What if a PLA jet shoots down a US surveillance plane over the Spratlys?
A PLA jet downing a US surveillance plane with crew killed forces retaliation: VIX +15, Nasdaq -6, crypto-beta first to dump on a casualties-on-both-sides escalation. The 2001 Hainan collision is the analogue, but a fatal shootdown removes the accidental framing and shrinks the diplomatic off-ramp. Transmission is pure risk-sentiment. Forward angle: with US-China relations already adversarial vs. 2001's relative calm, the de-escalation that contained Hainan is far from guaranteed, so size the vol for a longer tail.
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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 (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months 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. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A PLA jet downs a US surveillance aircraft over disputed reefs, killing the crew and forcing retaliation. The trigger decomposes into signed root‑shocks — Geopolitical risk ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.