A little scenario analysis for stocks of the consequences of the tariff crisis. Ranging from "Joking LOL!" to "China invades Taiwan".
Discussion
For reference, the 2020 covid stock crash was -35%. So the most negative scenarios (-60% and -80%) are historically on a level with 2008 and 1929. Very extreme.
Needless to say, Bitcoin will do its own thing. It's affected by short term deleveraging and liquidation, but in the medium term tariffs actually show off bitcoin's value proposition and fundamentals.
I better tell my Taiwanese friends to take out some life insurance vs your 10% chance of invasion.
It's not that I think it would be a full on invasion and WW III.. but a blockade followed by sanctions could happen at some point in the future. Trade wars increase the incentives for it and reduce the cost.
Even a negative scenario would see a recovery in time for the mid-terms.
It's clear by now that we will see some of the more negative scenarios for stocks, but hopefully not the 2 worst ones.
