Socialist President Seen as 2020 Black Swan Risk at BNP Paribas Event

(Bloomberg) -- Investors and experts at a BNP Paribas event who discussed black swan risks that could spook markets flagged one that has yet to be priced in: The chance a socialist candidate will take the White House in 2020.

That’s according to the firm’s Senior Multi-Asset Specialist Mark Howard, who summarized takeaways from the event to reporters on Wednesday. Howard said a higher-than-expected likelihood of a socialist president was considered an underappreciated risk. That may shift later this year, he said.

“There may be complacency in the markets about political risk,” he said. As the final quarter of the year approaches, “that may be a factor driving risk sentiment and positioning portfolios.”

Other risks included a lack of experience at the White House after a string of “significant departures,” he said. The administration may face challenges in the event of a high-stakes event or tragedy -- like a Hurricane Katrina -- which could define President Trump’s time in office.

Howard noted that investors had seen strength in the first nine months of 2018 until “the wheels fell off” and markets plunged.

Nikki Haley, the former U.S. ambassador to the United Nations, served as a keynote speaker at the bank’s Global Markets Americas Conference, which took place this week in New York.

To contact the reporter on this story: Sydney Maki in New York at smaki8@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Will Daley

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