Unknown unknowns 👽

“The valuations in financial markets are for the moment. They change quickly, and sometimes violently, reflecting uncertain knowledge of the future.”

              ^{— Mervyn King and John Kay, Radical Uncertainty}

‍At 9:00am Washington time, in the not too distant future, the President of the United States makes an announcement that, even by his standards, is pretty ‘out there’. In front of the cameras, the leader of the free world says the unidentified anomalous phenomena (UAP) drip-fed to an incredulous world over the past several years are, in fact, real. We are not alone in the universe.

Markets swing into action. US stock market futures drop, then rebound, as traders try to work out whether this is a Copernicus moment or a tradable blip. Liquidity thins and trading becomes jumpy. Volatility spikes and, within hours, some exchanges roll out controls to slow trading. By the time Asian markets join the fray investors are still trying to price something with no precedent.

Gold leaps, then reprices violently, as people argue over whether reverse-engineered alien technology challenges long-term scarcity. Who needs near-depleted mines in war torn nations when faster-than-light travel and trillion-dollar asteroid mining is potentially on the table?

Crypto, seen as a hedge against institutions, surges. Others sell their coins to raise cash, producing large swings. Brokerages report a rush of orders and withdrawals. Retail trading apps slow down or fall offline. Call centres are overwhelmed. Supermarkets see stockpiling. Petrol stations run dry. Cats and dogs, living together … Mass hysteria!

Before breakfast, the Bank of England calls for calm, noting the banking system is resilient and reminding banks they can access facilities to meet higher demand for cash and transfers. The aim: to prevent uncertainty from turning into a run on deposits and a wider financial crisis. But will it be enough to hold the country together?

Arrival

The above scenario is entirely hypothetical – for now – but not outside the realm of possibility. The Sunday Times recently reported that a former Bank of England analyst has written to Bank governor Andrew Bailey, urging him to plan for a scenario in which a US administration formally discloses intelligent non-human life. That’s right, aliens. 

Helen McCaw, who worked in financial security and crisis planning at the central bank over a decade ago, believes “disclosure”, as it is known in such circles, could cause widespread ontological shock – a sudden change in worldview, leading to extreme price volatility and a collapse in confidence. Market participants might not know how to price assets “using any of the familiar methods” and financial instability could happen in a matter of hours. “Ontological shock among the population, among an unprepared leadership, and among financial market participants is the biggest unknown. People might act in unusual and unpredictable ways,” McCaw said, speaking to the Weekend Read.

McCaw said the UK should carry out a risk assessment and hash out a coordinated response involving the Cabinet and Parliament, the intelligence services, the armed forces, aviation bodies, and the UK’s space agencies. McCaw also suggested Bailey should raise the topic of disclosure and UAPs with the Financial Stability Board’s Standing Committee on Assessment of Vulnerabilities (SCAV). “The most important thing that could be done in advance is to brief central bankers on the UAP topic, so they don’t suddenly find themselves dealing with their own ontological shock,” McCaw said. “This applies to all central banks worldwide, because financial markets are global, complex, and interconnected.”

Political scientist Alexander Wendt postulates that UAP disclosure could bring widespread insecurity and government distrust. “Eight billion people could start wondering individually what this means for their religion, their ideology, their economic wellbeing, wondering about everything, questioning everything that we thought we knew, that we could always take for granted.”

Contact

History has seen worldview shocks before. For example, European arrival in the Americas, the ‘New World’, forced societies to reinterpret religious and political narratives, and set off economic changes through trade, resources and state competition. The printing press had a seismic impact on civilization. There’s Copernicus, of course, and his theory of heliocentrism. Darwin’s theory of evolution recast our place in nature and in deep time. The Holocaust forced a reckoning with the depths of human cruelty. The beginning of the Atomic Age at the close of the Second World War, The End of History, and the attacks on the Twin Towers on 11 September 2001 all reset humanity in some way. But arguably none of these offers a template for how society reacts to the confirmation of intelligent alien life. However, the ongoing drip of disclosure, which has already begun with congressional hearings and media coverage, may take the edge off any initial shock.

A 1961 Brookings report for NASA argued that the discovery of “superior” beings could be destabilising. Understatement of the century. If disclosure happens, governments would need to decide what to release, how to release it, and who should be the messenger. The UK would likely need to align any public messaging with the US and other allies to reduce confusion and avoid rumours. “Probably multiple world leaders giving a joint formal announcement and probably offering some hard evidence as well, such as declassified clear videos or photos,” McCaw said. 

