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"Warren" Tops "Clinton" & "Bowling" Beats "Facebook" - Social Engagement & Investing In Q1 2015

Via ConvergEx's Nick Colas,

Hillary Clinton isn’t a lock for the 2016 Elections: Google searches for US Senator Elizabeth Warren surpassed the former US Secretary of State just last month with a ratio of 6 to 5. Interest in bowling (+85% since October) is growing faster than Facebook (-4%) and Youtube (-2%), and there is a lot more interest in smoking marijuana than tobacco (58 vs. 19 on average). Those are just three of the surprising findings from our latest survey of social engagement using Google Trends. Our analysis of over 150 discrete search terms from investing and leisure pursuits to politics and life changing events shows the disruptive shifts in Americans’ interests and attentions currently underway.

Note from Nick:  Here at Convergex, we are always on the lookout for the next big thing.  Those shifts are, after all, the critical drivers of everything from asset prices to social trends to market structure.  Jessica’s been poring over the data from Google Trends for +150 search terms – something she does every quarter – and has the latest and greatest from this analysis. Read on for the details.

Scientists have identified which areas of the brain light up when stimulated under different conditions, but how does the brain enable us to focus our attention on one thing amid other distractions? This is known as object-based attention—when we can block out superfluous senses and zero in on an object, like a face amongst a crowd. Dr. Daniel Baldauf and Dr. Robert Desimone of the McGovern Institute at MIT conducted an experiment—published in Science—that provides useful color on the mechanisms of how we pay attention. Here are the details:

Twelve participants were asked to view a stream of sequential images including houses and faces, and were told to focus on the former and latter objects irrespective of each other at different times. A house was shown every half second and a face appeared every two-thirds of a second. By using magnetoencephalography (MEG), the researchers were able to connect brain activity with different frequency patterns. They then matched these results with functional magnetic resonance imaging (fMRI), which allowed them to identify the exact areas in the brain responsible for object-based attention.


Activity rose in the parahippocampal place area (PPA) of the brain when participants paid attention to the houses, and increased in the fusiform face area (FFA) when participants concentrated on the faces. Additionally, when participants focused on the houses and disregarded the faces, neurons in the PPA fired in harmony and neurons in the FFA fired out of synch; the reverse occurred when participants paid attention to the faces.


The researchers also found that it takes 20 milliseconds for neurons to send information to the PPA or FFA from the inferior frontal junction, which usually experiences activity first. Thus, the inferior frontal junction may direct the synchronized neurons during object-based attention. This helps tune out the noise so that other areas of the brain can grasp pertinent information more easily.

We are bombarded with new information every day, and over time, we learn how to sift through this endless material. There are only so many hours in a day, so we have to allocate our attention judiciously. Therefore, we track attention by delving into Big Data—using Google Trends—since it bears valuable insight into the ebbs and flows of interests and behaviors. We divided topics of social engagement into six buckets: financial assets, human capital, non-traditional assets, leisure, major life changes, and politics. Please read on for our top ten takeaways for the U.S. during the period October 2014 through today:

1)    Hillary Clinton is not a shoe-in for the 2016 Democratic presidential nomination—Elizabeth Warren tracks close behind. At least in terms of garnering attention on the web: Ms. Warren received more Google searches than the former US Secretary of State just last month with a ratio of 6 to 5; the ratio now stands at 6 to 4 tilted in the other direction, or out of favor for the current Senator of Massachusetts. No matter which woman wins, throw Jeb Bush into the mix and the general election could actually get interesting.


Speaker of the House John Boehner (+533%) rose to the top of our political bucket list amid his reelection for House speaker and the State of the Union Address this month. Exclude the newly reelected speaker, and interest in politics (Federal, state and local government, key issues, and politicians, for example) waned from October through January, down 7%. This category grew by 36% from July 2014-October 2014 leading up to the mid-term elections last November, and experienced negative growth thereafter.


2)    “Stock market” gives “Kickstarter” the boot: the crowdfunding platform first achieved the same number of Google searches as “stock market” in July 2012 and surpassed it last summer from June through August. Stock market reclaimed its prominence over Kickstarter this past September, however, currently at a ratio of 26 to 19. The pivot in September—around the time volatility started to pick up— that lasted through the year largely contributed to “stock market” (+16%) garnering more search interest than “kickstarter” (-18%) in 2014.


After the financial crisis, we saw a shift in attention towards entrepreneurial ventures and away from traditional means of investing (i.e. search for “stock market”). Searches related to traditional financial assets (stocks, bonds, and mutual funds, for example) fell by 45% from October 2008 to June 2014, while searches related to investing in human capital (schooling, learning languages, getting involved in startups, for example) climbed 33%. This trend started to reverse in our last report as our financial assets bucket rose 12% from July 2014 through October 2014, while our human capital bucket lagged with a gain of 1%. This report found a slowdown in this trend, despite continued volatility, as searches related to investing in traditional assets was flat from October through January, and searches related to investing in yourself continued to grow steadily, up 2%.


3)    The Google search term “Currency investing” surged 154% since October, as the dollar continues to strengthen against the euro and yen, and as the Swiss National Bank unexpectedly abandoned the Swiss franc’s peg to the Euro. This was the largest gainer in our “Investing in non-traditional assets” category (“Hedge funds”, “House flipping”, and “Venture Capital”, for example), which rose 7% since October, more than the traditional assets and human capital buckets. Everything from Hedge fund (+52%), retirement fund (+23%), and gold coin (+7%) to buy land (+18%), house flipping (+23%), and buy art (+8%) grew positively.


