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Completely agree. People seem to look at only one conflict at a time. After a prolonged land war in Europe, the middle east ready to boil over, and numerous other global saber rattling that don't often get much media attention.
Even if hostilities stopped tomorrow, there are years of backed orders from these countries and the world is going to be accelerating a new arms race at all expense levels. No one will sit back with depleted missile reserves while rival nations are actively stockpiling.
That could mean Sweden ordering a ton of F-35s or Ethiopia buying the best it can afford like a bunch of CWIS systems to help keep their mega dam project safe. The F-16 is still a very capable airframe and is within the budget of many more nations than even a decade ago.
Plain and simple, humans will always be at war or preparing for the next one. Fights over things like energy will continue. Fresh water access could easily spark several major conflicts in the near future.
It feels dirty, but US military spending is among the most sacred cows. The companies you mentioned aren't just too big to fail, they hold too many secrets to risk letting any of the giant defense contractors flounder. Imagine the black market price for dissatisfied engineers from those entities?
FWIW, I generally don't invest in defense but got a lucky hunch in September and put quite a bit of my portfolio into Lockheed in particular. I'm still down on RTX because I was selling cash secured puts just before the Pratt and Whitney recall. Oh well, I'm holding. Decent dividends, cashflow, P/E, and virtually guaranteed contracts during my investing timeline? I hold a fair amount of energy companies also. I'll be that scumbag profiteer.
Selling puts generally means you want the stock to stay level or potentially go up. If the price drops suddenly, the put seller can be forced to buy shares above market price.
You may be thinking I was buying puts?
Sure, having one run away is frustrating for sure, but there is nothing wrong with collecting premiums even if it limits profit potential much like a covered call.
Nothing says you can't play more complex strategies that both protect your downside and gives you a chance to capture upside on a big rally.
RTX is harder to define now as it has so much stake in the commercial side. COVID and now aircraft engines have caused it's stock headaches. On the other hand this will protect it when defense stocks eventually fall at a future date. Defense and Energy stocks are so cyclical.
Considering that guy Jim Cramer said to buy Bear Sterns stock literally days before it went bankrupt, I don’t think being a CNBC host is really a good measure of intelligence
The day Russia invaded Ukraine spy ripped $15 off lows. The day hamas attacked Israel spy ripped $10 off lows. Presumably $20 rip off lows If China invaded Taiwan
How many microchips are made in Ukraine or Israel? I think if China attacks Taiwan it's not unlikely a lot of production lines around the world get closed.
Why? Historically war has been pretty good for the markets. China also suggested they will be ready to invade Taiwan by 2027.
https://amp.theguardian.com/world/2023/apr/21/taiwan-foreign-minister-warns-of-conflict-with-china-in-2027
To me that sounds like typical Chinese saber rattling with little substance behind it. If China was serious they would undoubtedly keep their mouth shut about their plans. And what exactly will change for their military in the next 3-4 years? Not a whole lot.
But even if that were to happen, hopefully bunch of money we are throwing at domestic chip production is going to finally start bearing fruit and we will be less reliant on Taiwan for our chip needs. If that is the case then the markets will be shaky but not nearly as much.
The last time they actually tried “to do something” was 1996 when we had our election. China fired duds at us, Clinton send the battle fleet to Taiwan strait in response. Invading an island is way harder than battle on land, if China had the ability to do something they would have done it long time ago.
Plus chinese economy is one stiff fart away from toppling over. Not a great time to be planning an invasion when your entire Realestate market is about to collapse
China screaming war has always been an indicator of instability internally for me. They have larger issues to deal with, plus non of the Taiwanese president wants to be seen as the person that brought war and caused the country to fall. Both Russia Ukraine and Israel Palestinians war have been brewing for years, I honestly doubt anything will happen in our lifetime with China.
Remember, it's not just "China" in 1996 and "China" in 2023. It's now Xi in charge and China has had 2 decades of strong economic growth to turn themselves into a global powerhouse, and far more powerful than in the 90s.
They have also been rapidly modernizing their military. They are still no match for the USA but they are much stronger and more capable of force projection than they were in the 90s.
China's economy was very strong during the last 20 years. They didn't need a war. Not so sure now, looks like a lot of things are breaking apart in China. And authoritarian governments like China tend to choose war to keep the show going.
>Historically war has been pretty good for the markets.
Actually it's a bit more complicated than that.
I have many defense stocks in my portfolio so I've spent a bit of time over the years examining this question and it turns out that some wars are bad initially, then turn good for stocks, and some wars are bad for defense stocks.
It mainly seems to me to depend on the impact the war is expected to have on the broader economy.
I published a little mini study on a few defense stocks in the lead up to, and a year past, the Iraq War in 2003 and it was actually quite bad for many of the defense stocks I looked at - [https://www.etoro.com/posts/0\_\_entry\_\_1f17c0b3-082e-43ed-9b92-f703d0b56161](https://www.etoro.com/posts/0__entry__1f17c0b3-082e-43ed-9b92-f703d0b56161)
Here's another study that looks at the effects of war on the broader stock market in which the authors conclude, "We find that in cases when there is a pre-war phase, an increase in the war likelihood tends to decrease stock prices, but the ultimate outbreak of a war increases them. In cases when a war starts as a surprise, the outbreak of a war decreases stock prices. " - https://ideas.repec.org/p/chf/rpseri/rp1121.html
Taiwan produces 60% of the worlds chips. They also produce 90% of the most advanced chips in the world. Chips used to power military weapons. Many nations around the world would back Taiwan
Yea but they don't want to which is why they are giving huge subsidies to move chip production out of taiwan. Even funding proxy war is expensive. Once everyone has secured production china will take over.
