Top of the agenda for conceptualizing political risk in the year ahead is the great unknown represented by President Trump. Having begun his first hundred days and with his cabinet in place, his legislative agenda is now expected to take shape beyond the populist but often unrealistic policy promises made during his campaign. Whether he will be able to enact this agenda, despite the Republican sweep of Congress – particularly in terms of foreign policy realities, the global economic repercussions of an isolationist United States, and the domestic protectionist framework in which he has couched his proposals – is the question that will dominate the risk forecast this year.
Buy low, sell High
As if the campaign had not sufficed to vent his inner id, Mr Trump’s penchant for reckless statements is unlikely to be tempered by the decorum of the office he has assumed. At least, initially. An indication of the risk associated with his sheer temperament was a story late last year that vigilant Wall Street traders and hedge funds are developing trade algorithms to parse through his tweeting. This followed tweets he had issued on slashing funding for the Lockheed Martin F-35 fighte jet program (a central component in the planned overhaul of America’s nuclear triad) – causing the company to lose $4 billion in value – and Boeing’s stock taking a dive after he announced that the cost of Air Force One was too high. This was either instinctively rash or disingenuously populist, but it was a portent of things to come in the ‘Twitter presidency’ (Lockheed Martin CIO Christopher Li promised to re-negotiate costs).