MEMO: To all researchers and traders on the Sell and Buy side,
The conventional ways of analyzing markets and generating trade ideas in all bulge bracket financial institutions on Wall Street, is in jeopardy. The typical mode of addressing any complex financial inquiry, usually entails a couple of days of intense spreadsheet manipulation and data collection. This is “threatened” by innovative financial technology, e.g. Kensho, and we suggest you all invest in re-training towards becoming masters in asking meaningful complex financial questions to an Artificial Intelligence software.
Kensho was founded in 2013, in Boston and offers a technology that revolutionizes the way financial information is processed; It speeds up the cumbersome spreadsheet crunching, from a couple of days to minutes. It uncovers relationships that can lead to trade signals (Buy/Sell). It organizes our thinking around what we don’t know. It is the commercial incarnation of Watson in the financial space.
Typical 4 yr olds ask more than 300 questions per day. Typical 40yr olds on Wall Street, can maybe channel to their supporting research department a few inquiries per week. Kensho can offer fast visual context to thoughtful questions like:
- Which Apple supplier’s share price goes up the most when the company releases a new product?
- What happens to the currencies of oil producing countries when oil trades below $45 and the USD is strengthening?
- Which part of the yield curve is more affected 3 months before the first rate hike?
- How do pegged currencies to the USD react, when the dollar strengthens in a strong trendy fashion against most major reserve currencies?
Those privileged to the quick answers, can interpret further the results and develop trading strategies based on informed big data analytics.
Kensho’s software is called Warren, inspired by an older, wise and patient uncle that knew all the answers (says co-founder D. Nadler). But of course, there is an immediate association with Warren Buffet. Warren is a cloud-based software that can find answers to more than 65 million question combinations in an instant, by scanning more than 90,000 sources such as economic reports, monetary policy changes, and political events and their impact on nearly every financial asset on the planet. Kensho is also in the process of building a massive unstructured geopolitical and natural world event database, which will allow processing such information and their relationship to financial events. Questions are simply typed in natural language in a simple Google-like text box.
While the partnership between Watson and Citi, has not been in the spot light; Kensho has already partnered with Goldman Sachs and CNBC, and has an impressive group of strategic investors. The FT, the Wall Street journal, Forbes magazine have already written about them. CNBC Pro offers the Kensho StatsBox that provides research and analytic insights designed to create actionable, historical context around market moving events, to its subscribers. Goldman Sachs recently led a $15m round of financing in the company, and will roll out their platform in-house across all businesses as well as to some of its big clients. Such investment houses have typically developed their own in-house technologies and through this move, Goldman is paving the way to welcoming data scientists for the analysis of financial information.
Kensho, has been likened to a Siri-style service for investors, analysts and traders. Users are impressed by the simplicity in which the complex inquiry is inputted. Will Kensho do to financial data analytics what Google did to search?
I’ve signed up for CNBC Pro to check out myself the Kensho partnership in action, even though totally behind the scenes. This April is a great month to “test” whether I gain additional insights from this service. As the uncertainty of the timing of the Fed rate hike still looms, Greece is at the brink of bankruptcy, multiple geopolitical conflicts are continuing, unprecedented divergence in growth rates between economies and Emerging markets volatility are the new normal,…..guidance is very welcome. CNBC Pro services (subscription business model) include the pro news/analysis texts which are then released with a delay to the public (generated with the support of StatsBox); an exclusive tracking of a virtual portfolio of only 5 stocks per year from 5 selected managers (ranging from founders of TradeMonster, to the CEO of Ritholtz Wealth Management and an MD from TIAA-CREF); another effort to be part of the democratization of the investment culture, through a more diversified portfolio with 14 fund managers sharing their top 5 picks for the year and exposing themselves to their annual performance on another $100k, virtual again, portfolio.