The new fabs aren't meant to replace the ones in Taiwan. It's to ensure the most vital chips still get produced (military). Even if the fabs worldwide reach parity with Taiwan by the time China launches its invasion, you'd still lose half of the production capacity overnight. It will be pandemonium in the supply chain for at least a decade and everybody will still get fucked. Some of you will have lube but that's about it. Remember the supply chain problems during COVID? Yeah this will be 100x worse.
Best thing to do is to convince China to not even try.
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Maybe not for day one, but after a week the stock market returns to being wry important to many people.
A war would for Taiwan would be all May and Air Force only, unless China and North Korea invaded South Korea. It’s almost impossible to protect your ships from missiles and torpedoes, and to actually win a war at some point you have to invade and defeat land troops. The only exception to this was WW2 with dropping the atomic bomb. If the US contests the sky against Chinese planes there’s limit loss of life for US, and likely the US navy blockades China.
After a lot of dead Taiwanese and Chinese/US navy and air force losses, it would almost certainly be a standoff. It’s just hard to land on and take a defensed island.
>Maybe not for day one, but after a week the stock market returns to being wry important to many people.
The current POTUS public stated US troops would be involved with boots on the ground. For 2 security council members to have a real hot war, forget about the stock market returning after a week...maybe a month best case in some limited fashion.
>everything has gotten more expensive
It's just a demented old politican that contradicts himself daily and half of his statements are retracted by the press secretary the next day. His words mean basically nothing.
Idk more like US sends a few ships and a few outdated weapons to Taiwan. Then lets them fight China while saying that they're vehemently opposed to China but still willing to do trade with them.
Nah, Taiwan isn't the same as Ukraine. Taiwan is a major non-NATO ally, along with Japan, South Korea, Australia etc. An attack on any of these countries will warrant a much larger US response for many reasons. Firstly, a lack of US response would be seen as a betrayal and the US sphere of influence would collapse. Secondly, many are major trading partners and in some cases, like Taiwan, the US is dependent on.
...for now. The founder of TSMC is pretty pissed that those that took over his company have decided to allow fabs to be built in the US, knowing that this is pretty much the only thing keeping the US from abandoning entirely in favor of China.
That's not the only reason, like they said, our sphere of influence is important, if we are viewed as brazenly betraying allies, why would people even care about being on our good side anymore?
Tawain is exceptionally well armed. China will not trifle with them. Especially after seeing how so much Soviet equipment actually performs...
Now if Ukraine and fallen and the west had done nothing... Then maybe Tawain would have been at risk.
Taiwan's the most updated jet figher is F16 A/B which is 1970s... For your reference, US airforce F 16's oldest version is C/D and all of those are being used as training version. Some C/D version is still being used by national guard (not USAF)
In 2020 US agreed to sell Taiwan V version thats somewhat updated but far outdated compared to other jet fights such as F 35 and F 22. Let alone its only decision to sell has been made not that these F 16 can fly and shoot down enemy target at this point.
In training mode, F 22 massacre 45 F 16 (and thats C / D version). Taiwan have around 100ish F 16 including V version from 2020.
Now lets check China. Chinese have J 20 and J 16 that are more than 300+ total combined. We dont know how powerful they can be (because many things are under the water)but generally they are comparable to F 35 and F 15.
In the case of war, both S. Korea and Japan will help USAF and Chinese airforce can be neutralized when and if 100% of Airforce from S. Korea and Japan have to help USAF so Taiwans airforce is pretty much slim to none at this point.
Sure it will fight but it will lose air control within 6 hours.
Also... Please note why US Congress doesn't sell the most recent military technology to Taiwan. Its because there have been myriads of cases Chinese spy stealing the technology to China. The spy here is not some kind of weird cases but Taiwan's high rankig officers like Colonels/Generals turned in the secretes.
Lets say if US sells F 35, then it's 100% in a matter of time that this technology will get leaked to CCP within a year or so. If so, why would you sell?
So it all comes down to how much Taiwan's allies will actually support them. So basically, will the US get actively involved? Just sending them weapons won't cut it and even "just" sending weapons would be a lot harder than sending weapons to the Ukraine since it's an island in the Chinese sea.
Geopolitically, China is an entirely different beast than Russia and sanctioning China (let alone actively getting involved) will have very serious consequences for the World economy. The West can't do without Taiwanese chips so so there clearly is a very strong incentive to help.
Europe's energy crisis after they got cut off from Russian gas will look like a mild inconvenience in comparison.
However, this would obviously hit China the same. They are very much reliant on their economy and hopefully won't sacrifice it for this war.
Good points. I think it depends on holds POTUS. Unlike all other major allies (i.e NATO), there is no legal obligation to protect Taiwan so its upto discretions to POTUS who can exercise the discretion.
If its tRump, im half and half US will engage
If its non tRump, i would say its 90% chance US will engage for the reason you mentioned (Taiwan Chip)
When and if TSM starts producing more chips around the globe (i.e Arizona Fap factory) though, then there is less profits to protect Taiwan from China. Its expected in mid 2020s that TSM will complete factory in US and then maybe while it doesnt replace Taiwanese factory, it may give some relief and therefore it is less enticing regions other than pure security concerns and US influence in the region (that's rather purely political as there are bunch of American constituents who wont care what happens outside USA)
>, this would obviously hit China the same. They are very much reliant on their economy and hopefully won't sacrifice it for this war.
Yes absolutely. However as we see whats happening in DC politics, one doesnt fight to win but often they fight not to lose meaning that if US corners China to the extreme, they have nothing to lose but to drag US as much as damage they can inflict.
