Concern over the escalating US-China trade war dogged the US economy in 2018. After agreeing to a temporary truce on the sidelines of the G20 on December 1, Presidents Trump and Xi have until March 1 to reach a new agreement. A delegation from the US is right now in Beijing for the first face-to-face talks since the detente.
Predata tracks metadata from both English- and Chinese-language web pages related to internal trade policy, trade safeguards, and major individuals or themes salient to the ongoing trade war. When trade observers visit those pages, it surfaces their unvoiced concerns over an escalation. As the image below shows, we found in 2018 that activity on these pages only surged amid periods of heightened tension or negative measures. Other newsworthy non-negative developments did not cause significant spikes in the signal. So, though many breathed a sigh of relief when the truce was announced, it actually registered a reaction on the internet similar in character to an escalation; had observers thought the peace would hold, the signal would have been muted.
That digital reaction bodes ill for the prospects the two sides will reach an agreement by March. The internet at least seems to think the trade war will carry on.
In 2018, as volatility returned to the US stock market with a vengeance, the online activity of market observers often foreshadowed major selloffs. As the chart below shows, unexpected declines in the Dow corresponded with spikes in interest in web pages related to past stock market crashes and volatility events.
Note that the large spikes in the signal came during periods of relative market instability and seemed to suggest that, for whatever reason, internet users were, in their browsing patterns, expressing a greater degree of concern over the possibility of an impending downturn. However, since October, the signal has been relatively muted, despite several sudden leaps and falls in the Dow. That indicates that that regime may have shifted and that in the eyes of online observers stock market volatility has become the new normal heading into 2019.
Predata’s Brexit signals monitor the salience of specific issues and the resonance of the messages of different factions in the Brexit negotiations. Here are some takeaways from 2018 and what we can expect going forward.
Don’t underestimate the Remainers. Though in 2018 the strident Brexiteers often dominated the headlines and op-ed pages, the hardline Remainers were active and garnering high levels of engagement on social and collaborative media. Even if their efforts do not result in a second referendum, their presence as a political force will likely prevent Theresa May from getting her Brexit deal through a parliament that now outflanks her on two sides and is due to vote on the deal on January 15.
The Europeans are tuning in. As the image below shows, European internet users have been paying more attention to Brexit. That could mean one of two things for the EU’s willingness to offer flexibility to Theresa May: 1) under greater scrutiny, European governments will be less likely to make concessions, or 2) Europeans may be becoming aware of and concerned about the potential for and consequences of a no-deal Brexit.
The Issue of the Border in Northern Ireland isn’t going away. By the measure of online activity over the subject, the Northern Irish border remains the most salient issue in the Brexit debate. The EU’s concern is that an open border in Northern Ireland could be a backdoor into the Internal Market for the UK. Brexiteers, too, worry about the backdoor, but that it will mean the UK gets entrapped in the EU regulatory regime. As a result, the border remains the policy issue most sensitive to developments in Brexit. And major spikes in attention to the subject have tended to accompany bad moments in the negotiations for the UK government.
2018 featured some unsettling moments for Russian President Vladimir Putin. An attempt to raise the retirement age triggered mass demonstrations, several pro-Kremlin candidates lost in a regional election, and Putin’s approval rating fell to its lowest level since 2014, in part because of ongoing economic stagnation. Some commentators speculated that Russia’s seizure of a Ukrainian navy vessel in the Azov Sea late last year was an attempt to win support at home.
In 2019 the Kremlin may tighten the screws on Ukraine further in a bid to divert Russian attention from domestic issues. At the end of 2018, Russia expanded its list of sanctioned Ukrainians and imposed an embargo on $500 million in Ukrainian goods, agricultural and industrial products mostly. Though the moves were expansions of existing sanctions and were in part in retaliation to an extension of similar measures against Moscow by Kiev, the moves resonated to a surprising degree with Russian-language audiences online. As the signal below shows, Russian interest in web pages related to sanctions shot upwards to its highest level all year.
In the past, acts of international aggression, such as the annexation of Crimea, bolstered Putin’s approval rating at home. He may be banking on the same to hold true in 2019.
In 2018, President Trump pulled the United States out of the Iran nuclear deal and installed hawkish national security officials -- most notably, Secretary of State Mike Pompeo and National Security Advisor John Bolton. A focal point of escalating tensions between Iran and the White House was the Islamic Republic’s ballistic missile program. Throughout the year, Iran tested missiles, and the United States reacted angrily. Heading into 2019, war between the two countries seems a remote possibility, but it’s not unthinkable that if there were to be a casus belli for Israel or the United States to take military action against Iran, the ballistic missile program could be it.
Predata machine learning algorithms identified a pattern of online activity that tended to emerge before Iran tested or unveiled a ballistic missile. As the image below shows, that pattern, expressed as a signal, spiked in the days and weeks before these ballistic missile events.
Heading into 2019, the signal is dramatically elevated. That could mean a provocative action from Tehran may be forthcoming in the coming weeks. Other issues are dominating the news cycle as the new year begins, but a US-Iran showdown over missiles could flare up in early 2019.