background image

OP 2019: X-class solar flare creates chaos and inflicts $2 trillion of damage

John J. Hardy
Chief Macro Strategist

Summary:  As reliant as we are on modern communications technology, this pales in comparison to our reliance on the sun. When it misbehaves, the consequences are severe indeed.

For the full list of Saxo's 2019 Outrageous Predictions, click here.



All life on earth exists thanks to the stable bounty of energy hurled our way by the
sun, but Sol is not always a serene and beneficent ball of burning hydrogen. As solar
astronomers are well aware, the sun is also a seething cauldron of activity capable of
producing incredible violence in the form of solar flares, the worst of which see the
sun vomiting actual matter and radiation in the form of Coronal Mass Ejections, or
CMEs.

Previous swarms of flares and their associated CMEs, called solar storms, have
disrupted radio and satellite communications as well as ground-based power
transmission infrastructure in the past. The most powerful know n solar flare was
the 1859 Carrington Event, an estimated X40 class flare that lit up the earth with
a massive aurora borealis that could be seen as far south as Cuba during the day
(X-class flares are the most powerful class of flares and an X40 flare is 40x more
powerful than the minimal X1 flare).

The early telegraph equipment of the time was largely rendered inoperable; in other
cases, it could still be used even though turned off. In the summer of 2012, the earth
got lucky when it missed a giant, multi-X-class flare by a matte r of a weeks as its
associated CME washed across the earth’s orbital path a week after the earth had
transited (flares are directional and only last a matter of hours).

In 2019, as Solar Cycle 25 kicks into gear, the earth isn’t so lucky and a solar storm
strikes the Western hemisphere, taking down most satellites on the wrong side of the
earth at the time and unleashing untold chaos on GPS-reliant air and surface travel/
logistics and electric power infrastructure.

The bill? Around $2 trillion, which is actually some 20% less than the worst-case
scenario estimated by a Lloyds-sponsored study on the potential financial risks from
solar storms back in 2013.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • 350x200 peter

    Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • 350x200 althea

    Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • 350x200 peter

    Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • 350x200 charu (1)

    FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • 350x200 ole

    Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.