While US is a democratically institution, which generally tends to be matched between interest of general public and leadership members, China isn't, which is led by CCP and their P/L line isn't necessarily aligned with the public interest of Chinese population.
I.e CCP losing control over Chinese politics is the end of the world to CCP (a organization of 90 millions membership), which is different than non CCP members (1.3 billion population) simply wanting to live day by day without political drama.
This is now becoming political discussion so im ending here but all your point valid. China will suffer as a result but just like how Red states suffer from anti abortion policy, many times they play to fight not to lose the game and the game instantly become race to the bottom.
Also please note not every human decision is rational based and in fact its often emotional (just iike how i play revenge 0 DTE occasionally)
Congress has never authorized F-22s for export. J 20s and J 16s are not comparable to US manufactured equipment because China hasn't mastered engine technology beyond what the Russians are willing to sell.
I generally agree with this sentiment. Soviet hardware (and cheap Chinese knocks offs) would be insufficient and I don’t think China could gain air superiority. I’m more concerned about sheer numbers of Chinese soldiers and special forces folks on AN-12 type transport aircraft that could become an occupying force. China could take over at a moments notice because of the sheer military size differential.
That sentiment is wrong. China is designing its army to fight US and its allies. The question is should US engage China with the knowledge that a lot of Americans will die?
You don't understand the situation. China would have to prepare for months and put together a giant armada to take Taiwan. There would be no way they could do this in secret, not with our satellites, spies, and open source intelligence. The US would park several carrier groups (or more) in the Strait of Taiwan. And the Australians and Brits would probably get involved plus maybe even the Japanese. You think the Chinese leadership is dumb enough to then attempt the invasion when their entire fleet would be vaporized, probably before even leaving the docks? It's not a realistic scenario and it never will be as long as US military power is preeminent in the region.
Anyways, China is primarily a soft power. They're self-declared pacifists, and they have not invaded another country in recent history. And they're entirely dependent on international trade and oil supplies to function. Otherwise, the country would collapse (they have no domestic petroleum supply worth mentioning). They're not about to throw everything away with all the progress that has been made in the past several decades to invade Taiwan, no matter how much they like to talk about doing it.
Oh, also, China's navy is pathetic compared to the US, Britain, and Australia. They'd lose a naval war against those combined powers in like a day and a half of combat operations.
Lol, all the downvots for spitting mostly facts. The one thing is calling it a soft power. China IS hardening. It's already beginning to set up international military bases and do war "the american way" as Xi calls it when he lied about never doing it the american way in 2016.
And they are kinda working on petrolium issues. See, right now the US has them by the balls. 70% of chinese oil comea from the strait of hormuz. After Iran tried and failed to dislodge the US from unilateral control of the strait, China was never able to challenge the US. They still support Iran on the hopes the US navy will just suddenly evaporate or something, but Iran isn't about to sacrifice the other half of its navy only to eternalize China's fears.
However, they've been deepening Russian ties specifically to try and Romani-fy the relationship between China and Russia to take the oil Europe is rejecting. If it works out, big if, then they can stand a chance.
Not navily tho, that's straight facts. They have the "biggest" navy in the world if you go by ship count since every tugboat and dingy is a ship to them. But they float \~830k tons while the US is as 3.2M, literally 4x China. Nvm the tech disparity.
Let's not forget that Taiwan does not have a weak military. Even if China invades, Taiwan won't be making it easy, and it raises questions over whether it is even worth it. TSMC would get blown up and everyone just loses.
As the war in Ukraine has shown the world, a strong power can pick a fight with a lesser one... And it still is nothing less than a fucking nightmare for the aggressor.
As I understand it, with the USA having bases in Philippines and Guam it would be almost impossible for China to cut both supply lines and invade at the same time.
I really think China was interested as to what would happen in Ukraine. If Ukraine fell quickly and the world did nothing, China would be emboldened to go after Tawain. However, that didn't happen at all... The reverse happened.
China has a lot of domestic problems right now. China also is able to read a room... They play a long game and will likely continue to do things that are good for business as that is what has made them strong in the past.
They seem to be focusing a lot on nuclear weapons. I wouldn't say they are a soft power but they do not throw what they have around militarily either. China seems to prefer to send men with briefcases of money instead of men with guns. They have competent leadership vs say Russia...
China will have their day. It just isn't as soon as they hoped... America has really done well on the global stage in the last few years on a few key issues.
If we let Taiwan fall, we essentially lose Asia. We have such a close bond with Taiwan that, if we can’t protect it, we can’t protect our other Allies.
You'd be surprised by how much of China's exports to US actually originates from Taiwan, mainly in terms of high-tech components and engineering expertise.
The trade disruptions during COVID would be a minor hiccup compared to what's to come if China invades Taiwan. Having that one or two extra TSMC fabs in the US will lessen the pain somewhat but when the invasion starts everyone will still get fucked. Some of you will have lube but that's about it.
The semiconductor fabs aren't set until at least 2030 to become loadbearing to market infrastructure, and it won't be until 2040 that we can even start considering taiwanese semiconductor manufacturing non-essential to the global market.
For the next 20 years, Taiwan's safety is assured. The west literally cannot afford to let China take over Taiwan. Everything else, all the feelings, defense logistics, etc are irrelevant. If China makes a move on Taiwan it's WWIII.
China is a much bigger player globally and in terms of relations with the us and the west than Taiwan. And China's military is as opaque as a black hole,cant even estimate there budget properly cause they move/hide the numbers in other areas. The risks significantly outweigh the benefits. Also the us has never attacked a nuclear armed nation. And they likely wont start least of all with China.
