Case Study: #Trade & #Brexit

Updated: Oct 4, 2019

Today we provide perspective on how our patented, automated, analytical data provides accelerated insight and predictive analytics in two overlapping policy areas which are peaking right now: Trade Policy and Brexit.


Consistent customer discovery over the last year shows that knowledge executives don't just face mounting information overload from the 24/7 news cycle turbo-charged by social media. They increasingly don't have time to read and they don't want to read because so much content increasingly is opinion-based. Finding concrete facts for analysis is increasingly difficult.


We hear you.


Today's case study shows how our users read smarter and choose better which items to read. Scrolling through email newsletters is replaced with objective, transparent, quantitative data that delivers information triage opportunities with every click of an interactive chart. Even in this early stage platform, we use 9 levels of analytical process automation to sift through the noise of the news cycle so users can access strategically significant information faster and better than other methods would permit.


The real value generating alpha for traders and delivering superior strategic insight occurs when our platform captures publicly information that did not receive significant media attention.

So now to Trade and Brexit....


Our customers know that Brexit policy and trade policy were set to spike in October. Among other things, the latest, greatest Brexit deadline looms on 31 October. We are tracking it on a dedicated page https://www.bcmstrategy2.com/brexit in our website. Consider here, however, the Momentum Measurements captured by our system each day this week so far:


That tall column on the left is Brexit. While it is not surprising to see rhetoric (the BLUE segment) outpacing action, it is surprising to see so much action on a Monday morning. The action was strategically significant, as discussed below.


The GREEN segment shows action. The column on the left is the most active issue of the day. Note that in 3 out of 4 days at the start of October Brexit outpaced trade policy...often by quite alot.



In general, when action outpaces rhetoric, public policy risk is spiking for a simple reason: headlines follow official sector action. This chart for October 2 therefore accurately captures spikes in Brexit risk associated with PM Johnson's latest negotiation offer to the EU.


Even on October 3 (today), when the full trade policy firestorm regarding the WTO Airbus ruling hit the internet, Brexit STILL outpaces trade as the most active policy issue. Long before we start looking at the details, a macrostrategist will see that Brexit issues require more attention than the trade issues today.


This outcome is intuitive for trade policy experts. As explained in this Atlantic Council post today (and as illustrated by the timeline below), the United States and the European Union have been bickering at the World Trade Organization (WTO) regarding Airbus subsidies for nearly two decades. US tariffs in response to EU Airbus subsidies became inevitable in May 2018.

Anyone paying attention would not be surprised by the tariff activity this week. They won't be surprised by next month's activity regarding auto sector tariffs in the United States. And they won't be surprised by next year's dramas when the EU counter-suit against Boeing subsidies likely is decided. Anyone using our platform would connect the dots between the September US-Japan partial trade agreement and the transatlantic auto sector situation spelled out in the Atlantic Council post above..


The trade policy and Brexit policy tensions are linked even if the rhetoric and technical details are different.


At its core, the European Union 's internal market is a trade policy construct around which other values and policy initiatives have been added over the years. And also at its core, the Brexit dispute is all about the UK seeking public policy independence regarding trade policy generally and regulatory policy (which can be a non-tariff barrier to trade) specifically. Trade tensions oin one sphere will impact trade tensions in another sphere.


This Atlantic Council blogpost from April 2019 describes the underlying trade policy impasse at the core of the Brexit dispute between the UK and the EU. So when a BCMstrategy, Inc. customer on Saturday, September 28 and again on Monday, September 30 sees all that action on Brexit and clicks on the interactive chart, they immediately find this letter from the lead EU negotiator taking a hard line against any renegotiation of the Withdrawal Agreement: "Every issue raised in your letter - from trade in goods to citizens’ rights and data flows - has already been addressed comprehensively in the Withdrawal Agreement. There is no other way to achieve all the benefits that the Withdrawal Agreement provides."


So when PM Johnson himself leaked his letter to the EU proposing a renegotiation, on Twitter, the letter was published by all major media outlets in the UK and beyond. Our users would have known Brexit risks were once again escalating when they read this sentence on page 1 of the PM's letter: "The Government intends that the future relationship (with the EU) should be based on a Free Trade Agreement in which the UK takes control of it own regulatory affairs and trade policy." Anyone using our data platform immediately understood that the prospects for a negotiated settlement were nearly nonexistent because our system captured what few in the media reported: the weekend release of the EU hardline position.


Operational efficiencies kick in at this stage. You don't have to like the direction of policy to understand it. Rather than chase the news cycle feeding frenzy over PM Johnson's letter, our users know to focus only on action items in the momentum measurement showing reactions from the EU and MPs on the trade policy/customs union issue.

Macrostrategists appreciate the massive irony of the situation. Both Brexit and the WTO/tariff issues reflect intensifying centrifugal forces placing pressure on the multilateral economic integration frameworks established first in Bretton Woods, NH 75 years ago. Beyond populist politics and noisy news cycles, a deep and substantive debate is underway as the Distributed Age gains momentum.


Our transparent, objective data provide an efficient way to monitor these macrotrends, especially in weeks like the current week when the noise of the news cycle distracts attention from substantive developments.

Next week, at noon EST on October 8, Interactive Brokers is hosting a free webinar on How To Trade The News. Blog readers are cordially invited to join the discussion and ask live questions about the public policy data. More information and a registration portal at Interactive Brokers is now open HERE.

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