Who is Robert Kagan, and why do markets care?

Robert Kagan is a US historian and policy commentator. He warns that US democratic norms face serious strain, which can raise US political risk. Markets react because policy uncertainty changes earnings paths, risk premiums, and safe-haven demand. Investors translate such warnings into positioning, hedging, and tighter risk controls.

How could US political risk affect German portfolios?

Higher uncertainty can weaken cyclical equities, lift demand for Bunds, and support USD strength. DAX exporters may face currency and demand swings. Banks track spreads and curve shifts. Utilities, energy, and defense can act as ballast. Portfolio hedges, duration buffers, and EUR/USD overlays help manage drawdowns and event risk.

What indicators should I watch into the US election?

Track VIX term structure, SKEW, and equity-bond correlations. Watch EUR/USD, UST-Bund spreads, and liquidity in DAX and S&P futures. Monitor primary calendar dates, debates, and legal rulings. Spiking volatility, wider bid-ask spreads, and funding stress are signals to scale hedges and trim net beta.

How can I hedge Trump election risk efficiently?

Use defined-risk options, such as put spreads on major indices, VIX calls, and measured USD calls. Pair equity exposure with Bunds or Treasuries. Keep position sizes linked to value-at-risk, rebalance near event windows, and roll hedges in three-month cycles. Preserve cash for tactical buys during volatility spikes.

Law and Government

February 19: Robert Kagan’s US democracy warning puts markets on alert

ByHuzaifa Zahoor February 19, 2026February 19, 2026

Robert Kagan warns that US democracy is drifting toward authoritarianism, raising US political risk for global portfolios. German investors are watching how a contested path and Trump election risk could shake investor sentiment, risk premiums, and safe-haven flows. Policy uncertainty often pressures equities, favors USD/Treasuries, and lifts volatility hedges. We explain why Robert Kagan’s remarks matter now, what signals to track in Germany, and how to position with clear timelines into the US election cycle.