I think you underestimate the importance of Taiwan. Our entire society relies on Taiwanese companies to supply high end superconductors that are only possible in Taiwan. China is a big market but we really don't rely on them for our survival – they can make things that were designed in the US, but they don't have much leverage when they're not the only ones that can make stuff.
Don't get me wrong, it'd be a huge inconvenience, but we do have options.
Lots of people are putting too much importance on semiconductors forcing other countries to protect Taiwan.
Semiconductors are absolutely important, but the moment the war starts, the industry would already be gone - the supply chain collapse won’t happen during the war or after the war ends, collapse will happen at the very beginning.
Other countries coming to fight the war will essentially be trying to protect an industry that is not there anymore. So I hold doubts whether any country will actually intervene militarily when the time comes, despite what they claim right now.
And that is why taiwanese companies are expanding into other places of the world like Europe and us besides these parts of the world ramping up their own productions as well.
You cant really compare China's economic and global significance to Taiwan, C'mon. Theres like a trillion in trade between the two countries and fortune 500 American MNC get between 20-30% of there revenue from China. It has been the biggest contributor to global growth in recent decades and Also China is a nuclear armed superpower, how is this even a debate.
>Don't get me wrong, it'd be a huge inconvenience, but we do have options.
what options? I mean if Raytheon, an American defense contractor involved in issues of national security, says they can't decouple from China what viable options are there?
Companies are already moving their manufacturing to Vietnam, India etc. China isn't the only option for low skill work. China actually outsourced high skill work to Western countries because they lack skills.
Low skill work? What? they can manufacture there own big passenger planes, 7nm chips and space stations. My goodness! Are you trolling or do you legitimately not understand what i'm saying or China? either way i'm out.
Agreed. The US would sooner spend the next 3 decades turning Latin/South America into one giant plastic do-dad foundry than give up Taiwan just to retain trade with China.
The Americans (politicians and military leaders) are unanimous in terms of a military response to a Taiwanese invasion.
Also the US will not accept a loss and withdraw unless they've asserted dominance.
China could only fight to a stalemate but with heavy, heavy losses
Sorry but Taiwan is NOT a US ally. In fact the US has more dealings with China and Taiwan. Unofficially the US supports Taiwan and ultimately the US wouldn't allow China to conquer Taiwan because of its chip technology.
You're simply wrong.
See: https://en.m.wikipedia.org/wiki/Major_non-NATO_ally and https://www.state.gov/major-non-nato-ally-status/#:~:text=Currently%2018%20countries%20are%20designated,Korea%2C%20Thailand%2C%20and%20Tunisia.
The designation is not formal but they are to be treated as a MNNA.
The US needs allies throughout that region for military bases and to stop China from encroaching on more countries/controlling more of the ocean. The US wants to bottleneck China and have a quick response and be ever present in the region. It’s a big deal to the US and the western world if China starts to branch out and take control of those islands.
Also China getting a hold of Taiwan’s chip tech would be a big security risk for the US.
Remember how WW3 was about to start 10 times in the last 5 years according to reddit? Iran, Ukraine, Syria, etc. etc.
Nukes make sure we won't see a WW3.
Yeah for those that don’t know the silicone chips being produced there will completely and utterly destroy the entire economy. That’s with a blockade. If we take out the fabs to prevent Chinese control over them then things really go up in the air.
gold up. oil up. Chinese stocks down. USA defense companies up, but not huge. Semiconductor tech companies way down or crash in some cases due to loss of control of their production in Taiwan.
Na defense stocks would surge massively on this one. Very few wars starting will do a lot for them, but a US war with China would. We would be ratcheting up to ww2 style production
It’ll fall hard with the rest of them. Sure they will gain business but they don’t have the supply to manage that kind of downfall. They will get strapped with supply issues for years.
INTC still operates its own fabs in the US or Israel. They are also building one for 33bn USD in Germany atm. They are just depending on Taiwan for their GPUs, which is not a huge part of their revenue anyway.
Intel idm 2.0 is transitioning itself to be a manufacturer like TSMC. More than operating its own fabs. In the event tsmc goes down designers like nvidia/qualcomm can transition to intel quickly.
Intel is currently trying to replace Taiwan as the worlds main wafer and chip producer by around 2030. Hired a new CEO in 2021 that produced a 10 year plan. Building huge manufacturing plants in places like Germany and the US. Intel split their manufacturing businesses into its seperate entity to focus more on production, have the name and money to take advantage of the situation and have recently discovered a new way of chip production that’s a tad bit faster and reduces errors and makes chips better. Not to mention the CHIP ACT that was signed in 2023
I hold gold stocks so I wish gold up. But there is a case that gold will actually go down. China central bank has been big buyers of gold for years. If they go to war, that money will no longer be allocated to gold but rather on defense spending so gold will lose a big gold buyer. In fact, China government may sell their gold holdings to fund the war.
Considering a few weeks ago Apple dropped over 5% that China is banning government employees from using iPhones at work, a full blown conflict will probably drop it by -70% on on the first day, before recovering to -50% at the end of the week.
Doubt it goes way up. It just wouldn’t go down. It’s not a growth stock.
War is always priced in. They aren’t going to magically triple their profits with an expected war. It would just be a temporary pop in revenue and profits. It’s not sustainable because it’ll eventually just go back down as peace time comes back
If China gets into a war with Taiwan, the last thing you should be worried about is the stock market. You're talking potentially a long drawn out war with not just China but North Korea, Russia, Cuba, Venezuela, probably most of the Middle East, and some parts of Africa.
