AI-Driven Financial Foresight

Will the U.S. enter a Debt Spiral?  We did an interactive presentation two weeks ago with some of the largest money managers in the world (the long-term "smart money"). One of the multiple choice poll questions was how high they see 30-year U.S. Treasury rates (Tbonds) reaching over the next 4-years. The answers are compiled in the graphic. Debt spirals are driven by perceptions - if investors believe there is a risk their loans won't be paid back, they demand higher interest rates to compensate them for the risk. That's what we see in the poll results.

We did a simple study that counted the number of times "tariffs" were mentioned in Earnings Call Transcripts of global companies in March 2025. The share price returns of those companies in April and May were then tabulated. Those whose transcripts mentioned tariffs 30x or more fell 4% through May 31st, while those with no mentions (thousands) rose 12.5% from April 1st to May 31st. Among all stock price factors, the number of references to "tariffs" in earnings transcripts was one of the most predictive in 2025.

With advances in large language models, Earnings Call Analysis is entering a new era. LSEG MarketPsych Transcript Analytics leverages fine-tuned NLP to extract sentiment, emotion, and topical insights from corporate transcripts.  See our blog on this new approach to extracting investable insights from executive (and analyst) language: https://lnkd.in/geNCjvCJ

Markets just delivered a textbook “relief rally.”  A 2019 study in PLOS ONE (“Relief from incidental fear evokes exuberant risk taking”) paired mild electric shocks with an investment task. When the shock threat was removed, participants’ risk appetite—and the expected value of the options they chose—jumped ~11 %. Takeaways for today’s market:• Relief fuels risk-on behavior. As macro stressors ease, investors systematically bid up risk assets. • It’s valuation, not probability, that shifts. The brain literally assigns higher worth to the same payoff once fear subsides. • Mind the half-life. If talks stall or other threats re-emerge, the reverse can happen just as fast. Behavioral finance reminds us that emotion isn’t noise around fundamentals; it re-prices them. Managing portfolios means managing the emotional cycle too.

In April there was a -12% share price return gap between companies that mentioned tariffs the most vs none in their earnings call transcripts (image). A month ago we posted March's results, when the gap was narrower at -7.5%: https://lnkd.in/g6iY4YRr A new type of news is moving markets. Having the right analytics makes all the difference.

On Monday, we’re launching our Global Leaders Feed — a real-time stream of social and news announcements from influential U.S. cabinet members and global leaders. Why? Because they move markets.💥 Case in point:- Today at 1:18 pm ET (17:18 GMT), President Trump posted on Truth Social that reciprocal tariffs would “PAUSE.”- Within minutes, the U.S. stock market rallied in one of its largest 30-minute moves in history (see image).🔍 And yet — CNBC and other outlets couldn't identify the reason for the surge until after the bulk of the move had already happened. ⚠️ Earlier the same day, China’s retaliatory 84% tariffs were posted on Reddit and X/Twitter — a full 6 minutes before traditional financial media and 9 minutes before a low-latency Reuters ALERT.📰📉📈 Markets Are Moving Faster Than the News 📡 Introducing Media Radar:A real-time NLP-powered feed that extracts early signals from high-impact media platforms. Our feed delivers structured JSON metadata, ready to plug into quant models, signal engines, alerting systems, and portfolio risk tools. NLP Tags Provided:🔹 Entities: 20+ types (stocks, commodities, currencies...)🔹 Topics: 1,000+ (accounting, litigation, tariffs...)🔹 Events: 4,000+ (dividends-payment, factory-build...)🔹 Sentiment: Finance, ESG, commodity scores🔹 Emotions: 14 dimensions (anger, fear, optimism...)For a sample of the Global Leaders feed or a trial of Media Radar:👉 Reach out to: [email protected]👉 Or sign up here: https://lnkd.in/gtUPfc_B

We analyzed mentions of "tariffs" in U.S. earnings calls over the past two decades:🔹 In 23 years of data, only the Trump presidencies saw tariffs become a major boardroom topic. 🔹 During Trump I, it took time for tariff talk to ramp up. 🔹 In Trump II, we've surpassed the prior peak — and the bulk of earnings season hasn't even hit. 🔹 Mentions are now far beyond the previous peak.  👀 Market participants are clearly bracing for geopolitical and trade turbulence. 💬 This time the Trade War does not look like a negotiation tactic.

📉 Get Ready for Turnaround Tuesday in the Stock Market 📈 On Monday, September 15th, 2008, I was in the green room for a financial news segment, preparing to speak on behavioral finance. A CEO of a large equity investment firm was also there. As he left, he turned to me and said: “Get ready for Turnaround Tuesday!” 📊 That Tuesday turned out to be one of the biggest rallies in S&P 500 history.Curious, I looked into it further — and sure enough, the stock market has a quirky history of rallying on Tuesdays following steep Monday selloffs. It’s a known behavioral phenomenon.