Political risks and uncertainty: Are the tails bigger than the core? – TDS

In view of the analysts at TDS, the rising popularity of anti-establishment movements and candidates in 2016 sparked higher-than-average political risks and hence outsized market volatility. 

Key Quotes

“Usually reliable predictive tools like polling and betting markets have fallen woefully short of reality, and so political risk-led market volatility is likely to continue throughout 2017.”

“Market: We like owning parity puts in EURUSD and GBPUSD to hedge rising political risks in Europe. The US election should emphasize some diverging idiosyncratic risks in EM, which we express by means of a short ZARRUB positions with target of 3.50 and stop at 5.1350.”