Following a year when it almost became the norm, rather than exception, to expect the unexpected, it’s anyone’s guess as to what will happen in markets in the year ahead.
It’s another year when uncertainty remains elevated, not that it seems to matter much to markets at this particular point in time.
Keeping with the theme of 2016, Barclays commodities research team of Michael Cohen, Dane Davis, Nicholas Potter and Warren Russell, have comprised a list of just some of the black swan events that could have an impact on commodity markets.
Here it is:
It’s an interesting list, with some outcomes seemingly more likely to occur than others, particularly the rhetoric heard from US president-elect Donald Trump during the presidential campaign.
And, of course, his prolific use of Twitter since winning the November 8 election.
Indeed, Barclays says that when it comes to potential shocks for financial markets in the year ahead, politics are likely to matter just as much as economics.
“Investors will have to balance the risks of unforeseen macroeconomic shocks and their effect on demand (bearish price) with potential geopolitical shocks disrupting the supply side of the market (bullish price),” they wrote.
Based on the makeup of the list, the bank say that the risks, in general terms, are skewed to the upside in 2017, primarily due to a high likelihood of disruption risk.
“We see demand side events as being less likely, but having more impactful structural impacts on the market compared to the supply side,” they wrote.
“Watch these spaces: China, Russia, the Middle East and Turkey are likely to surprise the commodity complex in 2017.”
While a black swan, by its very definition, is something deemed to be a random event and almost impossible to predict, it’s always interesting to see what others believe are potential surprises that could impact financial markets in the period ahead.
This list is no exception.