What if China sinks a Philippine ship in the South China Sea?
A treaty-test sinking bids VIX +13 and drags the semi complex (TSMC/Nvidia/ASML) on contagion fear from the adjacent Taiwan risk, not direct supply loss. Rhymes with the 2024 Second Thomas Shoal clashes — regional FX and Asian equities wobbled then recovered as no US kinetic response followed. Transmission: the Philippines is a minor trade node but the US treaty obligation is the real tail; markets fade shoal skirmishes quickly, so this is a sentiment dip — the durable trade only triggers if Washington is forced into direct involvement.
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 1–3 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 risk-off shock. China sinks a Philippine vessel seizing a contested shoal, triggering a US treaty test. The trigger decomposes into signed root‑shocks — Geopolitical risk ▲ · Semiconductor supply risk ▲ · Trade tension ▲ — 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 | Volatility (VIX) VIXon Hyperliquid 📈 chart | Vol | ▲ +12.6% hist +2.79–+10.91% · other way -1.95% (n=12) |
| 2 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -5.5% hist -3.08–-1.39% · other way -0.12% (n=12) |
| 3 | Tech sector XLK 📈 chart | Equity | ▼ -3.8% hist -2.41–-1.39% · other way +0.3% (n=12) |
| 4 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -3.4% hist -2.36–-1.01% · other way +0.99% (n=12) |
| 5 | TSMC TSMon Hyperliquid 📈 chart | Equity | ▼ -3.0% hist -3.82–-0.12% · other way +1.17% (n=12) |
| 6 | Nvidia NVDAon Hyperliquid 📈 chart | Equity | ▼ -3.0% hist -2.57–-0.45% · other way +3.31% (n=12) |
| 7 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -2.7% hist -2.73–-0.47% · other way +1.39% (n=12) |
| 8 | ASML ASMLon Hyperliquid 📈 chart | Equity | ▼ -2.2% hist -3.68–+0.31% · other way -1.38% (n=12) |
| 9 | AMD AMDon Hyperliquid 📈 chart | Equity | ▼ -2.3% hist -1.49–-0.72% · other way -2.76% (n=12) |
| 10 | Broadcom AVGOon Hyperliquid 📈 chart | Equity | ▼ -2.3% hist -1.53–-0.53% · other way +5.2% (n=12) |
| 11 | Micron MUon Hyperliquid 📈 chart | Equity | ▼ -2.3% hist -3.73–+0.27% · other way -2.25% (n=12) |
| 12 | Marvell MRVLon Hyperliquid 📈 chart | Equity | ▼ -2.3% hist -1.96–-0.49% · other way -0.68% (n=12) |
| 13 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -2.0% hist -2.26–+1.51% · other way +7.5% (n=12) |
| 14 | Qualcomm QCOMon Hyperliquid 📈 chart | Equity | ▼ -1.6% hist -3.46–+0.48% · other way -3.71% (n=12) |
Probable recommendation
Why we may diverge from history
Trust the cascade short on AVGO/MSTR: +10-13% history is entirely April-2025 tariff-truce-rebound windows — one regime, not a South China Sea chip shock; the realized print is regime, not channel.
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 |
|---|---|---|---|---|---|---|
| ETH ETH | SHORT | -6.8% · 5d -6.4% | 73% | 23 | 0.36 | ✓ matches cascade |
| CNY CNY | SHORT | -0.6% · 5d -0.3% | 67% | 29 | 0.33 | ✓ matches cascade |
| NVDA NVDA | SHORT | -1.1% · 5d -3.4% | 69% | 29 | 0.26 | ✓ matches cascade |
| TRY TRY | SHORT | -1.0% · 5d +0.6% ↺ fades | 66% | 28 | 0.25 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -4.2% · 5d -3.8% | 65% | 27 | 0.23 | ✓ matches cascade |
| KRW KRW | LONG | +0.2% · 5d -0.3% ↺ fades | 63% | 28 | 0.22 | ⚠ differs |
| NDX NDX | SHORT | -0.5% · 5d -1.2% | 64% | 35 | 0.21 | ✓ matches cascade |
| AUD AUD | SHORT | -0.7% · 5d -0.4% | 61% | 28 | 0.18 | ✓ matches cascade |
| BABA BABA | SHORT | -1.0% · 5d -2.7% | 60% | 27 | 0.17 | ✓ matches cascade |
| SOL SOL | SHORT | -6.8% · 5d -8.0% | 62% | 15 | 0.16 | ✓ matches cascade |
| INTC INTC | SHORT | -2.4% · 5d -1.8% | 58% | 37 | 0.16 | ✓ matches cascade |
| LMT LMT | LONG | +3.1% · 5d +0.7% | 59% | 39 | 0.16 | ✓ matches cascade |
| JPM JPM | LONG | +1.2% · 5d +0.0% | 60% | 37 | 0.15 | ⚠ differs |
| TSM TSM | SHORT | -2.1% · 5d -2.7% | 59% | 30 | 0.14 | ✓ matches cascade |
Why this probability
SCS collisions frequent; lethal sinking triggering treaty test rarer but plausible over 3yr. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.