Local economic-analysis firm fields employees worldwide to forecast bonds, currencies

BOULDER ? Action Economics may be a virtual company, but it is making a very concrete impact on banks and brokerage houses around the world. The Boulder-based company is leveraging the immediacy of the Internet to provide analysis of the bond and currency markets in real time to its customers.

?We don?t do policy analysis,? explained Michael Englund, the principal director and chief economist for Action Economics LLC. ?Our business is entirely to glean from speeches by officials or economics releases what that information means for the economy, bond prices and exchange rates. It is really a focus on anticipating and understanding the risks in different financial instruments.?

To that end, the company?s team of about 22 economists and analysts work on producing what Englund calls ?highly actionable commentary? regarding the bond and currency markets specifically.

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?Everything we write is intended to direct a trader to a position and to give them a feel for what data might mean for their market,? Englund said.

The company?s scrutiny of current events and their impact is delivered by means of daily e-mail bulletins as well as a user-friendly, real-time Web site. The service, which costs $350 per month for a single screen, is sold to banks and brokerage houses in global financial centers such as New York, London, Hong Kong and Singapore. The White House?s council of economic advisors even recently inquired about a subscription, Englund said. The Federal Reserve and Treasury Department are already subscribers.

?Comments get posted every few minutes on different pages telling people in the trading community how to interpret data and speeches by central bank officials to determine whether bond prices are likely to go up or down and whether currency movements are likely to occur,? Englund said.

Englund, just one of a whole team of experienced and respected economists, has a doctorate in economics from the University of California at Berkeley and spent a year studying at the London School of Economics. He has more than 20 years of experience in this kind of analysis, gained by working as a chief economist for MMS International, which later was purchased by Standard & Poor?s, the market research company.

After MMS was sold to a competitor, Englund and several colleagues left to establish Action Economics as a premium service to provide fundamental and technical analysis of financial instruments. His first idea was to decentralize the company.

?I live here in Boulder, but we recruited people from around the world to join Action Economics. It is a virtual team, and they are really spread out in various financial centers so we are actually quite dispersed,? Englund said.

While there are three economists here in Boulder as well as a legal and accounting firm on contract, everybody else in the company works from home. High-speed Internet access allows analysts to work from virtually any location around the globe. The company?s analytical team includes staff in California, New York, Toronto, London, Tokyo, Sydney, and Hong Kong, among other financial centers.

?What we have found by going virtual and also by outsourcing some work is that there is quite a global community prepared to do business in this way. We have found that it is easier to run a virtual company than some large companies might think. There is a global network of people out there who are prepared for this idea, and it appears we are not alone,? Englund said.
The company?s product quickly has become an essential tool for market makers, and the subscription base for the analytical service has swelled to 350 since the Web site was launched this time last year.

?A subscription-only Web site can be a complicated process, so we are quite happy to have built up our client base this fast,? Englund said. ?As we add volume and depth, it becomes more of a must-have to banks and brokerage houses. Some of the trading floors in New York have 500 people, so really it?s matter of not pushing to sell just one subscription but to sell a couple of hundred to a single customer.?

The Action Economics team, however, is very careful about remaining independent and objective, Englund said. None of its employees is associated with any financial institutions or takes speculative positions in the markets.

?We have been in the business for a couple of decades, and bond and currency traders have always been very focused on independent research. The results over the past five or six years in the equity market seem to have reinforced the position that you need independent research and not research linked to the banks or brokerage houses,? Englund said.

Englund?s next goal is to take the site?s impact even further by adding analysts to expand coverage of Europe and Asia.

?Right now we really focus on providing global analysis to the United States and Canada, so the majority of our real-time commentary is most active during U.S. hours. We are pushing to make the product a truly 24/7 product with similar volumes of updates occurring through Asian and European trading by this time next year,? Englund said.