A Black Swan in Gray Feathers?

417

Worries? There are none. Concerns? Not so much.

It is said that financial markets climb a “wall of worry,” but if nobody is worried, is “the wall” relevant? Are legitimate concerns being overlooked? Most people know, or have heard the term “black swan event,” but just in case you forgot;  A black swan event is an extremely negative event or occurrence that is unpredictable and has severe consequences.  How about a “gray swan event?”  A gray swan event is a rare and highly consequential event that, unlike absolutely unforeseen black swan events, can be expected.

So now that we have that settled, everywhere you look (look up) you can see several gray swans flapping their feathers. Ah, BUT one of those beautiful gray swans is really a black swan disguised in gray feathers (black swans like anonymity). But which one?

Certainly one of those gray swans is the situation in the Middle East. Or, to be blunt; the WAR in the Middle East. Every escalation since the October 7th attack has been “ho-hummed” and taken with a grain of salt. Make no mistake, there is a war going on (and don’t forget Ukraine) and the propensity for an error is huge. An oil supply disruption? More U.S. soldiers killed? But we know all these possibilities, right? A black swan hiding in here?

Another one of those graceful gray feathered birds is the economy. We all recognize that the risk of recession is present, but so what. Financial markets can look ahead to the Fed lowering interest rates, creating a “soft landing” and then a strong recovery. This gray swan of potential problems (inflation doesn’t ease, interest rates actually go up, a deep recession, etc.) certainly won’t happen. Will it? What could go wrong? This gray swan is surely NOT the black swan in disguise.

Uh-oh! One of those gray swans has some black feathers sticking out. Could this be THE black swan? An election “postponement?” A migrant “revolt” results in violent clashes around the country, election “dis-information” sparks doubts about a fair election, martial law is declared and the election is “put on hold.” Nah, that could never happen. Even a black swan could not be that diabolical. Or…..could it?!

In the meantime, let the financial markets soar like beautiful gray swans. Maybe there is even a white swan ready to make an appearance. But still……….. black swans tend to pop up when nobody is watching.


Bill Taylor is the CEO of Digital Wealth News and a 40+ year veteran of the financial markets.  You can also ready his weekly musings on BTC, ETH, Gold & SP500 at “The Taylor Market Report“.