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Derivatives are unregulated, so no one can be sure how widely a big or unexpected default would reverberate through the system.
Buoyed by the recovery in world stock markets, Switzerland's largest bank, UBS, reported a better-than-expected fourth-quarter profit, despite losses incurred in the unexpected default of the Erb Group, a Swiss conglomerate.
Additional components or scenarios may also include other stress factors that may not necessarily be directly correlated to macroeconomic or financial assumptions but nevertheless can materially affect companies' risks, such as the unexpected default of a major counterparty.
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"If you have some unexpected defaults or surprises in the economic data, you have a very fragile investor base that would think about pulling back".
A new popped financial bubble could easily end in monetary chaos — uncontrolled inflation or unexpected sovereign defaults.
This is not unexpected, because by default CPLEX does not solve the scheduling model to complete optimality.
In turn, this may be caused by QE, which has seen central banks buy government bonds and pushed traditional investors into buying corporate debt.So it would be possible to make a bearish case for corporate debt in 2014, if Fed tapering caused a sharp rise in government bond yields or if a slip into recession caused an unexpected surge in defaults.
While not unexpected, Russia's recent default on its domestic and Soviet-era foreign debt did the Kremlin's credibility no good.
We learned from wealth management institutions that allocate the pools into their high net worth accounts that in some cases interest rates have been lower than promised, due to unexpected pick-up in defaults.
If defaults rise to unexpected levels, the swap sellers could be hard-pressed to make good on their promises.
Creative thoughts happen when existing ideas are able to fuse together in fresh ways, and the best of them often come about at unexpected moments when your brain's "default network" – associated with mind wandering – is allowed free rein.
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com