Investing

China Does Not Want A Trump Victory

Austin Smith

Published: November 4, 2024 10:06 am

Last Updated: November 4, 2024 11:47 am

Key Points:

• Many are concerned about a Chinese invasion of Taiwan, but a simple blockade could bring the global tech industry to a halt.
• US-China tensions are rising, and a trade war could be on the horizon in the coming months 
• The stock market has not bee pricing in this risk, but China understands the power and influence they hold over the global tech supply chain.
• If you are worried about how geopolitical risks could impact your tech investments, we suggest using this free matching tool to connect you with experienced financial advisors who understand these global dynamics and can help you position your portfolio correctly.

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Transcript

[00:00:00] Doug McIntyre: There are constant, there’s constant agitation about whether China will try to either blockade or invade Taiwan. I think invading Taiwan, that would be pretty fricking bloody and maybe a world war, but a partial blockade isn’t out of the question that happens. The chip business worldwide implodes. Can you, can you tell us a little bit, I mean, it literally falls apart.

[00:00:29] Lee Jackson: Yeah, it really would. I, I read a recent, you know, pretty in depth article on this, just stating how vulnerable the worldwide chip industry is because two thirds of all chips, all chips, two thirds of all chips are made in Taiwan. And 90 percent of the super high performance Nvidia (Nasdaq:NVDA), et cetera, chips are made there 90%.

[00:00:56] Lee Jackson: And, and like you said, Doug, they don’t have to try to land troops in Taiwan, you know, go through the straits there. But if they put an entire blockade in and out, whoa, that could spell some big trouble.

[00:01:12] Doug McIntyre: Well, it could sort of bring the artificial intelligence, uh, industry’s growth to a halt if you can’t, if you can’t get ahold of the chips and the great majority of them are made there that the supply, which is, you know, for the Blackwell and stuff is very tight.

[00:01:26] Doug McIntyre: And that’s really, really tight if this happens. So I don’t know, I, you, you know, the pundants say, well, China, Won’t invade because it’s, you know, it’ll be a war, you know, you, you can blockade places. It’s happened before. Uh, so I, I’m not suggesting to anybody, they buy or sell ship stocks because of this, but no, it’s one of those edge cases people need to worry about.

[00:01:56] Lee Jackson: Yeah, and it’s, it’s the kind of tail risk that, you know, Rubini and people like that warn about constantly. And, you know, they’re right about once every 10 or 15 years, and maybe it’s the kind of thing that could pose a huge problem. And don’t think for a moment, the Chinese don’t know this.

[00:02:13] Doug McIntyre: Of course they do. Are you kidding me?

[00:02:15] Doug McIntyre: There could end up being a trade war within the next several months, a significant trade war.

[00:02:20] Lee Jackson: Yeah, there definitely could be. And the thing is, is that they only understand a very firm hand and that is not what we’ve treated them with over the last four years. So the election is going to be an interesting kind of, I’m sure they’re using all the misinformation they can to, to try to sway the election away from Donald Trump, but boy, they’re not going to be thrilled if he is the next president.

[00:02:50] Doug McIntyre: No, they’ll have significant trade problems.

[00:02:53] Lee Jackson: Yeah.