Unless otherwise defined, sentiment refers to the mood (opinion based more on emotion than on reason) on the stock exchange; more specifically, the assessments of the markets prevailing among suppliers and/or buyers and expressed in their actions, including expectations. In-house sentiment analysts try in various ways to explore the development direction for the stock market as a whole, for securities of individual economic sectors or also for individual securities. The same applies to commodity exchanges, although sentiment is generally less important there than on securities exchanges. – As far as stock exchange expectations are publicly announced – also in the course of an astro forecast, in internet forums, in blogs or on Twitter – mistrust is appropriate. Because also on this way often enough specialists aligned to price manipulation try to cause investors to appropriate decisions. – The CBOE Volatility Index (Vix), published daily and based on options traded on the Chicago Board Options Exchange (CBOE), one of the world’s largest options exchanges with an annual trading volume of over one billion contracts, is a reliable measure of the expected price increases on the U.S. stock market. – In Europe, the yield spread between Italian and German ten-year government bonds currently serves as a key indicator of sentiment in the euro area. – The state of the financial sector can be calculated using the depo-repo spread, the difference between a three-month EURIBOR and an overnight risk-free interest rate (EONIA). As a rule, the corresponding spread is expressed in basis points and refers to three-month money. The spread is a measure of uncertainty and confidence/mistrust in the European money market. – During the financial crisis that followed the subprime crisis, the deviation of both interest rates increased from a previous average of seven basis points to as much as one hundred and eighty basis points. – See valuability, daimonion, euro breakup index, financial vultures, frontrunning, coincidence problem, base sentiment, hedge fund strategies, Monday, black, Friday, black, yield chasing, sell-in-May effect, sensitivity analysis, exuberance, carryover effect, psychological, foreshadow effects.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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