News sentiment is one of those financial indicators people hear about but rarely see.
The data is now available for most equities on Bloomberg and the longer-term charts can paint some dramatic pictures. I selected five big companies to illustrate.
Lets start with Microsoft. You don’t see charts like this often.
Every single week save one over the past 12 months was positive. (During the negative week a story broke about a bribery probe in Hungary.) Its hard to beat that performance.
Apple’s chart is more typical. It’s mostly positive with some ups and downs.
The company seemed to sail through the data privacy controversies that tripped up Facebook only to be snagged at the end of 2018 by worries about growth in China.
Those concerns caused some steep declines, but sentiment recovered earlier this year.
Facebook’s sentiment chart is among the most dramatic, showing clearly how it was hurt by negative headlines associated with data sharing and then Congressional hearings.
News sentiment recovered in early 2019, perhaps helped just by being out of the limelight.
Moving on to Europe, the news sentiment chart for Deutsche Bank illustrates the company’s struggle with several failed turnaround plans and executive departures.
The bank did post some positive weeks, based on Bloomberg’s sentiment algorithm, but was unable to maintain that trend.
Finally, let’s head to Denmark where a probe of money laundering at Danske Bank has rocked the country and resulted in a slew of negative headlines.
If you are thinking this cannot be good for news sentiment you would be right.
The chart is notable both for its consistency and intensity.
The clarity with which these charts chronicle the fluctuating fortunes of companies helps explain why more and more investors are considering news sentiment as a tool.
It’s also part of another big trend in financial markets: the growth of non-traditional data.
The hope is new algorithms such as sentiment can be used along with traditional fundamental data to provide an edge.