Presenting 100 Years Of Geopolitical Risk

Tyler Durden's picture

While we can track policy uncertainty (and its decoupling from global market risk perceptions)...

 

And we can follow the relative level of "crisis" and the market's complacency of it (risk perceptions collapsing as "crisis" explodes)...

 

Geopolitical tensions, which take many different forms, are however difficult to measure. One proxy for assessing the geopolitical environment is the news-based Geopolitical Risk Index developed by economists from the Federal Reserve Board.

 

And close-up...

Source: Dario Caldara and Matteo Iacoviello, Federal Reserve Board. See also https://www2.bc.edu/matteo-iacoviello/gpr.htm. The index from 1985 on counts the number of articles in 11 US, UK, and Canadian newspapers mentioning phrases related to geopolitical tensions. The index from 1900 on performs the same analysis using the archives of three newspapers, the New York Times, the Wall Street Journal, and the Financial Times. The choice of newspapers for both indices implies a measure of geopolitical risk as covered by the Anglo-Saxon press.

And looking at these charts one can only laugh at the fact that VIX had a 9 handle just days ago?

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MD's picture

Just glancing at VIX vs GPRI over the past 20 years, they seem pretty uncorrelated.  Why would today be any exception?

Relentless's picture

The correlation has inverted

Yen Cross's picture

  Same as it ever was.  It's who you know.

 The euro is so due for a "rectal examination'.

 Maybe Barclays or Belgium will fill the gap?

  Banks chasing stops for 5 pips??? How pathetic !

Mr 9x19's picture

it is all said with the other article about digitalized slavery. this circus is digital, what did you expect....

 

fuck it, keep stacking, time will tell.

 

 

meta-trader's picture

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Yen Cross's picture

 If everything is so awesome, why is usd/chf with 100- snb basis points being sold? The snb selling $usd and buying eur/usd much?

vesna's picture

Demit, for the first time since 1990 vix is under gpri. New normal? New abnormal!

The only explanation I see is that Central banks via their subsidiaries already own the majority of world markets captialization.

Deep Snorkeler's picture

The Pentagon still cannot account for $8 trillion in spending,

according to the Defense Dept Inspector General's report

of July 2016.  This is the largest case of corruption in human history.

 

romanmoment's picture

These graphs clearly demonstrate that the world was much safer when Seinfeld was on each week.  

whatisthat's picture

I would observe a key correlation not depicted or discussed for data listed in this post "is the corrupt establishments and media and global government entities which contribute more negative significant impact to Geopolitical risk factors than all other events combined"..