To most Wall Street pundits and strategists, the recent 10% correction in all three US key indices can be summarized with one word, or rather, acronym: BTFD. After all, someone has to pay those year-end bonuses, and that becomes problematic if the S&P is down on the year. Nevermind that none of these pundits actually predicted the correction, even though as we warned repeatedly, with the vol of all other products screaming, equity VIX was in its own little world for most of 2015 until two weeks ago, when reality finally caught up with it.
But what about the average American: how does Joe Sixpack feel about the recent 10% drop in the S&P? For the answer we went straight to the source - google trends. What it revealed was disturbing.
As the chart below shows, in the age of artificially supressed volatility, even a plain vanilla market correction now generates the type of emotional shock comparable to the biggest market collapse since the Great Depression, and judging by the Google Trends chart [11], searches for "market crash" are on par with those recorded during late 2008!
Worse, due to SEO optimizing algos which seek to give readers precisely what they are looking for, many websites which have algo-written headlines and news, have been perpetuating the shock from the market drop, by blasting headlines that while seeking to be click bait, merely encourage the fear witnessed in the recent two weeks, thus exacerbating the impact of the market drop.
One wonders what would happen if there is a bear market, or worse: a real crash, comparable to the 60% plunge witnessed when Lehman failed?
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Source: google trends [11] [11]