Software to gauge mood?

A software to read between the lines of Fed statement? Now that is seriously getting too finicky or even silly. But this is not a prank, truly there is a software - Fed Playbook Sentiment Indicator and within minutes, it digest the Fed’s statement and give an indication of the mood – dovish, hawkish, optimistic and so on. It will mark out specific words to watch out for, which, according to the software could give one an indication of what to expect. Like last time, Fed’s statement was all about seeing what word replaces ‘considerable time’. This was replaced with ‘patience’ and that was interpreted as the wait for rate hike would be longer and one should expect anything till April Fed meet.

Who needs such a software? Well, it seems there is a ready market in fund managers who look for such  ‘buy’ and ‘sell’ signals for stocks, Treasuries and currencies.  This software can analyze communications from about nine central banks and Schnidman said they plan to bring the number to 15 by the end of this quarter.

The logic behind this bizarre software? Well, the developer feel that as humans we carry opinions and biases and this software will keep track of all these human emotions and thus give us a better insight into the mood, reading between the lines.

We in India, do not analyze each and every word spelt out by RBI Governor, Rajan, nor do we read his body language and make interpretations. This way, we are more simple and keep our outlook also simple. Reading too much between the lines, that too with the help of a software is well, bizarre.