According to the recent TIM (Trade Ideas Monitor) report for August 20th, the TIM Sentiment Index (TSI) in North America was 50.37, down 1.76 points, right near the critical 50 mark (see last post, and previous post and the youDevise website for additional information on the TIM report). The TSI Worldwide Index was down marginally. Total new long ideas as a percentage of all new ideas sent to investment managers by way of the TIM decreased 3.15 points to 62.53%.

As for individual securities in the U.S. and North America, Medidata Solutions (MDSO), BJ's Wholesale Club (BJ), and Alcoa (AA) were stocks with long broker sentiment, while First Solar (FSLR), Brocade Communications (BRCD), and Las Vegas Sands (LVS) had short broker sentiment. In general, the materials, telecommunication services, and energy sectors had long broker sentiment, while the consumer staples, industrials, and consumer discretionary sectors had short broker sentiment.

With leverage no longer propping up demand, many analysts point to signs that we are either currently in, or are approaching a deflationary period, with some expecting this period to last up to 12 to 18 months (see Investment News article). Gary Shilling, who has written a couple of books on the topic of deflation, believes the period of deflation could be much longer, on the order of 5-10 years. In addition to providing a signal of lower consumer spending, and subsequently lower GDP, deflation also increases the impact of debt in real terms for both corporations and consumers. As for investment plays, analysts recommend looking at utilities, agricultural, and high-quality and in-demand consumer staples, in edition to U.S. Treasury bonds and good old fashion cash.