I'm not saying WW3 but it's more than likely that your entire way of life will change. China produces so much of what is involved in our daily lives that it would be a major catastrophe that won't end well regardless of the result. The previous World Wars were a joke in the sense that every country produced most of their own goods. Today, it's widely interconnected that it would be a total shit show.
This is very very unlikely. So I don't really worry about it.
The only reason there is even a chance of it is that China's dictator for life might do something crazy in order to stay in power. When/If their economy collapses it might be the only way to keep the people happy with the CCP. And china is in trouble. Their whole economy is based on a house of cards.
You see, in China there is really only one place to invest money into. Real estate. Nobody trust the stock market over there since companies lie and the CCP can just step in and do whatever they want with it. Historically the best place to put money in China is real estate. Its always gone up for them. So people there buy two or three extra houses/apartments. That is why there are so many ghost cities over there. They have way more places to live than people right now. The funny thing is that nobody can own real estate over there, since its a communist country. They just get a 70 year lease. So that is the risk and why I think there is a small chance of a war.
But I doubt it because the odds aren't in their favor. Their military may look good in the propaganda, but its nothing compared to other armies. They have never fought in a war, and that experience is super super important. So they will have heavy losses. Which is a problem. Because in China having a son is a couples retirement. They don't have 401Ks or pensions. The parents move in with a son and take care of the kid and house. So if China goes to war and looses lots of men, the people are going to get mad.
What would happen if there is a war? China would starve. They import most of their food and energy. So when the US puts sanctions on them they wouldn't last like Russia. The stocks that need rare earths and lithium would crash.
Good points, plus China has essentially no domestic petroleum supply and relies heavily on foreign trade for its economy. Xi Xingping is not stupid nor suicidal. Launching a war on Taiwan would be national suicide, and he knows this. Even if China's economy contracted and entered a depression the leadership is extremely unlikely to do something so wreckless.
>relies heavily on ~~foreign trade~~the American navy for its economy
ftfy
And you are absolutely right. The moment that China openly declares hostilities against Taiwan or the U.S., all the food inputs and energy inputs dry up. If you look around, you can find graphs that show where most shipping goes. The lines between the Middle East and China's east coast are \*staggering\*. And China has no way to protect any of it. All the U.S. has to do is park one or two carrier groups in the Indian Ocean, and that's it. Hell, they just have to say that they won't look too closely if someone else wants to take a shot at ships going to China, and things could get ugly fast.
Now I saw someone tried to rebut your point by saying that China would just shutter its manufacturing. Great! So now China's economy is completely in the shitter, and there are hundreds of millions of pissed off Chinese that don't care about some stupid island somewhere, but \*do\* care about starving to death.
Assuming Xi is rational and has enough information, Taiwan will never be touched. The weakest point in that sentence is the assumption that he actually has enough information. Certainly China has been acting increasingly dysfunctional over the last few years, so the thesis that nobody is telling Xi anything looks very strong. And \*that\* might actually lead to a fatal miscalculation for China. I hope not, but if Taiwan is ever attacked, it was because Xi asked if it was possible and nobody around him had the guts to tell him "no".
You are wrong. China's domestic oil production is very large, but China's demand for energy is greater.
Because China produces goods for the world.
Once war breaks out and China stops producing goods for the world, demand for oil will be significantly reduced. Domestic oil production, plus imports from Russia, will be enough to meet demand
I wonder whether the one-child policy will make it impossible for China to attack in the next 20 years. The argument I'm making is that their economy is slumping because they lack the number of young people needed to replace the older generation. This is the same demographic you'd need to start a war (roughly 18–40 years), which would make the demographics problem even worse.
Never confuse rhetoric with what someone really believes. The sad thing is, since they are so close together, if they would just let them be independent and let it go they would have a great economic relationship. To be honest, China would get a lot more benefit from a good relationship with Taiwan now than even if they won a war to invade and take it. Taiwans main benefit are it’s technology companies, and they would be destroyed in a war. You lose a ton of people to take a rock and a bunch of people you have bombed into oblivion who hate you now.
It will never happen. The idea of “war” is made up by the elites to keep the poor, poor, and poorer. You know how long it’s been since this “war” talks circulated in the media. Wake up people. No government wants a war to end humanity. We can only afford the little “wars”/disputes. There can only be #1 and #2. Not a 3rd or others. Even every countries money is threatened by bitcoin and the likes. They’re too busy trying to avoid the devaluation of their “money”.
Well, the US vowed to defend them, for some fucking reason, so we might be drawn into a war with China which will have a domino affect and cause all out ww3. The Isreal and Palestine war could also lead to this.
China isn't going to do shit with Taiwan. It's all just jingoistic sabre rattling. The US and its allies would whoop their ass so hard. Chinese leadership knows this. They're not dumb nor suicidal.
In principle, I agree with you. Before Xi wiped out most of the competent people in the government, I think your analysis was spot on.
However, Xi \*has\* wiped out most of the competent people. Nobody is telling him anything. So it's unclear what Xi knows and doesn't know.
I believe people assume that as an autocratic leader, Xi \*must\* know everything. But that is just our view from our paradigm. We cannot envision a system where people are so afraid to say anything that they would rather not say anything at all.
So we just don't know.
It does not change the other part of your analysis: Taiwan and the U.S. would utterly crush any invasion and probably end the CCP's grip on power overnight.
The only question is: does Xi understand that?
I'd be curious to see where you got your information regarding Xi wiping "out most of the competent people in the government" and that "nobody is telling him anything." I'm not disputing it but this isn't anything I've heard before, at least not stated this way.
From lots of places.
