QQQM - Investors Should Brace For Impact If Rising China-Taiwan Tensions Escalate
2024-02-02 12:32:50 ET
Summary
- In 2024 January, the NATO friendly DPP party won the Taiwanese elections, raising the risks of a Chinese military intervention.
- Taiwan Semiconductor plays a crucial role in global supply chains, and a fallout would have grave consequences.
- U.S. Companies has significant production and revenue exposure to China.
Changing World Order
As many elements in life, probably empires and history can be well described by cycles as well. According to Ray Dalio's empirical cycle model, the current world order is changing as the U.S. empire likely peaked around 2008, while apparently, China has been closing the gap ever since. Looking back to history, this appears to be the natural dynamics of civilization. Unfortunately, when the gap between the still dominant but falling empires and the challenging nation's cycle got too small, 10-20 years of war-like period followed. Concrete examples are the Anglo-Dutch wars between 1654-1674 and the First and Second World War between 1914-1945. Sadly, as per the model, the world might be heading in a similar direction, as the gap between the U.S. and China has become small enough that the current West-led world order is being increasingly challenged. We can see signs of this power struggle in Ukraine, in the Middle East, and in the Asia-Pacific as well. Investors may conclude that such power struggles at the very least have massive potential for continuous proxy wars or worse, therefore should brace for impact and prepare carefully....
Investors Should Brace For Impact If Rising China-Taiwan Tensions Escalate