Watch their money not their words

Bank of Jamaica’s survey findings of perceptions of Present and Future Business Conditions in Jamaica reached the second highest levels in February 2016, since its inception in 2005. The data shows up the disparity of in how business executives think and what they do reflecting the real world, experience of a gulf between what people say they will do and what they in fact do. In the 2015 elections in Trinidad, 74 percent of voters indicated they were going to vote but 66.84 percent finally turned out to do so, while in Jamaica, pollsters said between 59 and 62 percent of the electorate were going to vote and only 48 percent did.
The survey findings of carried out amongst Jamaica’s business executives, show wild swings in their views on current conditions since the start of the data in 2005, while the index of future business conditions was far more predictive of actual business developments. The attached chart shows this up quite clearly. Other findings of the survey also points out that the top management of the various companies were was off the mark when it came to inflation, interest rates and the rate of exchange of the local dollar. One of the clearest measures to test what the executives say and do, is a comparison of the sentiments on business conditions and the performance of the stock market.
When it came time for the business community to put their money where their mouth is, it turned out to be vastly different from what they were saying in the Business Condition Survey. One measure of the business community’s bet on the future, is shown in the attached graph. The graph shows future expectations are is much more aligned with future business conditions than with current ones.
What the business sector did, reflected itself in a much smoother monthly movement than what they said about the future. When it comes to money, the stock market reflects what people are doing with their money as opposed to what they say. The chart shows the movement in the all Jamaica Composite Index, plotted against the two business surveys published by the country’s central bank.
The movement of the stock market seems a better predictor of future expectations, than the surveys, as shown by the smoother movement of the stock market compared with the sentiments data. What is also true, is that the future expectations and the stock market movements are fairly closely aligned with each other.