What Comes Next -- Data-Driven Policy Nowcasting

Updated: Jan 12

Towards the end of December, while recording Episode 79 of "That Annuity Show," the inevitable question arose: what does 2020 data imply for 2021 public policy trends?

This was not a hypothetical question. US News just named "That Annuity Show" one of the 8 best podcasts form investors. The question had a purpose: how can annuity investors anticipate headline risk in 2021 in order to generate alpha or, at the very least, protect principal. You can listen to the podcast and learn my top issues to watch HERE: http://nassaure.libsyn.com/079-separating-policy-noise-from-news-with-barbara-matthews?tdest_id=910469


Like all good conversations and questions, two weeks later the conversation is still generating inspiration. We now have a full two years of data on a range of key technical policy issues like digital currency policy, trade wars, and macroprudential policy. We have nearly a year of data on other key issues important to the digital economy (like digital services taxes, 5G policy, and big tech regulation) as well as COVID-19 fiscal, monetary, and regulatory policy.


Market participants and data scientists access the full database through the Bloomberg Enterprise Access Point will have a field day identifying how inflection points on individual issues can impact their portfolio positions. Armed with PolicyScope data -- and the ability to drill down to the underlying words -- our customers during 2021 are poised for yet another year of out-performing headline-reading bots.


One key way humans outperform bots is by applying common sense rather than react reflexively and automatically to headlines. Another key way to outperform a bot is to adopt a "nowcasting" approach to policy trend projection.


At its most basic, nowcasting uses current data to generate conclusions concerning near-term outcomes based on concrete facts. PolicyScope Platform data makes it possible to extend this traditional economic forecasting process to public policy. We wrote about it first in 2019 as part of our "How to Trade the News" series for Interactive Brokers. Analysts and strategists using our nowcasting approach and data regarding public policy can become "superforecasters" easily.


So we are dedicating January 2021 as the official PolicyScope Nowcasting Month. Throughout the month, we will show how 2020 policy data provides predictive insights into 2021 policy trajectories. From the thousands of curated lexicon terms in our PolicyScope Platform, we will shine a spotlight on a few issues.


The posts will deliver guidance on how small shifts in policy language deliver signals on future policy trajectories. Anyone can do it -- even without technical subject matter expertise -- so long as they have access to high quality information and data visualization. Fortunately, our PolicyScope Platform data and related analysis deliver shortcuts to investors and strategists so they can spend less time chasing facts and more time analyzing policy trajectories.

PolicyScope data is available through the Bloomberg Enterprise Access Point.

Customized widgets and dashboards are available via API HERE.

Analytical scenario analysis (The Scenarios -- twice monthly) and daily global macro analysis of platform data (The PolicyScope Risk Monitor) are also available.