After Week of Turmoil, Can Catalonia Land on Its Feet?

Online conversation activity suggests the crisis may be abating.

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CATALONIA | Images coming out of Catalonia since last Sunday's independence referendum have shocked the world: Spanish police beating Catalans and seizing ballot boxes; tens of thousands marching in Barcelona as part of a general strike; even King Felipe's unprecedented television address. Consistent with expectations based on a Predata signal backtest, the shock to markets was profound as well: the referendum sparked the biggest withdrawal from Spanish equities since 2014, sending the IBEX 35 tumbling.

One week after the vote, Predata signals suggest tensions may be easing, allowing cooler heads to prevail in the inevitable negotiations over Catalonia's future relationship with the rest of Spain. In the immediate aftermath of the referendum, Predata's country volatility signal for Spain rose to its second highest-ever level, falling just short of where it was around the peak of nationwide anti-austerity unrest in 2011. Unlike that episode, where the primary driver was the Economy sector, signal activity this week was driven by all component sectors, revealing that the Catalan crisis has sparked greater questions for Spain beyond simply Catalonia's place in the country. Now, however, it seems the digital “fuss” over Spain has diminished, leading the country-level signal to drop by 20% over the past two days.

On a more micro-level, the subject related to the Catalan crisis that this week generated the most debate online – measured by relative intensity of Wikipedia edit activity – was Catalonia's Statute of Autonomy. Both the Spanish and Catalan versions of the page saw substantial single-day spikes in activity, with the former hitting its all-time high. Pages covering subjects such as Catalan Nationalism and the Catalan Constitution failed to generate the same level of debate. Though far from a definitive sign of the standoff's outcome, the source signal traffic suggests online debate across Spain and Catalonia is coalescing around a negotiated solution.

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