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.

Macroeconomics

<p>In early July, our sentiment indicators flagged a pending downturn in Brazilian equities as we saw the emergence of political risk in a wave of anti-Bolsonaro protests and new corruption scandals, along with Lula's re-emergence as the favored candidate for '22 (see <a href="https://www.smartkarma.com/insights/tmi-snapshots-brazil-macro-sentiment-peaking-pboc-easing-not-a-buy-signal-yet-crypto-sentiment" target="_blank" data-smartkarma-citation="insights:54390" rel="noopener">TMI Snapshots:  Brazil Macro Sentiment Peaking, PBOC Easing Not a Buy Signal Yet, Crypto Sentiment.)</a> In addition, we flagged Brazil's hydro crisis as key potential driver of inflationary shock, with spot electricity pricing set to double.</p><p>Although Brazil remains fragile, we are seeing early signs of a bottoming process as sentiment momentum has turned less negative following the Q3 selloff, and is no longer accelerating to the downside after 3 months of relentless deterioration from June to September:</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/233/606/original/BRAZIL_SENTIMENT_OCTOBER.png?1633429628" class="editor-image img-responsive" data-smartkarma-image-id="233606"></figure><div class="content-caption">Brazil Sentiment Momentum (90D, STDEV Units) vs. EWZ</div> Correlation between our Brazil Macro Sentiment indicator and the iShares MSCI Brazil (EWZ) has been 92% in the T6M, 48% T12M and 47% T24M.  Brazil underperformed sharply in Q3, down -21% in USD terms vs. MSCI EM's -9%, with BRL down -9%.  Following this outlier move, it appears that EM fund positioning has turned neutral to slightly OW Brazil (along with only 2 other OWs in EM - Russia and India - as per EPFR.)</section><section class="figure"></section><div class="content-highlight"><section class="figure">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 tools text-mine 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. </section></div>

In early July, our sentiment indicators flagged a pending downturn in Brazilian equities as we saw the emergence of political risk in a wave of anti-Bolsonaro protests and new corruption scandals, along with Lula's re-emergence as the favored candidate for '22 (see TMI Snapshots:  Brazil Macro Sentiment Peaking, PBOC Easing Not a Buy Signal Yet, Crypto Sentiment.) In addition, we flagged Brazil's hydro crisis as key potential driver of inflationary shock, with spot electricity pricing set to double.Although Brazil remains fragile, we are seeing early signs of a bottoming process as sentiment momentum has turned less negative following the Q3 selloff, and is no longer accelerating to the downside after 3 months of relentless deterioration from June to September:Brazil Sentiment Momentum (90D, STDEV Units) vs. EWZ Correlation between our Brazil Macro Sentiment indicator and the iShares MSCI Brazil (EWZ) has been 92% in the T6M, 48% T12M and 47% T24M.  Brazil underperformed sharply in Q3, down -21% in USD terms vs. MSCI EM's -9%, with BRL down -9%.  Following this outlier move, it appears that EM fund positioning has turned neutral to slightly OW Brazil (along with only 2 other OWs in EM - Russia and India - as per EPFR.)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 tools text-mine 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:  Early Signs of Bottoming in Brazil Macro Sentiment

<ul>
<li>After a remarkable recovery from March to late June, TMI's Brazil Macro Sentiment indicator has been losing momentum in recent weeks together with BRL sentiment; political risk has resurfaced with the Bolsonaro vaccine scandal and Lula's lead in the polls</li>
<li>Our PBOC Easing-Tightening Diffusion suggests further downside to Chinese 10yr yields and the China FXI, having been strongly negatively correlated with both</li>
<li>While cryptocurrency sentiment remains subdued, negative momentum peaked in June; environmental concerns appear to be easing on the margin, aided by proof-of-stake optimism</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 tools text-mine 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>


After a remarkable recovery from March to late June, TMI's Brazil Macro Sentiment indicator has been losing momentum in recent weeks together with BRL sentiment; political risk has resurfaced with the Bolsonaro vaccine scandal and Lula's lead in the polls
Our PBOC Easing-Tightening Diffusion suggests further downside to Chinese 10yr yields and the China FXI, having been strongly negatively correlated with both
While cryptocurrency sentiment remains subdued, negative momentum peaked in June; environmental concerns appear to be easing on the margin, aided by proof-of-stake optimism
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 tools text-mine 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 Snapshots:  Brazil Macro Sentiment Peaking, PBOC Easing Not a Buy Signal Yet, Crypto Sentiment