Close Encounters of the Third Kind

The US Navy has for some time been declassifying its interactions with UAPs. It has released testimony from eyewitnesses such as former navy commander David Fravor, who has described seeing objects moving in ways not physically possible with current technology. The extreme acceleration and instantaneous direction changes on display – evident in videos across the web – would produce insane levels of G-force and liquify any human occupants. 

Alongside the recent congressional hearings, there has been discussion involving senior US political and military figures in high profile documentaries, such as The Age of Disclosure (2025), in which director Dan Farah argues that a sitting US president will eventually make such a disclosure. The documentary claims senior US economic officials have been briefed on the issue because of potential market impact, though there is no public record confirming those briefings.

In 2022, a new office to centralise UAP reporting across the US military was created. Established within the Department of Defense (DoD), the All-domain Anomaly Resolution Office (AARO) set out procedures to assess threat levels and mandated regular reporting to Congress. “There have been serious credible allegations under oath and before Congress, that some aerospace companies have been illegally given advanced non-human technology. Specific companies have even been named,” McCaw said. Not since Roswell has the US federal government taken flying saucers so seriously. 

War of the Worlds

If the US formally confirmed intelligent non-human life, stock markets could fall on the uncertainty. Shares are claims on future profits and, post-disclosure, the range of possible futures just got a whole lot wider. All that uncertainty could reduce the price investors are willing to pay today. 

On the other hand, share prices could rise given the potential of abundant, low-cost energy sources and other remarkable technological advances. The most volatile moves may occur in areas where valuations depend heavily on the distant future. “Even speculation about the existence of advanced new technologies could shock global markets and cause a lot of volatility – it’s the human reaction,” McCaw said. Think January 2025’s so-called ‘Deepseek moment’, but far more uncertain. 

There would also likely be a move towards perceived safe assets – and disagreement over what ‘safe’ is. Cash, the most liquid of assets, government bonds, and gold may all see rallies. But, depending on the nature of the technology disclosed, these safe havens may have their status thrown into question in the process.

The Thing

Based on Congressional testimony, the technologies behind UAPs are likely disruptive whether they are human or non-human. If they are human and previously unknown, this would imply a major hidden leap in capability that could destabilise the global balance of power. And if UAPs are not human the question is, are they hostile, neutral, or friendly? 

In a ‘friendly’ scenario, access to superior technology could see a levelling up of global wealth and prosperity. But it could also create chaos by rapidly stranding existing assets, especially in energy and other technologies, if new systems made current production and pricing obsolete. Also, what would happen if China got hold of one of these things before we did?

In a ‘hostile’ scenario the downside is more existential, and many conventional assumptions about growth and security would be up in the air all at once. Such a scenario could see humanity rally around a common foe. Or drive division further as nations and governments clash over how to react. 

Polymarket has offered a market on whether the US will confirm aliens before 2027. The price has suggested low-teen percentage odds, around 12%. UAPs arguably fit into the category of unknown unknowns, in the words of former Secretary of Defense Donald Rumsfeld. Known unknowns can be priced, but unknown unknowns are where markets start to creak. “I suspect a big-bang disclosure would be much riskier, but you could argue we are already in a drip-feed disclosure process and most people simply haven’t noticed yet,” McCaw said. 

The Day the Earth Stood Still

Investors forced to act during a shock usually cause the most damage. Those buying on margin or who end up needing cash quickly are more likely to sell at the worst time. Investors who panic sell and then buy back later often lock in losses.

Mega shocks also create second order effects that markets will try to price. Investors would likely focus on questions such as defence spending, aerospace and space investment, energy research, cybersecurity, and other areas tied to any potential government response.

Post-disclosure, as fear and uncertainty hits fever pitch, the most important thing would be ensuring the financial system continues to function normally. Banks must be able to settle, businesses must be able to make transfers, and households must be able to receive wages and pay bills. Despite the world changing forever, daily life would also continue uninterrupted. 

In a shock, people do not only sell investments. They move cash and may try to withdraw deposits. Bank runs can happen without warning. “A liquidity crisis becomes a solvency crisis. Banks are vulnerable to a crisis of confidence, whether real or imagined,” McCaw said. In most financial crises, the central bank tries to stop this by acting as a lender of last resort. It provides liquidity against collateral so banks can meet withdrawals without selling assets at distressed prices. That policy really matters when markets are unstable and confidence is paper thin.

The key question wouldn’t be what the aliens do next. It would be how people, institutions, and markets respond in the afterglow of disclosure. For investors, the main risk would be making decisions during that period of maximum uncertainty. In the first few days and weeks, prices would be driven less by facts and more by fear, positioning, liquidity, and forced selling as markets trade an unknown unknown.