Events dear boy, events
It’s a phrase commonly attributed to Harold Macmillan, when asked what most often derails governments or leaders and is one of the most famous lines in British political history, meaning that unforeseen events—not plans, ideology, or strategy—often determine outcomes.
Just ten days ago, Bank of England Deputy Governor Sarah Breeden (and former speaker at RAOEurope. Just saying) delivered a timely and highly relevant speech at the Program on International Financial Systems and Harvard Law School, focusing on whether today’s financial system is sufficiently resilient to absorb a new generation of shocks. Her central message was that markets may be underpricing a dangerous combination of risks: elevated asset valuations, growing fragilities in private credit, leverage outside the banking system, and the possibility that multiple geopolitical and macroeconomic stresses could crystallise at once. (Bank of England)
The speech carries particular resonance in light of the recent assassination attempt on Donald Trump, an event that sharply reminds investors how political violence and sudden instability can rapidly alter market sentiment, policy expectations, and capital flows. Breeden’s broader warning was not about any single event, but about how modern markets react when confidence is tested unexpectedly. In an environment where elections, conflict, and social tensions are increasingly capable of moving markets overnight, her remarks underline the importance of resilience, liquidity planning, and preparedness across the investment chain.
For practitioners, the significance of the speech lies in its challenge to complacency. With equity markets near highs and risk appetite remaining firm, Breeden questioned whether pricing adequately reflects geopolitical uncertainty and structural vulnerabilities. For asset owners, pension funds, insurers and fiduciaries, the implication is clear: this is a moment to stress-test portfolios not only for economic downturns, but for abrupt political shocks and correlated market repricing. (theguardian.com)
Read Sarah Breeden’s full speech here.