Cross Asset Strategy

<ul>
<li>Going into the new year, Brazil featured prominently as a key overweight EM on commodity &amp; China leverage, undervalued BRL and potential upside from reforms</li>
<li>In the past month, MSCI Brazil (EWZ) underperformed MSCI EM (EEM) by ~9% and the BRL underperformed on fiscal policy worries, an unwelcome upside inflation surprise, disappointing retail sales, delayed vaccine timelines, pandemic resurgence and concerns on potential breach of spending caps</li>
<li>Our text-mined indicators saw a melt-up in sentiment on Brazil &amp; EMs hitting record highs in late December with &gt;3x STDEV readings; after a slight pullback, overall EM sentiment is on the rise again but our Brazil macro indicator has yet to recover</li>
<li>Aside from the IPCA inflation and retail disappointment, our Brazil indicator has been impacted by news of Ford's announcement of 3 auto plant closures eliminating ~8% of total Brazilian auto production last week</li>
<li>Despite the barrage of bad news, not all indicators are negative:  Incoming December activity indicators and flows are new positives, while yesterday's approval of AstraZeneca &amp; Sinovac vaccines is another incremental positive after mismanagement &amp; anti-vax messaging from Bolsonaro</li>
<li>While idiosyncratic challenges in Brazil are significant, this is "business as usual"; stability in USD and treasury yields would likely help re-establish conviction in Brazilian equities and the BRL on the broader EM flows theme, for a much-anticipated catch-up trade</li>
</ul>


Going into the new year, Brazil featured prominently as a key overweight EM on commodity &amp; China leverage, undervalued BRL and potential upside from reforms
In the past month, MSCI Brazil (EWZ) underperformed MSCI EM (EEM) by ~9% and the BRL underperformed on fiscal policy worries, an unwelcome upside inflation surprise, disappointing retail sales, delayed vaccine timelines, pandemic resurgence and concerns on potential breach of spending caps
Our text-mined indicators saw a melt-up in sentiment on Brazil &amp; EMs hitting record highs in late December with &gt;3x STDEV readings; after a slight pullback, overall EM sentiment is on the rise again but our Brazil macro indicator has yet to recover
Aside from the IPCA inflation and retail disappointment, our Brazil indicator has been impacted by news of Ford's announcement of 3 auto plant closures eliminating ~8% of total Brazilian auto production last week
Despite the barrage of bad news, not all indicators are negative:  Incoming December activity indicators and flows are new positives, while yesterday's approval of AstraZeneca &amp; Sinovac vaccines is another incremental positive after mismanagement &amp; anti-vax messaging from Bolsonaro
While idiosyncratic challenges in Brazil are significant, this is "business as usual"; stability in USD and treasury yields would likely help re-establish conviction in Brazilian equities and the BRL on the broader EM flows theme, for a much-anticipated catch-up trade


TMI Snapshot: Our Brazil Sentiment Signal Diverges from Rest of EM - Opportunity or Warning?

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>Emerging market equities have experienced large out-flows in recent weeks, with LatAm equities hit hard, especially Brazil and big-cap banks at the fore</li>
<li>
<a href="https://www.smartkarma.com/entities/banco-do-brasil-sa" target="_blank" data-smartkarma-citation="entities:24564:1" rel="noopener">Banco Do Brasil Sa (BBAS3 BZ)</a> reported 4Q19 results in mid-February, and management provided their guidance for 2020, with minimal thought to coronavirus effects in our view</li>
<li>We concentrate on three key drivers for Banco do Brasil's fundamental outlook - loan growth, credit quality and interest rate spreads - in the current climate</li>
<li>We believe that 2020 guidance is challenging, with "bottom up" consensus estimates for earnings and ROE likely to be cut going forward, but not by the extent of the heightened fear factor reflected in markets and share prices currently</li>
<li>Risks to our view include protracted volatility in markets, and a much harder hit to the real economy impacting loan growth and credit quality adversely</li>
</ul>


Emerging market equities have experienced large out-flows in recent weeks, with LatAm equities hit hard, especially Brazil and big-cap banks at the fore

