FED Speech Dovish Long Em
In plain terms
This family tests a hypothesis: when a Fed official's speech scores unusually positive on Loughran-McDonald tone (read as dovish), emerging-markets stocks (EEM, China internet, LatAm names) may rally for 1-2 weeks on softer-USD expectations. No academic paper documents this exact strategy; the backtest harness is the evidence.
How it works
Hypothesized (composite thesis, not a paper replication): when a Fed speech's Loughran-McDonald tone score z-scores high vs the trailing 365d Fed-speech distribution, softer-USD and rate-cut expectations lift EM-exposed equities over the following 5-10 trading days. Dovish Fed -> softer USD path -> EM currencies firm -> EM corporate earnings translate upward. Caveat: the "high LM-positive tone = dovish" mapping is a heuristic, not a validated hawkish/dovish classifier; no published effect size exists for this strategy, the harness is the evidence.
Data dependencies
- Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
- Fed speeches
A data feed this strategy reads, refreshed on its normal schedule.
Expected edge
- Reported return
- +1-3% over 5-10d
- Tested over
- T+1 to T+10d
No published effect size (uncited composite thesis); harness-validated only. The former "+1-3% over 5-10d (BHL 2013)" claim was unsupported by the cited paper and removed in the 2026-07-04 paper-fidelity audit.
Example tickers where this is likely to fire
Illustrative only, the signal fires based on the live data, not a fixed list.
Related families
Hawkish Fed speech → SPY/QQQ drift down 1-3 days.
Stocks reliably drift up in the ~24 hours before scheduled Fed rate announcements. This family buys a rate-sensitive basket (long Treasuries, REITs, high-multiple growth tech) 1-3 trading days before each scheduled FOMC announcement and exits at the announcement-day close.
The 24 hours before each scheduled Fed announcement, the market drifts up ~0.5% — one of the cleanest known anomalies, especially on press-conf meetings.
Explore FED Speech Dovish Long Em on alphactor.ai
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