9 Grey Swans for 2019

Black swan events are ones that are out of the realms of possibilities at least as envisaged by market participants. For 2018, perhaps the only black swan event was the US-North Korean peace summit in June. As far as I could tell – no one was remotely thinking that was possible at the end of 2017. As for the other outsized moves of 2017, such as the EM FX sell-offs, VIX spike and equity sell-offs, these were grey swans – they were risks that many had highlighted, but turned out to materialise in a much more extreme fashion than expected.

So what grey swans are possible in 2019? This year, we try to provide some “positive” grey swans as well to provide some balance against the pessimistic ones. None of these are our base case, and instead are more an exercise in forcing us to think outside our usual base scenario-risk modes of thinking.