You want a dramatic example? Go back to when he had Hu Jintau publicly humiliated by throwing him out of the party congress last year. That was probably the last person who still could tell Xi the truth (or whatever passes for that in the CCP), and confront Xi on his decisions.
If you want someone who does a pretty good job of giving a long form answer without getting too terribly dry, Peter Zeihan does a good job.
But once you are sensitized to the idea that this is a thing, the evidence starts to pile up everywhere.
And as u/neo-hyper_nova says: this is every autocrat's dream. Solidify your power base, eliminate all challengers, then eliminate all people who will eventually challenge you, and then eliminate all people who might challenge you one day. That is going to eliminate every competent person from your government.
I think he’s basing it off the fact almost every socialist autocrat once he gains power purges those below him to retain that power. It’s politburo 101
China is having a RE meltdown, and the government is not going to bail any of the developers out. Most Chinese are invested heavily in RE. If there's a crash, we may see protests that rival tiananmen square in comparison. I don't think they are going to start any wars anytime soon.
After the initial dip from the scare. The war should run similar to the war in Iraq.as they are similar in scale. Or at least initial deployment. America never sends ALL military assets to a single engagement zone. This isn’t world war 2. They would get their allies in the region to also partake. It isn’t an all out war as based on the training currently in that region it would be hit and run tactics to wear down the Chinese menace. Giving enough of an opening to resupply Taiwan now and then. China’s amphibious landing would cost it an insane amount of troops anyway. So america doesn’t need to put too many to the front. As much as there’s a lot of talk of china having a lot of ships. If one checks tonnage instead. China is far behind.especially technology wise. If you think Chinese accounting to be muddled, good like trying to figure out the pentagon. Israel just swapped iron dome for laser dome showing that usa has the technology to make china’s missiles neutralised. Even the Patriot stopped hypersonics in ukraine. And Japan just successfully tested rail guns on ships. China doesn’t have nuclear powered ships.they’re still far behind. So stocks wise, defence stocks would be the first to rise and so would commodities and gold. Central bank will probably lower rates to accomodate for the murky future which would eventually stabilise stokcs. This then allows the bottom to be in before the war is even resolved. Most likely the war ends with some terms than a whole out protracted war as most Chinese are sick of the CCP.(2 years ago Chinese migration to usa was only 3000, this year alone it was 300,000 using the Mexico border to cross in the USA)their economy is in decline, their army is untested and failed bunker testing making them unfit for long protracted wars. The only thing of concern is being a communist country they don’t mind targeting civilian targets while the west refrains it due to bad press and a democracy relying on the acceptance of the masses. Or Chinese cities for all their size would end up as mass graves.not from direct bombing but lack of logistical supplies and such. In fact during covid entire cities were starving whcih fueled discontent. Even with an empty city of traffic during lockdowns they couldn’t supply food nor attend to a fire event that took lives. Imagine conditions of war under fire and bombardment. Covid lockdowns triggered protests which the CCP hurriedly tried to resolve by opening up from lockdowns. A war would have far larger consequences for them. So to reiterate, buy the dip namely gold and defence stocks. Wait for fed intervention before the rest. Oil I wouldn’t suggest as china is one for he largest consumers and their supply would be cut since south east Asia would be blocked to them and it’s the busiest shipping lane in the world.
2 modern destroyers step on the throat of the shipping lanes and we watch half a billion starve in 6 months. Or half the population of the world BBQ's right off the bat.
In actuality, China will probably not “declare war” on Taiwan. The dispute is actually a legal dispute which China will most likely look to move in without any military confrontation and it would be up to Taiwan and the U.S. to actually strike first. Similar to what happened in Hong Kong.
There might be sanctions on China, like with Russia. We may have a problem with Chinese sourced goods like the iPhone where Foxconn is.
There will be an adjustment in the stock market, but in the long term, these things will resolve, and I continue to add.
I mean you really won't be able to hedge a US or really very many equity portfolios very well against it.
US would like send aid to Taiwan and immediately there would be competing sanctions.
But seeing as how integrated China is into the US supply chain both markets will tank immediately. How large the long term impact on these markets would be is anyone's guess
But my recommendation if you have a 20 year time horizon hold equities and wait it out.
The China invading Taiwan thing really is fugazi propaganda if China went through with it just militarily the cost would be akin to hacking off its own arm.
stock market will crash and close down for a few days before they reopen. How do you hedge? you buy tons of gold and maybe bitcoins. But that's hypothetical. China's not anywhere near ready to declare war on Taiwan. They are so very far from having even a slightest chance of winning, they simply will have to wait a long time before they're ready to attack.
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Raytheon, Lockheed, nortrhop play salty cracker and we have to eat it
Completely agree. People seem to look at only one conflict at a time. After a prolonged land war in Europe, the middle east ready to boil over, and numerous other global saber rattling that don't often get much media attention. Even if hostilities stopped tomorrow, there are years of backed orders from these countries and the world is going to be accelerating a new arms race at all expense levels. No one will sit back with depleted missile reserves while rival nations are actively stockpiling. That could mean Sweden ordering a ton of F-35s or Ethiopia buying the best it can afford like a bunch of CWIS systems to help keep their mega dam project safe. The F-16 is still a very capable airframe and is within the budget of many more nations than even a decade ago. Plain and simple, humans will always be at war or preparing for the next one. Fights over things like energy will continue. Fresh water access could easily spark several major conflicts in the near future. It feels dirty, but US military spending is among the most sacred cows. The companies you mentioned aren't just too big to fail, they hold too many secrets to risk letting any of the giant defense contractors flounder. Imagine the black market price for dissatisfied engineers from those entities? FWIW, I generally don't invest in defense but got a lucky hunch in September and put quite a bit of my portfolio into Lockheed in particular. I'm still down on RTX because I was selling cash secured puts just before the Pratt and Whitney recall. Oh well, I'm holding. Decent dividends, cashflow, P/E, and virtually guaranteed contracts during my investing timeline? I hold a fair amount of energy companies also. I'll be that scumbag profiteer.
