Ep. 378: Apurv Jain on Alternative Data, Real-Time Macro Nowcasting, and AI's Economic Role

Bilal Hafeez (0:03)

Welcome to the Macro Hive Conversations Podcast. I'm Bilal Hafeez, Head of Strategy at Macro Hive. Before we dive in, a quick update. Following Macro Hive's acquisition by the BGC Group, BGC has launched a new regulated business called Macro Hive Markets. For the first time, onboarded clients can also access execution services via Macro Hive Markets. This new workflow will allow macro institutional investors to benefit from strategy and insights alongside access to global liquidity. Please contact Andrew Simon or Gail Motibrian on Bloomberg or click the link in the description below for more details on Macro Hive Markets and its service offering.

Now on to this episode's guest, Apurv Jain. Apurv is the founder and CEO of MacroX, a San Francisco based startup building a real time measurement layer for the global economy using alternative data. Before MacroX, Apurv built machine learning investing systems at Microsoft, traded FX derivatives at Deutsche Bank and worked at Bridgewater Associates. His research experience spans Microsoft Research and Harvard Business School, with publications and invited talks across academia, central banks and global forums including Davos and the World AI Summit. He holds a degree from Georgia Tech and the University of Chicago, and is passionate about mixed martial arts. Now on to our conversation. Greetings and welcome Apurv. It's fantastic to have you on the podcast show.

Apurv Jain (1:25)

It's great to be here, Bilal.

Bilal Hafeez (1:26)

I've been looking forward to this for a while, and I've been really impressed by the work that you've been doing at MacroX. Perhaps what we can do to start with is if you just explain what you guys are doing there, then from there we can go into the details.

Apurv Jain (1:41)

Sounds good. At MacroX, we use many different kinds of alternative data to measure the economic state. So in other words, understand what is growth doing right now? What is inflation doing right now? What is the consumer doing right now?

What will be the central bank says? What is the labor market doing right now? So we actually map the actual state of the economy, obviously, because government data is one to three months lagged. So by the time experts figure out what is really going on, it can be a little bit late for acting on it.

Bilal Hafeez (2:18)

I guess what typically happens is that you have economists often working at banks and other independent research houses.

And what they do is they generally speaking track economic data, official economic data releases, say for the labor market, the non-farm payrolls report for the US, and then other survey data like the PMIs or jobless claims. And then they come up with a view around that all. So how does your approach differ from that? Is it that you're using that same data, but you have some extra magic algorithms on top of that, or is there something else you're doing?

Apurv Jain (2:53)

Great question.

So I'll give you an example. We have been concerned about inflation, second order effects, and now we're actually seeing central banks act on it. So one of the things that drives inflation, obviously, services inflation, a big piece, as you and I know, about 2 thirds of inflation, especially in developed markets. And what in turn drives services inflation is wage pressure. And now the problem is, if you are an economist at a bank like we were, you have to infer that, like you can either look at the noisy services CPI, that's a realization of like, hey, well, wage services CPI is high. Was it the fact that we heroically imputed rents in October when the government shut down to zero? And then the CPI popped up because the rents came back in. So it's basically a noisy white line and it's a noisy line or the noisy CPI data that you get. Or you can wait two months for the gold standard employment cost index. So that's the index that the BLS very carefully calibrates and that's the gold standard for like, okay, if that's going up, wage pressures are going up. But the problem is that's two months delayed. So what we do is we'll look at actual worker bargaining power with lots and lots of alternative data.

So to give you an example, if workers are searching for food stamps, they're probably not doing very well. Their bargaining power is lower, or they're tweeting, I can't find a job, or satellite data shows us something, or corporate learning shows us something. So there's many sources that go in. We have a thousand plus kind of pipelines across many data sources. So when that happens, you're like, oh, workers are feeling this way. That's the complex map of their mental state. And then employers, are they complaining about not being able to find specialist workers and having to pay them extra bonuses and letting them work from anywhere? So that was in 2022 And when they were complaining that much, so their bargaining power was lower, worker bargaining power was much higher. And now the situation is diverse. So the employers have much more bargaining power. Maybe I'll replace you with AI.