4)    Interest in “Youtube” and “Facebook” dissipated since October, as people opted for… bowling? Searches for “bowling alley” grew by 85% from October through January, while searches for the video-sharing and social media sites dropped by 2% and 4% respectively. More prosaic leisure activities also gained a greater share of attention: Movie showings (+38%), museum (+17%), casino (+13%), and mall (+7%).


Searches related to leisure activities (TV, Casinos, and NASCAR, for example) rebounded from our last report, up 12% since October. The category fell by 13% from July 2014 to October 2014. The reason for this may be cyclical as the prior period captured the transition back to school from summer, and the latter included the holiday season when people carve out more time for fun with family and friends.


5)    Searches for marijuana rose just 4% in 2014, even as recreational marijuana stores opened for the first time in Colorado and Washington. Not to mention the successful legalization efforts in Alaska, Oregon, and Washington, D.C. Nonetheless, interest in cigarettes on the web pales in comparison to marijuana: the average number of hits is 19 to 58 respectively. As the legality of medical and retail marijuana continues to unfold, this represents a huge addressable market for tobacco companies. On a positive note, searches for “how to quit smoking” rose by 10% over the last decade. This is a positive development and one that falls under the territory of our “Life change” bucket.


Interest in major life changes (examples from our list include searches for “Nursing homes”, “retirement” and “having a baby) advanced by 12% since October after falling by 14% from July 2014 through October 2014. Some inputs may relate to New Year’s resolutions: “weight loss” tops the list with a gain of 34%, similar to the rise of 25% for “gym membership” in our leisure category. Others are seasonal, such as “Funeral home” (+27%) which is the second highest on our list, as older people are more prone to dangerous bouts of pneumonia during the winter.


6)    Netflix streams past TV: interest in the online streaming service grew 24% since October compared to +14% for TV. The latter means of video entertainment still has the upper hand in terms of the amount of attention overall, but it fell by 11% from its peak in January 2009 over the past six years. During that same period, Netflix gained 214% in popularity.


The success of original series created by Netflix significantly expanded its outreach. For example, “House of Cards” received 22 Primetime Emmy Award Nominations and 3 nominations at the Golden Globes; likewise, “Orange is the New Black” received 12 Emmy nominations and 3 Golden Globes nominations. In fact, “Orange is the New Black” drew more attention during the month in which it premiered in June than “American Horror Story”—one of network television’s most popular shows—during October when it premiered, with a ratio of 100 to 89 respectively.


7)    Wealthfront closes in on stockbrokers: there are more searches for the online financial advisor than “stockbroker” with a ratio of 75 to 51 respectively. Since January 2013, interest in “Wealthfront” rose by 525% compared to 33% for “stockbroker” and negative 4% for “financial advisor”. “Stockbroker” may have neared the top of our list of financial asset related searches, climbing 65% since October, but online financial advisors are gaining share of attention.


“CVX” (+72%), or the symbol for Chevron, grew the most on our list in this category—most likely due to the rapid drop in oil prices. Comparatively, XOM gained 43% over the same period. Stocks in general fared better than bonds on the attention generation front: buy a stock (-1%), small cap stock (+10%), large cap stock (0%) versus buy a bond (-41%), corporate bond (-36%), and high yield bond (-25%).


8)    People are more interested in driving an Uber car than a taxi: the ratio of searches for “Drive for Uber” and “Drive a taxi” is 95 to 32. Drivers have opted for Uber over traditional taxis since April 2014 and haven’t looked back. The app-based taxi service now serves as model for other startup hopefuls trying to become “the Uber of X”.


The financial crisis helped spur the startup craze as billions in capital was allocated towards companies in their early stages as opposed to post-IPO through stocks or bonds. “Tech startup” dipped 5% since October 2014, but is up 326% since October 2008. Similarly, “Startup jobs” gained 22% since this past October and 300% since October 2008. Other entrepreneurial ventures also garnered interest over the past few months: open a store (+17%), start a business (+10%), and business loan (+8%).


9)    What can defeat both Putin and Isis: Ebola. Each input generated more attention than the others during their peaks, but none like Ebola. During the annexation of Crimea in March 2014, the ratio of searches for “Putin”, “Isis” and “Ebola” was 3:1:1. Peak interest for Isis in September 2014 coincided with a ratio of 22 (Isis): 1 (Putin): 10 (Ebola). Both pale in comparison to peak interest in Ebola (October 2014): 100 (Ebola) vs. 9 (Isis) vs. 1 (Putin). Unsurprisingly, Isis (5) is currently in the lead as compared to Putin (1) and Ebola (3).


Geopolitics (+10% since October 2014) and war (+11%) remain high on our list of political searches, as the U.S. navigates tensions between Russia and Ukraine, and fights a war with Isis. By comparison, interest in other key issues fell by the wayside after the mid-term elections: education reform (-38%), income inequality (-29%), gun control (-27%), global warming (-23%), and universal health care (-21%).


10) Trade the US dollar for some Bitcoin? Searches for “Bitcoin” exceeded those for “US Dollar” in December 2014 with a ratio of 24 to 21, compared to 24 to 23 now in favor of the US dollar. Searches for “Bitcoin” may have grown by 300% over the past two years, but the average number of searches is only 7 compared to 17 for “US Dollar”. So what accounts for its rapid growth in interest, compared to the US Dollar which is relatively flat over time?


The first licensed U.S. exchange for Bitcoin launched this week. This development comes on the heels of the closing of Japan-based exchange Mt. Gox last February, or when the second largest peak in searches for the anti-fiat currency occurred. The first and third largest peaks developed in December 2013 and April 2013 when the currency crashed. Bursts of interest in Bitcoin seem to coincide with times of panic, or when its viability comes into question.

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