What if China declares an inspection zone in the Taiwan Strait?
A Beijing-declared Taiwan Strait inspection zone is the cleanest tail in the book: VIX +16%, a ~7% Nasdaq drawdown and a TSMC repricing as the single point of failure for global advanced chips comes into question. Rhymes with the Aug-2022 Pelosi-visit live-fire drills (a dress rehearsal) escalated toward a quasi-blockade. Taiwan anchors >90% of leading-edge supply; the forward angle is markets have never priced an actual interdiction, so realized vol could overshoot even this - and TSMC's -4.3% may understate a genuine quarantine.
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 6–18 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. 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. Beijing declares a Taiwan Strait inspection zone, forcing global carriers onto longer Pacific routes and spiking war-risk premiums. The trigger decomposes into signed root‑shocks — Geopolitical risk ▲ · Risk appetite ▼ · Semiconductor supply risk ▲ — 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 | ▲ +15.8% hist +2.4–+13.73% · other way -2.31% (n=12) |
| 2 | Nasdaq 100 NDXon Hyperliquid 📈 chart | Index | ▼ -6.8% hist -3.35–-1.62% · other way -0.05% (n=12) |
| 3 | TSMC TSMon Hyperliquid 📈 chart | Equity | ▼ -4.3% hist -3.98–-0.7% · other way +1.64% (n=12) |
| 4 | Tech sector XLK 📈 chart | Equity | ▼ -4.6% hist -2.81–-1.49% · other way +0.37% (n=12) |
| 5 | Semiconductors SMHon Hyperliquid 📈 chart | Equity | ▼ -4.1% hist -2.51–-1.28% · other way +1.4% (n=12) |
| 6 | Nvidia NVDAon Hyperliquid 📈 chart | Equity | ▼ -4.0% hist -2.96–-0.88% · other way +4.13% (n=12) |
| 7 | S&P 500 SPXon Hyperliquid 📈 chart | Index | ▼ -3.7% hist -3.46–-0.84% · other way +1.35% (n=12) |
| 8 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -3.6% hist -3.62–+2.11% · other way +8.12% (n=12) |
| 9 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -3.1% hist -9.07–+0.98% · other way -17.76% (n=11) |
| 10 | ASML ASMLon Hyperliquid 📈 chart | Equity | ▼ -3.0% hist -4.66–+0.3% · other way -0.91% (n=12) |
| 11 | AMD AMDon Hyperliquid 📈 chart | Equity | ▼ -2.8% hist -1.61–-0.76% · other way -2.72% (n=12) |
| 12 | Broadcom AVGOon Hyperliquid 📈 chart | Equity | ▼ -2.8% hist -2.06–+1.18% · other way +5.76% (n=12) |
| 13 | Micron MUon Hyperliquid 📈 chart | Equity | ▼ -2.8% hist -4.5–+0.22% · other way -1.7% (n=12) |
| 14 | Marvell MRVLon Hyperliquid 📈 chart | Equity | ▼ -2.8% hist -1.89–-0.67% · other way -0.28% (n=12) |
Probable recommendation
Why we may diverge from history
Trust the cascade short on MSTR: +11% history is BTC bull-regime contamination from ASML/Iran/tariff 2024-25 windows — a Taiwan Strait exclusion has no crypto channel; JPM/XLF gains are also broad-rally artifacts.
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 | -7.7% · 5d -4.8% | 76% | 24 | 0.37 | ✓ matches cascade |
| CNY CNY | SHORT | -0.5% · 5d -0.3% | 67% | 29 | 0.32 | ✓ matches cascade |
| Bitcoin BTC | SHORT | -5.2% · 5d -3.1% | 68% | 27 | 0.28 | ✓ matches cascade |
| Volatility VIX | LONG | +6.0% · 5d +4.0% | 65% | 31 | 0.27 | ✓ matches cascade |
| NDX NDX | SHORT | -0.4% · 5d -1.2% | 68% | 33 | 0.26 | ✓ matches cascade |
| SOL SOL | SHORT | -6.7% · 5d -6.8% | 70% | 20 | 0.26 | ✓ matches cascade |
| AUD AUD | SHORT | -0.6% · 5d -0.4% | 63% | 28 | 0.22 | ✓ matches cascade |
| KRW KRW | LONG | +0.1% · 5d -0.3% ↺ fades | 61% | 28 | 0.20 | ⚠ differs |
| MU MU | SHORT | -2.9% · 5d -3.4% | 61% | 33 | 0.18 | ✓ matches cascade |
| AMD AMD | SHORT | -0.2% · 5d -1.7% | 61% | 34 | 0.17 | ✓ matches cascade |
| Gold XAU | LONG | +1.1% · 5d -0.6% ↺ fades | 61% | 29 | 0.17 | ✓ matches cascade |
| INTC INTC | SHORT | -2.8% · 5d -1.7% | 59% | 34 | 0.17 | ✓ matches cascade |
| NVDA NVDA | SHORT | -0.9% · 5d -3.7% | 61% | 29 | 0.15 | ✓ matches cascade |
| AVGO AVGO | LONG | +2.3% · 5d -2.0% ↺ fades | 57% | 28 | 0.14 | ⚠ differs |
Why this probability
Taiwan Strait inspection zone is major escalation; cross-strait tense but armed quarantine still low-probability. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.