6/12/18: When it comes to geopolitical & socio-economic anxiety, Europe's problem is European

Europe is a sitting duck for major geopolitical risk, but the U.S. is getting there too:

And volatility surrounding the uncertainty measure is also out of line for Europe, both in levels and trends:

Just as the Global Financial Crisis in Europe was not caused by the U.S. financial meltdown, even if the latter was a major catalyst to the former, so is the current period of extreme policy anxiety and instability is not being driven by the emergence of the Trump Administration. Europe's problem seems to be European.

4/9/16: Some Points on Russian & European Policy Uncertainty Trends

With some positive (albeit very weak still) changes in the Russian macroeconomic news in recent months, it is worth looking at the evolution of trends in Russian policy uncertainty, as measured by the http://www.policyuncertainty.com/ data.

Here is an updated (through August 2016) chart comparing news-based indices of policy uncertainty in Russia and the EU

Note, series above are rebased to the same starting point for the EU and Russia (to 1994 annual average) to make them compatible.

Things of note:

• Russian policy uncertainty continues to trend below that of the EU
• The above conclusion is also confirmed in raw data 3mo averages and 3mo exponential moving averages
• This is nothing new, as general policy uncertainty has been systemically lower in Russia than in Europe since the peak of the Russian Default crisis of the late 1990s, with exception for two episodes: brief period in 2006-2007 - the starting point of Russian-Georgian trade and migration pressures; and 2014-2015 period - marked by first economic slowdown in the early 2014, followed by the Russian-Ukrainian conflict and the Ruble crisis
• Generally, the EU continues to show growing trend divergence with Russia when it comes to policy uncertainty, despite the more moderation in the underlying series since the end of the latest spike caused by the Greek crisis earlier this year (IMF participation and Tranche 2 disbursement)

It is worth noting that, despite a rise in the U.S. uncertainty index due to the ongoing election cycle, the U.S. comparatives are similar to those of Russia, as opposed to the EU. 

23/2/15: Russian Policy Uncertainty Environment Moderated in January

January 2015 saw some easing in the overall policy uncertainty environment in Russia, based on the Policy Uncertainty Index that fell to 197.8 in January 2015 from 305.7 in December and down 22.6% y/y. The index is down 12.3% on the current crisis period average (January 2014-present)

You can see index methodology and get data here: http://www.policyuncertainty.com/russia_monthly.html

15/11/2014: Emerging Markets Rot Drives Russian Economic Uncertainty

Some interesting data from the Policy Uncertainty Index for Russia (see http://www.policyuncertainty.com/russia_monthly.html). I traced out the main news markers over the period covered by the index (click on the chart to enlarge):

Note: higher values of Index, greater attention to the domestic economic and economic policy uncertainty in the media.

There is a clear pattern of rising policy uncertainty from, roughly speaking, early 2008, with both geopolitical risks (Georgia conflict) and economic risks (the 2009 recession) as well as internal political risks (2012 elections) all coincident with amplification in uncertainty. Ukraine crisis period is clearly only comparable in uncertainty with the last Yeltsin elections (which almost lost to the Communist Party candidate).

Volatility in uncertainty has also been on the rising trend, since, roughly, 2009 (note: the chart below is plotting 24mo MA):

However, it is worth correcting in the above data for the general global changes, not just Russia-own trends. To do so, let's take a look at Russia's Policy Uncertainty Index relative to the average of the same indices for China and India:

Notably, Russia's relative uncertainty has peaked around April-May 2014 and then subsided despite the fact that Ukraine conflict remains active. This suggests that post-May 2014, the acceleration in the rising trend in Russian economic and policy uncertainty is driven more by the general rot setting in in the Emerging Markets, and less by the geopolitical crisis.

Here is a chart plotting Policy Uncertainty Indices for the U.S., Russia, China and India:

This further confirms the above proposition: China is now showing levels of policy uncertainty on par with those in Russia. Geopolitics take a back seat to economics of the Emerging Markets slowdown.

26/10/2013: Confidozac Failing to Cure Euro Area's Policy Risks

While the euro leaders are happily slipping into dream-like state of amnesia, engaging in esoteric discussions and debates about the US spying scandals, wasting summit time on chatter and fluffing of feathers, the region's trials are not going away.

Debt overhangs remain persistent in the public, non-financial corporate and households domains; incomes remain stagnant and declining in real terms; unemployment is sky-high; deficits are sky-high; lending is stuck in 'reverse' gear; depositors are getting taken for a ride by the banking system malfunctions; and so on... Aggregate levels of uncertainty/risk in the system are not abating back to the levels of pre-crisis bliss, no matter how much intensive Positiviagra, Hopium and Confidozac have been pumped into the airways...

Proof?

Source: Scott Baker, Nicholas Bloom and Steven J. Davis at www.PolicyUncertainty.com

Higher numbers above imply higher uncertainty. September is showing reversion to trend, up... Good news is that we are on downward trend. Bad news is that we've been in these 'false bottoms' before (Q3 2009 and Q4 2010-Q1 2011). Worse news is that the we are nowhere near the levels of uncertainty that we've reached at the peak of 2000s recession and dot.com bust, let alone the levels of 'normalcy'.