Modeling stress scenarios that take into account the geopolitical outcome of a new administration always involves some level of uncertainty.
The continued public admiration between Trump and Putin in the face of US intelligence reports accusing Russia of interference with the US presidential election and the mystery surrounding the National Security Advisor Michael Flynn’s resignation raises potential risks and uncertainty to an entirely new level.
Given the alarming pace of activity from the new administration (see Part 1) it is imperative to consider possible risk scenarios that may disrupt capital markets and adversely impact investment strategies. Albeit this is no easy task given the plethora of alternative facts, policy confusion and the mounting Flynn Fallout.
Trump’s unpredictable nature has the potential to trigger a Black Swan event that is difficult if not impossible to model. However, we can look toward established narratives to create scenarios that are within the realm of expected outcomes and therefore more readily modeled.
We attempt to gauge the likelihood of a range of possible scenarios occurring by relying on the wisdom of crowds and asking our readers to assign a probability (low to high) for each scenario. Results of this survey will be shared in the next post.
today for a demonstration