Banco Do Brasil Sa (BBAS3 BZ) reported 4Q19 results in mid-February, and management provided their guidance for 2020, with minimal thought to coronavirus effects in our view
We concentrate on three key drivers for Banco do Brasil's fundamental outlook - loan growth, credit quality and interest rate spreads - in the current climate
We believe that 2020 guidance is challenging, with "bottom up" consensus estimates for earnings and ROE likely to be cut going forward, but not by the extent of the heightened fear factor reflected in markets and share prices currently
Risks to our view include protracted volatility in markets, and a much harder hit to the real economy impacting loan growth and credit quality adversely


Banco Do Brasil (BBAS3 BZ): Excessively Hard Hit by the Fear Factor

Founder, Riedel Research

David Riedel

Founder

Independent equity research on GEM Markets

Riedel Research

Riedel provides equity research and analysis to leading financial organizations. By becoming members of a region (Asia, Latin America, Emerging Europe or Global), organizations have access to an integrated set of services including:

Regular company coverage reports
Up-to-date investment decision advice (buy, hold, sell)
Monthly regional and global conference calls
Customized company reports and unlimited on-line access to the program's services.

Riedel provides research coverage of companies across the full range of market capitalization. Experienced research professionals in each market develop company reports and analysis as well as earnings models and projections. Ratings are Buy, Hold and Sell with a focus on compelling investment ideas - both long and short. Downloadable, dynamic earnings models are built to facilitate sensitivity analysis.

Please feel free to contact us for complimentary access to our written research.  We want to show you that our unique research flow can add value and help develop a long-term, high value-add relationship.

Riedel's model focuses on providing clients with unique insights and consulting in addition to unlimited access to all produced research This model allows members to receive exponential benefits for their retainer fees.

Thematic (Sector/Industry)

<ul>
<li>US: Fed Sees Tailwinds from Global Growth Shifting to Headwinds from China and Europe.</li>
<li>Greece: Growth supported by ‘Golden Visa’ (5-year visa for investing 250,000 Euro) and strong tourism arrivals. 2.3% GDP in 2020.</li>
<li>Thailand: Sunday election between Shinawatra-linked Pheu Thai Party and military backed Palang Pracharat Party. Too close to call.</li>
<li>Brazil: Former Brazilian President Michel Temer has been arrested in São Paulo as part of the Car Wash corruption investigation. Brazil stocks fell on the news.</li>
</ul>


US: Fed Sees Tailwinds from Global Growth Shifting to Headwinds from China and Europe.
Greece: Growth supported by ‘Golden Visa’ (5-year visa for investing 250,000 Euro) and strong tourism arrivals. 2.3% GDP in 2020.
Thailand: Sunday election between Shinawatra-linked Pheu Thai Party and military backed Palang Pracharat Party. Too close to call.
Brazil: Former Brazilian President Michel Temer has been arrested in São Paulo as part of the Car Wash corruption investigation. Brazil stocks fell on the news.


RRG Weekly - Fed Highlights Headwinds - Greece Greases Growth - Thai Election Sun Too Close to Call

Brazil

iShares MSCI Brazil Capped ETF is an exchange-traded fund in the USA. The ETF's objective is to provide investment results that correspond to the performance of the MSCI Brazil 25/50 Index.

iShares MSCI Brazil Capped ETF (EWZ US)

TMI Snapshot: Early Signs of Bottoming in Brazil Macro Sentiment

Our Brazil macro sentiment indicators are showing early signs of bottoming as we see improvement in the hydro crisis, "peak unrest" and other...

Elan Gore

TMI Snapshots: Brazil Macro Sentiment Peaking, PBOC Easing Not a Buy Signal Yet, Crypto Sentiment

After a remarkable 3-month recovery, our Brazil Macro Sentiment has pulled back as political risk is resurfacing with Bolsonaro's vaccine scandal...

Elan Gore

TMI Snapshot: Our Brazil Sentiment Signal Diverges from Rest of EM - Opportunity or Warning?

Our Brazil macro sentiment indicator has diverged from broader EM to the downside on a series of negative surprises and fiscal policy concerns, but...

Elan Gore

Banco Do Brasil (BBAS3 BZ): Excessively Hard Hit by the Fear Factor

Emerging market equities have experienced large out-flows in recent weeks, with LatAm equities hit hard, especially Brazil and big-cap banks at...

Victor Galliano

RRG Weekly - Fed Highlights Headwinds - Greece Greases Growth - Thai Election Sun Too Close to Call

US: Fed Sees Tailwinds from Global Growth Shifting to Headwinds from China and Europe. Greece: Growth supported by ‘Golden Visa’ (5-year visa for...

David Riedel