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

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.

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Macro: It’s all about elections and keeping status quo
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
Read article
FX: The rate cut race shifts into high gear
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Read article
Equities: The AI and obesity rally is defying gravity
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
Read article
Fixed income: Keep calm, seize the moment
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Read article
Commodities: Is the correction over?
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Read article

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

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Quarterly Outlook 2024 Q2

01 / 05

Macro: It’s all about elections and keeping status quo

FX: The rate cut race shifts into high gear

Equities: The AI and obesity rally is defying gravity

Fixed income: Keep calm, seize the moment

Commodities: Is the correction over?

Macro: It’s all about elections and keeping status quo

FX: The rate cut race shifts into high gear

Equities: The AI and obesity rally is defying gravity

Fixed income: Keep calm, seize the moment

Commodities: Is the correction over?

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