Internal R&D · living plan · inferno

The Earnings Transformer

status: research → corpus-design · last updated 2026-08-05 · not investment advice · internal only

The dream, stated plainly: build a point-in-time dossier of a company before an earnings call (or any event), pair it with the realized post-event return, and train a transformer on that corpus to predict the reaction. The whole bet rests on one idea — that markets price the change in expectations about the future, so the features have to capture forward posture, not just what a company already did.

01 · The thesis

Markets price the delta off the bar

Last quarter's numbers — the beat, the margins — set the bar. The stock moves on the delta off that bar: raised guidance, an expansive tone, a capex commitment, a "we're in talks to…". A great past with a cautious future falls; a good past with an expansive future runs.

🔀 The natural experiment. Amazon and Apple printed the same week, both with strong quarters — identical backward line. Amazon talked up AI capex paying off and more coming; Apple talked chip-cost pressure and a bleaker margin path. Opposite forward posture → opposite reactions. That divergence isn't noise; it's the mechanism, and it's what a backward-only feature set can never see.

02 · The pre-announcement fingerprint

What a company looks like the week before it reports

Freeze a company as-of the day before its call and read it across a handful of PIT dimensions. Worked example — Applied Materials (AMAT), frozen 2026-08-05, reports ~08-13 (semis-equipment: a pure forward-narrative name that also gets read-through from every chip name that already printed):

DimensionReading (PIT as-of 2026-08-05)
Track recordbackward Beats own trend 7 of 8 quarters; latest SUE +1.44, revenue SUE +2.31; sue_trend −0.12 (slightly decelerating)
Reaction patternPEAD base-rate Sell-the-news, then grind up — recent beats printed negative day-1 (−14.3%, −6.5%) yet the 41-day drift after a positive SUE is +1,329 bps. The print is a poor guide; the drift is the signal.
Forward wordstheir own filings Expansive but hedged. Hard guide: "grow our semiconductor equipment business over 20 percent this calendar year" · secular: "large-scale adoption of AI will drive substantial investment… in the years ahead." But the latest 10-Q hedges: "the timing and amount of investments by our customers related to AI… is difficult to forecast."
Insider postureForm 4, discretionary Lightening into it — net −$170M discretionary, 5 C-suite sellers (CEO $105M), zero buyers, not 10b5-1 (partly monetizing a big run)
Tape read-throughnews / peers Cautious near-term"Micron, SK Hynix stocks sink as AI chip sell-off deepens" (07-28); a cyclical air-pocket against the secular story

The read: a structurally strong, secularly-favored name whose forward posture is expansive-but-hedged, that reliably dips on the print and drifts up after — walking in with insiders trimming and a wobbly chip tape. The whole setup is one tension: secular AI-capex bull vs cyclical wobble. That tension is the pre-announcement state.

03 · Two discoveries that change the plan

The hard parts are already half-built

Assembling the AMAT fingerprint from tools that already exist surfaced two things that turn "research project" into "data-assembly job":

Discovery 1 · 2026-08-05

The "excited vs cautious" layer already exists as classifiers

Every forward sentence AMAT filed fired ARGOS classifiers — is_backlog_building is_demand_accelerating is_deal_size_increasing versus is_customer_spending_declining is_demand_softening is_bookings_deceleration. Those are directional forward-posture tags, cooked across ~8,000 companies. We don't build sentiment from scratch — we aggregate them into a posture score per filing, PIT. The expansive-vs-cautious delta is already in the data.

Discovery 2 · 2026-08-05

The label lives in the same tool as the features

earnings_surprise_history returns the pre-event fingerprint (beat rate, SUE, posture) and the realized abn_drift_41_bps that follows — PIT-validated (+106 bps, t 5.9). So a training pair is: freeze the as-of-T-1 fingerprint → label = the drift after. Loop over (company, quarter) and the corpus writes itself.

04 · The data & compute stack

Assembled, and nothing's blocking it

narrow
signals :9300
lexical: ticker / phrase / date / PIT → parquet on S3
embed
our GPUs
vortex 3×3090 · e5 on the AMD boxes = the semantic layer
assemble
PIT fingerprint
filings + classifiers + insider + drift base-rate
train
transformer
nanochat / ROCm · pair with realized drift
argos filings features

semantic_search nails a company's own forward words cleanly; classifiers = the posture tags (Discovery 1).

earnings_surprise_history features + LABEL

Beat rate, SUE, PEAD drift base-rate — and the realized abn_drift_41 label (Discovery 2).

insider_signal positioning

Discretionary buy/sell breadth into the print — the "5 C-suite sold, 0 bought" tell.

signals corpus news / read-through

14.6M rows via tunnel; lexical is noisy for concepts → we embed a narrowed slice. Precise for phrases ("in talks to acquire").

MARS graph linkage

Commercial / relational edges — read-through a supplier's print onto a customer; forward statements mint the edges.

05 · PIT / leakage discipline — non-negotiable

Two ways to poison the corpus, both guarded

06 · The log & next steps

Forced, falsifiable, scored

Every call is stamped as-of, direction + confidence, logged, then scored against the realized reaction. The scored log is the training corpus.

Next steps, in order:

Open risks: overfitting the past (out-of-sample discipline); the analyst-consensus gap ("beat" = own-trend, not Street — a known hole); news lexical noise (needs our embeddings); corpus coverage holes (specialist trade press thin).

THE EARNINGS TRANSFORMER — living plan, maintained by inferno. Built from the MARS entity graph + argos filing/insider/surprise tools + the signals news corpus (via SSH tunnel to proc2:9300), point-in-time. Worked example (AMAT) is illustrative of method, not a recommendation; a beat/miss and the stock's reaction are different things. "Beat" = above a company's own seasonal trend, not Wall Street consensus. Not investment advice. Internal — not for external distribution.