Measuring the Bigger Picture, Faster

When we first meet with portfolio managers and Bloomberg Terminal users, it does not take long before they ask us how and why our data is different from the media-focused sentiment analysis generated from sentiment analysis.


The short answer is that our inputs are much, much broader. We take in data from far more official sector sources. Then we measure it objectively, without bias, and without a normative overlay. We measure more activity than the media reports. Every day. Automatically.


The Benefits and Limits of Journalism Inputs

It is an understandable question. Capital markets acquire an impressive amount of real-time news data either at the human level through their Bloomberg Terminal or at the automated level through institutional news feeds read by algorithm-programmed bots. Portfolio managers spent their day looking at multiple screens, seeing real time interviews on CNBC, reading blogs, reading research reports, and zooming through a wealth of information literally at the speed of light with the flick of a finger.

Markets know that policy drives price action. But they fail to realize that newsflow is not the best way to spot market-moving shifts. And our patented process provides the ONLY mechanism that communicates the magnitude of the shift in a language markets understand: math.

Quality fact-based journalism serves a crucial role in communicating market-moving information. Journalists have human intelligence networks; people tell them things that augment their reporting. Officials leak information they are not ready to release publicly.

But at the end of the day, the filtering process comes at a cost. No human – not even the best journalist – can read everything. Governments release far more information than most people realize. Most of the activity may not be newsworthy on any given day.


For example, a central banker’s speech regarding inflation trends today is not likely to generate much news coverage because it is crowded out by understandable and justifiable media focus on the deteriorating and atrocious situation in Ukraine. These technical shifts never make it on to a journalist's radar screen or are filtered out because other developments (e.g., sanctions on gold reserves) are more pressing on the day.

If your main mechanism for acquiring information on public policy comes from the news flow, you are only seeing a fraction of what policymakers are doing. Quality journalism is a necessary BUT NOT SUFFICIENT condition for assessing risk and volatility related to public policy shifts.

You are literally not seeing the entire picture because your entry point is the news flow. More data exists than you are capturing today. The good news is that our 9+ layers of patented analytical automation capture all those developments automatically, on a 24-hour loop.


Inefficiencies in Human Intelligence

Despite all our technological advances, public policy intelligence remains a surprisingly human-centered activity. It is strikingly inefficient. Our backtests last year suggest strongly that it can take markets as long as 22 days to price in strategically significant public policy shifts.


Why the three week delay? Because a journalist has to write about what government did. Then the analyst has to see the shift, maybe conduct some more research, and then….write about it. Then the portfolio manager needs to see the analytical words, read them, understand them, and only then does the process of pricing the observed risk begin. Every step of this process injects a small amount of embedded bias from every analyst and journalist in the chain.

(c)2022 BCMstrategy, Inc. | www.bcmstrategy2.com | {APPS PLCY <GO>} | www.policyscope.io

Our patented technology shortens the pricing cycle considerable. Automated reading means we also expand simultaneously the number of inputs far beyond what any human might be able to read on any given day. The information age generates information overload for information workers; we have the patented solution. And because our measurement process is objective, we leave the normative assessments of whether the shift is good/bad to the capital markets based on how their portfolios are structured.

(c)2022 BCMstrategy, Inc. | www.bcmstrategy2.com | {APPS PLCY <GO>} | www.policyscope.io

Portfolio managers can see spikes in public policy volatility within 24 hours of their occurrence. Right now, depending on the issue, they might have 22 hours or 22 days to establish a strategic position.

Consider our case study HERE from earlier this month regarding the informational advantage that our Bloomberg Terminal users had regarding monetary policy. Our users literally "caught the wave" and were able to anticipate monetary policy volatility with a full day's notice:


Portfolio managers that use our data even as just an alerting mechanism have a head start on the rest of the market. Where there is smoke, there is fire. Where we measure increases in policy activity, market reactions will follow.


Global macro strategists using our data literally connect the dots faster and better because they are seeing the bigger picture.


Conclusion

Capital markets famously seek access to better, more comprehensive information as quickly as possible. Our patented technology makes it possible for professional investors to accelerate their capacity to make data-driven decisions regarding their exposure to public policy risks.


The coming days will be dark from a geopolitical perspective. We are honored to help our customers acquire more efficient and effective access to technical policy shifts that matter to their investments today, cutting through the noise of the news cycle to deliver objective data they can trust for their internal analysis.

 

About BCMstrategy, Inc.: The company helps portfolio managers and strategists anticipate market volatility related to public policy/headline risk by delivering quantitative volume-based objective data drawn directly from the public policy process paired with data generated from media coverage from fact-checked journalism publishers like Dow Jones and ThomsonReuters. The full data set is available exclusively through the Bloomberg Enterprise Access Point. Volatility signals related to cryptocurrency policy, CBDC policy, climate finance policy, and monetary policy are available via API. Charts, graphs, and verbal data are available through the V3 PolicyScope Data app on the Bloomberg Terminal at: {APPS PLCY <GO>}.