What if a policy shock strands fossil assets and pops the carbon bubble?
A stranding policy shock is a demand-side hit to crude and energy equity: Brent leads lower on its Gulf/global weighting, dragging the energy complex and integrated majors, with a downside breakeven pull-through. Closest rhyme is the 2020 oil demand collapse (negative WTI) more than a credit event; using Lehman as the analogue overstates the financial channel. Forward angle: a credible carbon repricing strands reserves gradually, so the credit-spread widening is real but second-order to the equity de-rating.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 3–10 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a mixed shock. A policy shock strands fossil assets, repricing the carbon bubble. The trigger decomposes into signed root‑shocks — Oil supply risk ▼ · Credit spreads ▲ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | Brent crude BRENTon Hyperliquid 📈 chart | Commodity | ▼ -1.8% hist -5.34–+0.29% · other way -3.48% (n=11) |
| 2 | WTI crude CLon Hyperliquid 📈 chart | Commodity | ▼ -1.5% hist -3.75–+0.44% · other way -2.88% (n=11) |
| 3 | Energy sector XLEon Hyperliquid 📈 chart | Equity | ▼ -1.1% hist -2.35–+0.29% · other way -0.63% (n=11) |
| 4 | United Airlines UAL 📈 chart | Equity | ▲ +0.9% hist +0.3–+0.63% · other way +32.78% (n=11) |
| 5 | ExxonMobil XOM 📈 chart | Equity | ▼ -0.8% hist -1.9–+0.4% · other way -0.72% (n=12) |
| 6 | Chevron CVX 📈 chart | Equity | ▼ -0.7% hist -0.98–+0.02% · other way -1.96% (n=12) |
| 7 | Delta DAL 📈 chart | Equity | ▲ +0.8% hist -0.65–+2.37% · other way +21.04% (n=11) |
| 8 | High-yield credit HYG 📈 chart | Rate | ▼ -0.2% hist -0.12–-0.01% · other way -0.28% (n=11) |
| 9 | 30y Treasury yield DGS30 📈 chart | Rate | ▼ -2bp hist -8.47–+1.93% · other way +23.6% (n=12) |
| 10 | Gold XAUon Hyperliquid 📈 chart | Commodity | ▲ +0.2% hist -0.2–+0.74% · other way -1.07% (n=11) |
| 11 | 10y Treasury yield DGS10 📈 chart | Rate | ▼ -2bp hist -6.92–+1.68% · other way +25.5% (n=12) |
| 12 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▲ +0.2% hist -0.23–+0.76% · other way +0.13% (n=11) |
| 13 | 2y Treasury yield DGS2 | Rate | ▼ -1bp model prior · unmeasured |
Probable recommendation
Historical precedent — what analogous events actually did
Across 40 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| BRENT BRENT | SHORT | -3.9% · 5d -3.0% | 74% | 37 | 0.41 | ✓ matches cascade |
| CL CL | SHORT | -2.7% · 5d -2.8% | 65% | 39 | 0.25 | ✓ matches cascade |
| XLE XLE | SHORT | -1.7% · 5d -1.1% | 61% | 39 | 0.19 | ✓ matches cascade |
| US dollar DXY | LONG | +0.9% · 5d +0.3% | 60% | 40 | 0.19 | · |
| 30y yield DGS30 | SHORT | -7bp · 5d +1bp ↺ fades | 60% | 40 | 0.17 | ✓ matches cascade |
| Gold XAU | LONG | +0.6% · 5d -0.4% ↺ fades | 56% | 39 | 0.12 | ✓ matches cascade |
| 10y yield DGS10 | SHORT | -6bp · 5d +1bp ↺ fades | 58% | 40 | 0.12 | ✓ matches cascade |
| NDX NDX | LONG | +0.6% · 5d -0.8% ↺ fades | 54% | 40 | 0.07 | ✓ matches cascade |
| XOM XOM | SHORT | -1.4% · 5d -0.8% | 53% | 40 | 0.05 | ✓ matches cascade |
| DAL DAL | LONG | +1.9% · 5d -0.3% ↺ fades | 51% | 38 | 0.02 | ✓ matches cascade |
| UAL UAL | LONG | +0.1% · 5d -2.7% ↺ fades | 42% | 39 | 0.00 | ✓ matches cascade |
| CVX CVX | SHORT | -0.5% · 5d -0.1% | 49% | 40 | 0.00 | ✓ matches cascade |
| High-yield credit HYG | LONG | +0.1% · 5d -0.1% ↺ fades | 45% | 38 | 0.00 | ⚠ differs |
| Volatility VIX | LONG | +3.0% · 5d +1.2% | 50% | 39 | 0.00 | · |
Why this probability
No precedent for a policy-driven carbon repricing; 2026 politics favor fossil, not stranding. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.