TMI Snapshot:  Text-Mined Inflation Indicators Take a Breather After February-March Breakout

TMI Snapshot:  Update on Underlying Inflation Expectations from Our Text-Mined Indicators

Introducing TMI Data Science: Delivering Alpha With Custom NLP-Based Leading Indicators

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

Cross Asset Strategy

Multiple Countries / Cross Asset Strategy

<ul>
<li>Breakevens continue to march higher, with our most recent text-mined indicator update finding sentiment on inflation expectations at the high end of the past year's range, with no signs of an overshoot; as pre-pandemic readings were higher, further upside is likely</li>
<li>Media coverage of general supply disruptions has accelerated to levels seen last Spring; though choppy, coverage of the global semiconductor shortage continues to trend higher, likely to exert additional inflationary pressures at least throughout H1</li>
<li>The crude rally has been another source of support for breakevens, even as crude lagged breakevens this time around (unlike crude, BEs revisited their pre-pandemic levels as early as November)</li>
<li>Not unlike the NFP print, the market looked right through weak CPI data, but it should be noted that data collection from businesses was particularly difficult in January as per the BLS</li>
<li>Considering the significant housing rally of H2, the continued deceleration in both primary rents and Owners' Equivalent Rent (together ~40% of core CPI) is surprising; but data from property management software provider Rentec Direct suggests rent collections continued to improve through year-end, which helps alleviate a current source of uncertainty</li>
</ul><div class="content-highlight"><p>TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </p></div>


Breakevens continue to march higher, with our most recent text-mined indicator update finding sentiment on inflation expectations at the high end of the past year's range, with no signs of an overshoot; as pre-pandemic readings were higher, further upside is likely
Media coverage of general supply disruptions has accelerated to levels seen last Spring; though choppy, coverage of the global semiconductor shortage continues to trend higher, likely to exert additional inflationary pressures at least throughout H1
The crude rally has been another source of support for breakevens, even as crude lagged breakevens this time around (unlike crude, BEs revisited their pre-pandemic levels as early as November)
Not unlike the NFP print, the market looked right through weak CPI data, but it should be noted that data collection from businesses was particularly difficult in January as per the BLS
Considering the significant housing rally of H2, the continued deceleration in both primary rents and Owners' Equivalent Rent (together ~40% of core CPI) is surprising; but data from property management software provider Rentec Direct suggests rent collections continued to improve through year-end, which helps alleviate a current source of uncertainty
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Snapshot: Update on Text-Mined Inflation Indicators - Supply Disruptions & Crude Push BEs Higher