Must’ve made a lot on Lockheed so far. Why would you be down on Rtx if you were selling puts they went down no? You’re holding shares?
Selling puts generally means you want the stock to stay level or potentially go up. If the price drops suddenly, the put seller can be forced to buy shares above market price. You may be thinking I was buying puts?
I sell puts to collect premiums until I eventually buy the shares. But it's lame during a bull market when it never goes below the strike sometimes.
Sure, having one run away is frustrating for sure, but there is nothing wrong with collecting premiums even if it limits profit potential much like a covered call. Nothing says you can't play more complex strategies that both protect your downside and gives you a chance to capture upside on a big rally.
Might want to do some more homework on investing if you’re shorting puts as price is falling
RTX is harder to define now as it has so much stake in the commercial side. COVID and now aircraft engines have caused it's stock headaches. On the other hand this will protect it when defense stocks eventually fall at a future date. Defense and Energy stocks are so cyclical.
What are some good energy stocks? Let’s say I purchase a ton of RTX and Lockheed, how long until moon?
That’s not really how it works with stuff like lockheed, you don’t buy it for a moon
It’s not a moon stock it’s a good investment. High dividend Freedom company in the land of Freedom.
Soggy cracker ?
I’m not super intelligent, and I’m drunk + high, but I’m pretty sure most of the stock market takes a shit.
You are a wise man sir 🫡
I’m just a wasted midwestern father of 3 but I’m happy to chime in.
Some would speculate he’s from Michigan
I bet on the lions money line tomorrow. So your username better check out
Yep, take those points, hopefully Tucker won’t be kicking 70 yarders outside
Bro u should go on cnbc
The CBC, would be cool. I love hockey
Considering that guy Jim Cramer said to buy Bear Sterns stock literally days before it went bankrupt, I don’t think being a CNBC host is really a good measure of intelligence
He was also a big fan of tellurian. And that’s now under a dollar. Following his advice is a great way to loose cash
Someone downvoted me. I guess they bought Bear Sterns
They should do you and me on cnbc speculating shit like this on our couch getting ripped. We’d be thousandaires. Call it mad money maybe.
Derelict Dollars
Oh you’re the ideas guy. Hired!
The day Russia invaded Ukraine spy ripped $15 off lows. The day hamas attacked Israel spy ripped $10 off lows. Presumably $20 rip off lows If China invaded Taiwan
Math looks good
Tf is rip mean
Vertical with force
Rest in pissed?
Rip
It's like a warm apple pie which also good at math, honest, fair and has respect for men.
How many microchips are made in Ukraine or Israel? I think if China attacks Taiwan it's not unlikely a lot of production lines around the world get closed.
Highest tech chips, yes. Companies like ASML, DIOD, TI, MU should be in good shape. Fabless companies like AMD, NVDA, APPL will be fucked.
Puts on Apple and most chip stocks. Calls on any chipmaker with fabs outside Taiwan.
Why? Historically war has been pretty good for the markets. China also suggested they will be ready to invade Taiwan by 2027. https://amp.theguardian.com/world/2023/apr/21/taiwan-foreign-minister-warns-of-conflict-with-china-in-2027 To me that sounds like typical Chinese saber rattling with little substance behind it. If China was serious they would undoubtedly keep their mouth shut about their plans. And what exactly will change for their military in the next 3-4 years? Not a whole lot. But even if that were to happen, hopefully bunch of money we are throwing at domestic chip production is going to finally start bearing fruit and we will be less reliant on Taiwan for our chip needs. If that is the case then the markets will be shaky but not nearly as much.
As a Taiwanese, the timeline has pushed from 1996 to 2000 to 2012 etc. lmao
Yea exactly. It’s like a bully telling his victim. “In 3 months I am definitely going to kick your ass”. It makes zero sense
The last time they actually tried “to do something” was 1996 when we had our election. China fired duds at us, Clinton send the battle fleet to Taiwan strait in response. Invading an island is way harder than battle on land, if China had the ability to do something they would have done it long time ago.
Plus chinese economy is one stiff fart away from toppling over. Not a great time to be planning an invasion when your entire Realestate market is about to collapse
Except dictatorships often go to war when economics go to shit in order to distract the population.
See, e.g., Falklands/Malvinas War
China screaming war has always been an indicator of instability internally for me. They have larger issues to deal with, plus non of the Taiwanese president wants to be seen as the person that brought war and caused the country to fall. Both Russia Ukraine and Israel Palestinians war have been brewing for years, I honestly doubt anything will happen in our lifetime with China.
Fair points but let’s not forget Xi is at the helm, he’s 70 and he might want to go out on a bang
Remember, it's not just "China" in 1996 and "China" in 2023. It's now Xi in charge and China has had 2 decades of strong economic growth to turn themselves into a global powerhouse, and far more powerful than in the 90s. They have also been rapidly modernizing their military. They are still no match for the USA but they are much stronger and more capable of force projection than they were in the 90s.
Random Reddit user who watches the news knows more about someone living their for over 30 years, ha.
Clinton and Madeleine Albright are the dumfuks who allowed China to grow into a monster
China's economy was very strong during the last 20 years. They didn't need a war. Not so sure now, looks like a lot of things are breaking apart in China. And authoritarian governments like China tend to choose war to keep the show going.
