Macro-economics & Finance

Reconciling economies and markets: a top-down approach

Macroeconomics and finance are linked because they are offshoots of economics. Economics is a social science that explains how parts of economies produce, distribute and consume goods and services. Macroeconomics refers to behaviors of large sections of markets, such as growth domestic product, unemployment rate, inflation rate, etc. Finance is used to discuss the specific ways money is created and managed.

From a metaphorical perspective, we might consider each economy as a tree. Then, macroeconomics would be a way to describe the tree’s bark and finance would be a way to describe its fruit. The bark and the fruit both serve a same purpose. Furthermore, macroeconomics and finance serve as economic gauges of an economy’s health and they help to show which direction an economy is growing or dying. Beyond Ratings intends to make the link between macroeconomics and markets through a top-down approach both on long- (structural analysis) and short-term horizon (cyclical analysis).

More about macro-economics

When discussing macroeconomics, two major ways of thinking are clashing: Keynesian economics vs. Neoclassical economics. Beyond Ratings doesn’t emit any judgment on countries’ policy choices but seeks to analyze the impacts of these policies on country and sovereign risks. Beyond Ratings also seeks to analyze the exogenous events such as economic, financial and political crisis and their impacts on countries’ ability to repay their debt. Furthermore, our proprietary scoring methodology aims to provide both structural and cyclical analysis in order to anticipate trends inflections on major economic aggregates but also on financial markets.

More about Finance

Finance refers to what the market has been producing in terms of money, credit, assets, investments, etc. One of the key financial concepts is establishing the fair value of goods and services. Knowing how to estimate fair value is important to investors. Our clients must make precise decisions based on quantifiable numbers. Financial knowledge is crucial to these decisions and Beyond Ratings assists its clients to better understand the key contemporary issues on financial markets.

Beyond Ratings adopts proprietary quantitative and qualitative methodologies in order to provide insightful measures of goods and services fair value. The value added of these approaches particularly lie in taking into account a new risk factor: the energy and climate change resilience.