment, albeit at a lower level.
Elite business journalists have been heavily quoting analysts on the general economic patterns developing throughout the Euro crisis. Media Tenor´s content analysis of these citations reveals that analysts are not as worried about sovereign debt, as they are about the threat of contagion. This raises long term reputational risks for Euro investments as the speculation phase of the debt crisis continues. According to Matthias Vollbracht, Head of Corporate Research at Media Tenor, “There has been a spectacular economic news flow coming out of Europe, and journalists are back in crisis mode. For analysts supporting this news flow the issue is about the peripheral problems snowballing through Germany, France and the UK.”
The Euro crisis faced competition for space in May as soon as analysts began to get cited on BP. There was a clear lag effect in the citation of experts on the crisis; however, towards the end of the month analysts were starting to underline journalist speculation on the effects of the spill on oil prices, BP, and the industry as a whole. In May there was a clear shift in focus from the uncertainty around the oil price as a result of industry challenges to heavy criticism on BP itself - speculation of the breakup of the company being the latest area for analysts.
The positives in May were gold and the dollar. Gold blossomed in May, playing a leading role as a perceived flight to safety amidst various uncertainties. “Journalists are calling on analysts to figure out the gold trend”, say Vollbracht, “experts are needed to explain why this metal, which has so little function outside the jewellery industry, can be booming when the general commodity sentiment is generally negative on demand worries in China. In June we have even seen the FT devoting a whole column on gold history to Barclays Capital, which is a pretty clear signal of the editorial interest in the metal”.
The dollar‟s strength in the tonality of analyst citations is linked to growing consensus that the US economy may one day recover; the currency is also profiting from European tribulations. Media Tenor‟s data points to an increased positive trend in dollar sentiment, however volume is required to drive dollar sentiment over the long term. “Financial sentiment has two aspects”, explains Vollbracht, “on the one hand there is the need for quick buying and selling based on streamed data and on the other there is the long-term reputational issue. For the dollar, the question is more about the long-term perspective. Our evidence is that analysts are basing dollar sentiment on solid reputational criteria – better job data, return to growth, and the comparative attractiveness compared to its peers.”
Media Tenor´s financial sentiment tracker will be released weekly at http//www.mediatenor.com. Next week: UK blue chips, Real Estate, BRIC economies, corporate Bond markets.
This analysis is based on, 45123 statements by citied analysts in select business media: Financial Times, Les Echos, Expansion,Il Sole 24 ore, WSJ, Barron‘s, Mint, Financial News, Economist, Forbes. Media Tenor has evaluated more than 500 000 news stories in international TV news. Among its specialized analyses are political coverage, economic coverage, social values, technology and financial sentiment data.
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