Trump vs Clinton: Election Scenario Analysis
Months after the UK’s vote to leave the EU (Brexit), prices in risk assets are still swaying from one Article 50 headline to the next. In the US, November 8 presents a similar risk management challenge to market participants because of the outcome of the long-awaited and heavily-contested US Presidential Election.
Not unlike Brexit, the market has once again predicted one outcome as more likely than the alternative, the question of how markets might react, and the subsequent resulting price changes if the unlikely prevails. Below, we present an example of estimates, as we did for Brexit, for either outcome of the vote:
|Asset Class||Clinton Wins||Trump Wins|
|US Bond Prices||-1%||2%|
Please contact Consulting or your TS Imagine representative for help with constructing your own scenario analysis.
The stresses described in this blog post illustrate one possible scenario and are intended to be used in general as guidance towards risk management of market events.
Our most recent interns, Nicholas and Timur, both joined us from Imperial College London where they are going into the third year of their Mechanical and Aerospace Engineering degrees, respectively. They spent 11 weeks working with TS Imagine’s Professional Services team in London this summer under the supervision of myself and Simarjit Johal (Regional Team Lead).
The Dollar Milkshake Theory – Stress Testing the Potential Impact of a Sovereign Debt and Currency Crisis
Stress Tests play an important role in improving financial stability by enhancing market discipline and transparency. Here we consider the third example of these stresses based on current market conditions and show how the risk factors can be generated along with their relevant shock examples.
Since the start of the war in Ukraine, Western nations have imposed sanctions on many Russian individuals, businesses and state-run enterprises. Stress Tests play an important role in improving financial stability by enhancing market discipline and transparency.