Presenting 100 Years Of Geopolitical Risk

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 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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