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FIVE BLACK SWANS FOR 2026: WHAT BCA THINKS INVESTORS NEED TO KNOW

BCA Research's 2026 outlook suggests that "black swan" events, once rare, are now at the forefront for investors.

President Trump's threat of tariffs against Europe and threat to seize Greenland triggered a bout of volatility in which U.S. stocks, bonds, and the dollar fell together. On January 21, he reversed course.

BCA highlights five major threats: a global oil shock from Iran, a Chinese tech breakthrough, Chinese power projection, Russia-NATO conflict, and a potential U.S. exit from NATO.

Iran’s domestic unrest, combined with limited spare capacity at OPEC and among Russian producers, means any disruption to Iranian or Iraqi supply could push oil prices sharply higher. BCA estimates a 38% probability of a major supply shock, warning of spillovers to global markets, bond yields, and recession risk.

China’s drive for tech self‑sufficiency is also reshaping global competition. The launch of DeepSeek AI showed China can rival U.S. tech leaders even without advanced Western chips, threatening the pricing power and elevated valuations of non‑Chinese firms, BCA says.

Greater tech independence could also embolden Beijing’s foreign policy, raising pressure on Taiwan. Any major conflict would unite the West, disrupt electronics supply chains, and deliver a heavy economic blow—particularly to the U.S., which relies on Taiwan for about 20% of its electronics output.

Meanwhile, Russia’s aggressive posture and strains in U.S.–NATO unity increase the risk of direct conflict. A sharp escalation of U.S. support for Ukraine under Trump—through advanced weapons, intelligence and funding—would represent a black‑swan outcome.

Finally, BCA warns that a U.S. withdrawal from NATO would trigger severe security and market disruption. Europe buys roughly 31% of U.S. exports and holds about 40% of foreign‑owned U.S. debt, though exposure extends more broadly, with foreigners overall holding 26% of U.S. debt securities.

With these converging risks, BCA recommends that investors stay "overweight" on U.S. and emerging market-excluding-China equities until China's outlook improves.

(Kanishka Ajmera)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)