Jens Nordvig is a leading economist and author of the book The Fall of the Euro. In this episode of Opto Sessions, he discussed how more than 20 years as a leading global currency market strategist have taught him to look at policy, data and market trends.
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Originally from Denmark, Jens Nordvig has travelled a long road, stopping in London and Tokyo before settling in his current home of New York: prior to founding Exante Data in 2016, Nordvig held senior positions in global currency strategy at Goldman Sachs, Bridgewater Associates and Nomura Holdings, where he developed the Japanese bank’s research franchise.
In 2011 and 2012, Nordvig published a series of papers focused on the euro crisis that was unfolding at the time. These formed the basis of his book The Fall of the Euro: Reinventing the Eurozone and the Future of Global Investing, published in 2013 by McGraw Hill.
In 2016, Nordvig founded Exante Data in an effort to “break free of any constraints and have total intellectual freedom” — crucial to deciding which trends to focus on in a sea of data. He is a self-proclaimed “macro markets nerd”, having known he wanted to study economics since the fourth grade.
Anticipating the fact
Where ex-post-facto research entails examining events after they have occurred, ex-ante analysis elaborates insights that predict future events. The name Exante underscores Nordvig’s priority of forecasting how the market will move before it actually does.
The research philosophy at Exante is to see things as early as possible, using a combination of data-driven analysis and human conceptual thinking. While both are powerful, the latter often determines the value of the former.
As an example, he takes us back to January 2020. News regarding Covid-19 had not yet made headlines, but his team noticed that Chinese equities were starting to look “fishy”. Nordvig presciently allocated half of his research team to studying the trend. While this was a human decision based on the observation of data, a data model on its own would not have been sufficient to predict what was about to unfold.
Discerning the trends
At present, however, the Exante approach to China is very data-intensive, and focuses in particular on how the country will respond to the easing of zero-Covid measures.
Unfortunately, official data is often “total garbage”, according to Nordvig, and Chinese GDP figures are only a distraction. There’s a lot of alternative data available, and there are various ways that Exante can create its own data, which ends up being much more accurate and timely, and allows them to “look at stuff that other people are not looking at”.
“In order to really squeeze value out of data, it has to be combined with human conceptual thinking – that's our philosophy.”
And it’s important to look. Nordvig says that Chinese policy shifts have had dramatic impacts on many things, from commodity markets to global equity markets. The US dollar turn in early November, for example, was closely linked to better news regarding restrictions in China.
While anyone can acquire a wealth of information, “in order to really squeeze value out of data, it has to be combined with human conceptual thinking – that's our philosophy.”
Nordvig’s new venture is MarketReader, for which a successful round of funding brought in $3.1m in January. While he has served institutional investors throughout most of his career, MarketReader is “a tool that can help everybody”, he says.
More than software that shows how the market is moving, it tells you why, explaining gaps in performance in a data-driven way. The software tracks over 10,000 assets in real time and models out the links between them. Nordvig and his team are finalising the program now, and plan to release it to the public in the second quarter of 2023.
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