2021 has felt full of Grey Swans, from continuing COVID mutations to low rates in the face of high inflation. We therefore continue our tradition of picking Grey Swans for the upcoming year.
Grey Swans are those low-probability, high-impact events that few expect. They are close cousins to Black Swans: high-impact events that no one expects.
Last year, we had picked 10 Grey Swans for 2021. Amazingly, some materialised. Notably, the Democrats won the Senate, and inflation surged. A few almost happened. US yields avoided going negative, but they went much lower than everyone thought. And while we saw no global carbon tax, carbon policy has impacted energy markets. Others failed to appear – China refrained from war over Taiwan, Biden failed to unite America, and we met no aliens (or did we?!).
But the main purpose of Grey Swans is not to be right. Rather, we hope to broaden our perspective on what could happen. This year, we have selected 12 Grey Swans. We will send them daily this week and next. We start with two Grey Swans – one on how pundits being wrong and the US enters a recession in 2022, and the other on how COVID disappears as a serious health risk…
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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