WARNING: This article is rated PG-13. It is NOT meant to be political and may best be read with a cold bottle of vodka nearby (or whatever your choice).
If you don’t know (or remember) what a gray swan event is, here’s a quick reminder: A gray swan is an event that is known and possible to happen, but which is assumed to be unlikely to occur. In other words, it is something that is right ‘under our noses’ but totally ignored or overlooked.
OK, while we’re at it, let’s remember what a black swan event is: A black swan event is an extremely negative event or occurrence that is impossibly difficult to predict. In other words, black swan events are events that are unexpected and unknowable. And scary.
There are certainly a lot of gray swans circling potential “events” around the globe. My goodness. Gray swans have been spotted over Taiwan, North Korea, Ukraine and of course the Middle East. True to the definition of a gray swan event, all these are known and may or may not become a significant financial concern.
But the biggest gray swan has cast its shadow right here in the U.S. The big gray bird is circling over the November elections…….or, lack of an election. That’s where the gray swan may actually be a black swan. Sure, everyone knows there may be some “rough patches” on the way to the final voting. Will Trump be in jail? Will Biden survive a stumble and fall? That’s the “gray” part. We all know the election will be “rough,” but it’s going to be OK (?).
Really? It appears the war between Israel and (pick) Hamas, Hezbollah, Iran or all of the previous, is being fought on the streets of America. The protests are sure to become larger and more violent over the summer. The rhetoric between the two political parties is heating up, meaning the stakes for this election (meaning power) are huge. Chaos is growing. It’s all here and from a bird’s (swan’s) eye view, the situation is turning a gray swan’s feather………black.
Suppose the chaos and fiery rhetoric causes the White House to call up the National Guard and “postpone” the elections citing an inability to ensure a “fair and safe” voting environment? Meaning, martial law. That’s a black swan event.
Financial markets would certainly be closed if that occurred, as would some banks. That’s a black BLACK swan event.
Then what?? THAT’S a BLACK, BLACK BLACK swan event.
So, be careful of gray swans in black feathers. If you say it will never happen…….that’s a black swan event.
Bill Taylor is the CEO of Digital Wealth News™ and AI & Finance™ and a 40+ year veteran of the financial markets. You can also ready his weekly musings on BTC, ETH, Gold & S&P500 at The Taylor Market Report.
