Quantamental, by design.
Quant models see the whole economy but miss the context. Fundamental analysts have the context but can’t see everything. We use both, in that order.
Five layers, one view
Price & volume
What each sector charges and how much it sells, taken from official statistics.
Supply chain
Input-output tables show whose costs a price rise will reach.
Macro regime
Growth, inflation, rates and credit set the backdrop for every call.
Evidence
Out-of-sample tests on data as it was first published.
Judgement
Analysts turn the reading into a view on companies and markets.
The result
An early, explainable and tested read on where revenue and margins are heading.
See it in the platformPrice, volume, cost
A company’s revenue is what it charges multiplied by how much it sells, and its margin is what’s left after paying for inputs. The same holds for a whole sector, and governments publish the numbers every month.
- Price. Consumer and producer price indices show what each sector charges.
- Volume. Industrial production, retail sales and employment show how much it sells.
- Revenue. Price times volume estimates each sector’s turnover before any company reports it.
- Cost. Materials, labour, services and overheads, weighted by what each sector actually buys.
- Margin. The gap between revenue growth and cost growth shows whether profitability is widening or being squeezed.
Costs travel
National input-output tables record how much each industry buys from every other. That lets us follow a price shock from where it starts to where it squeezes margins.
We map more than 400 industries this way and update the cost pressure along each chain every month.
Regime matters
Sectors behave differently depending on the wider environment. We classify the current regime from growth, inflation, the yield curve and credit conditions, then show how each sector has responded to those drivers before.
That tells an investor what is happening and why: whether a sector moves with oil, copper, interest rates or wages, and which of those links actually hold up statistically.
Goldilocks
Growth rising, inflation contained
Overheating
Pricing power, rising costs
Recession
Volumes fall, margins tested
Stagflation
The squeeze on both sides
Tested the hard way
A signal is only useful if it would have worked at the time. So we test ours the way an investor would have had to use them.
Over 25 held-out quarters, the US iron and steel revenue reading tracked what the sector’s listed companies went on to report with a correlation of
0.90
[Illustrative; confirm compliance wording.]
Out of sample
Each signal is judged only on quarters it wasn’t fitted to.
As first published
We re-run tests on original, unrevised government data. The price signal kept all of its strength and the revenue signal kept most of it.
Corrected for luck
Across many sectors and tests, some results look good by chance. We adjust for that before calling anything a finding.
Honest about limits
Where companies don’t track the economics, or the sample is too small, we say so and make no call.
Where people make the difference
A model can tell you a sector’s margins are widening. It can’t tell you that one company is hedged, another is losing share, or that a policy change is coming.
That is where our analysts come in. The model tells us where to look. Fundamental research, industry knowledge and conversation turn that into a view. The gap between what the economy implies and what companies or the market expect is often where the opportunity lies.
See the method on the sectors you follow.
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