When economists started drafting their 2020 outlooks a few weeks ago they had penciled in, as they do every year, the likely risks to the markets and the global economy. A meaningful trade deal between the U.S. and China not materializing was high on the list. Ballooning corporate debt was there too, as were China’s failure to right its economy and further delays to Brexit.

Conversely, the impeachment (let alone the removal from office) of President Trump was seen as a mere trifle for most 2020 forecasts. As for an airstrike taking out Iran’s top military commander, plunging the two arch-enemies into a precarious game of brinksmanship? Not even the most pessimistic prognosticator could see that one coming.

And yet here we are, not yet a week into the new year, and the global markets are facing a test unlike any they saw in 2019.

The markets were impressively resilient throughout the past year, most notably shrugging off the impeachment of a U.S. president for only the third time in the nation’s history.

Rising geopolitical tensions between the U.S. and Iran isn’t likely to be the same kind of ho-hum affair.

“With the impeachment proceedings, it was by and large mostly taken for granted that the president would be impeached and not be convicted, not be removed from office,” says Dennis Shen, a director in sovereign ratings for Berlin-based Scope Ratings, a credit ratings agency. “With Iran, there’s a much higher asymmetric, or tail, risk.”

Iran and the risk to the stock market

Marketplace observers, like military planners, hate the "negative asymmetric risks," those in which the potential downside far outweighs the desired upside. An economist, analyst or portfolio manager is paid to think through all kinds of risk scenarios to assess potential return, or, like Scope, credit worthiness. For them, an impeachment scenario is fairly straightforward. War is not.

This lack of clarity has played out at points in the markets over the past few days.

Since President Trump ordered the airstrike last week that took out Iranian General Qassem Soleimani global markets have, predictably, sold off—moderately at first, and then, more worryingly, at an increasing rate.

And while U.S. markets recovered broadly in afternoon trade on Monday, many of the usual indicators of rising market volatility (gold rallying to a six-year high and crude spiking) plus some new ones (the price of bitcoin soaring) are there. Together, they reveal that investors are undoubtedly unnerved by the Soleimani slaying and the events that’ve followed. Namely, that would include Iran’s official pullout of the nuclear deal, Iraq’s vote to expel U.S. troops, and the escalating war of words from Trump and the Ayatollah Ali Khamenei.

On the geopolitical front, nobody is sure what will happen next. Possibilities include a tit-for-tat cyber war. Or, maybe it’s a military skirmish fought by proxy militaries. Maybe there’s a disruption to oil supplies. Maybe crude spikes to $75, then $80, or even $90 or above. Then again, maybe not.

For markets, the what-ifs are nearly as bad as the real thing, particularly in the short term as we’re seeing. And, just a few days into the ordeal, the uncertainty is sky high.

On cue, the Vix, or so-called Volatility Index, spiked nearly 10% Monday morning as the markets opened in the U.S. with every major index in the red. Zoom back, and the Vix is not nearly at the worrying heights it reached during the worst of the Great Recession, a decade ago. But it’s clear: the markets are no longer on cruise control—no longer where they were just four days ago.

Some of the sell-off and ramp-up in volalitity is to be expected. “Markets at the moment are of course highly vulnerable because markets had such a good run last year, that anything unexpected is a major market event,” said Holger Schmieding, chief economist at Berenberg. “Sentiment-wise, we are looking for reasons to end the euphoria of last year. The question for me as an economist is that really something that adds up to a major threat to the global economy? And I think it does not.”

Schmieding says the latest tensions in the Middle East, no matter how bad they seem at the moment, are not enough to get him to rewrite his 2020 economic outlook. He still predicts U.S. economic growth at 2.1%, down from 2.3% in 2019.

But being an economist, he’s on the look out for worrying data points. Chief among them would be a big spike in the price of crude for an extended period—say, $90 a barrel for three months or more (Brent is hovering around $70 at the moment)—something that would hit consumers at the pump, goose inflation and sink consumer optimism.

At the moment, that scenario doesn't seem likely. But still it’s the kind of turn of events—"asymmetric" in other words—that could doom an incumbent president in an election year.

“Higher petrol prices, and an economy that takes a hit from that is not the backdrop you’d want to have this autumn,” Schmieding says.