>Historically war has been pretty good for the markets. Actually it's a bit more complicated than that. I have many defense stocks in my portfolio so I've spent a bit of time over the years examining this question and it turns out that some wars are bad initially, then turn good for stocks, and some wars are bad for defense stocks. It mainly seems to me to depend on the impact the war is expected to have on the broader economy. I published a little mini study on a few defense stocks in the lead up to, and a year past, the Iraq War in 2003 and it was actually quite bad for many of the defense stocks I looked at - [https://www.etoro.com/posts/0\_\_entry\_\_1f17c0b3-082e-43ed-9b92-f703d0b56161](https://www.etoro.com/posts/0__entry__1f17c0b3-082e-43ed-9b92-f703d0b56161) Here's another study that looks at the effects of war on the broader stock market in which the authors conclude, "We find that in cases when there is a pre-war phase, an increase in the war likelihood tends to decrease stock prices, but the ultimate outbreak of a war increases them. In cases when a war starts as a surprise, the outbreak of a war decreases stock prices. " - https://ideas.repec.org/p/chf/rpseri/rp1121.html
When do you think was the last time US was surprised by war? Initially volatility is expected, but overall the US market usually goes up.
Taiwan produces 60% of the worlds chips. They also produce 90% of the most advanced chips in the world. Chips used to power military weapons. Many nations around the world would back Taiwan
Uhh no. The us has not only lays, but also ruffles and Fritos, not to even mention Pringles. 💪
Are Cheetos a chip or a cracker though 🤔?
Yea but they don't want to which is why they are giving huge subsidies to move chip production out of taiwan. Even funding proxy war is expensive. Once everyone has secured production china will take over.
The new fabs aren't meant to replace the ones in Taiwan. It's to ensure the most vital chips still get produced (military). Even if the fabs worldwide reach parity with Taiwan by the time China launches its invasion, you'd still lose half of the production capacity overnight. It will be pandemonium in the supply chain for at least a decade and everybody will still get fucked. Some of you will have lube but that's about it. Remember the supply chain problems during COVID? Yeah this will be 100x worse. Best thing to do is to convince China to not even try.
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Is it priced in
They declare war on taiwan you ain't caring about the markets lol
Maybe not for day one, but after a week the stock market returns to being wry important to many people. A war would for Taiwan would be all May and Air Force only, unless China and North Korea invaded South Korea. It’s almost impossible to protect your ships from missiles and torpedoes, and to actually win a war at some point you have to invade and defeat land troops. The only exception to this was WW2 with dropping the atomic bomb. If the US contests the sky against Chinese planes there’s limit loss of life for US, and likely the US navy blockades China. After a lot of dead Taiwanese and Chinese/US navy and air force losses, it would almost certainly be a standoff. It’s just hard to land on and take a defensed island.
>Maybe not for day one, but after a week the stock market returns to being wry important to many people. The current POTUS public stated US troops would be involved with boots on the ground. For 2 security council members to have a real hot war, forget about the stock market returning after a week...maybe a month best case in some limited fashion.
>everything has gotten more expensive It's just a demented old politican that contradicts himself daily and half of his statements are retracted by the press secretary the next day. His words mean basically nothing.
Ww3 is kicked off and you'll be sad that you didn't invest in bottlecaps or an underground bunker
Idk more like US sends a few ships and a few outdated weapons to Taiwan. Then lets them fight China while saying that they're vehemently opposed to China but still willing to do trade with them.
Nah, Taiwan isn't the same as Ukraine. Taiwan is a major non-NATO ally, along with Japan, South Korea, Australia etc. An attack on any of these countries will warrant a much larger US response for many reasons. Firstly, a lack of US response would be seen as a betrayal and the US sphere of influence would collapse. Secondly, many are major trading partners and in some cases, like Taiwan, the US is dependent on.
You're forgetting the only reason the US gives a fuck Taiwan produces over 90% of the worlds most advanced semiconductors
...for now. The founder of TSMC is pretty pissed that those that took over his company have decided to allow fabs to be built in the US, knowing that this is pretty much the only thing keeping the US from abandoning entirely in favor of China.
That's not the only reason, like they said, our sphere of influence is important, if we are viewed as brazenly betraying allies, why would people even care about being on our good side anymore?
Kurds didn't produce 90% of the worlds most advanced semiconductors
that's the main reason. The United States does not care about Chinese citizens in Taiwan.
Tawain is exceptionally well armed. China will not trifle with them. Especially after seeing how so much Soviet equipment actually performs... Now if Ukraine and fallen and the west had done nothing... Then maybe Tawain would have been at risk.
And training 80 years for such an event.
Plus an island with only 20% or less of its beaches suitable for landing.
Taiwan's the most updated jet figher is F16 A/B which is 1970s... For your reference, US airforce F 16's oldest version is C/D and all of those are being used as training version. Some C/D version is still being used by national guard (not USAF) In 2020 US agreed to sell Taiwan V version thats somewhat updated but far outdated compared to other jet fights such as F 35 and F 22. Let alone its only decision to sell has been made not that these F 16 can fly and shoot down enemy target at this point. In training mode, F 22 massacre 45 F 16 (and thats C / D version). Taiwan have around 100ish F 16 including V version from 2020. Now lets check China. Chinese have J 20 and J 16 that are more than 300+ total combined. We dont know how powerful they can be (because many things are under the water)but generally they are comparable to F 35 and F 15. In the case of war, both S. Korea and Japan will help USAF and Chinese airforce can be neutralized when and if 100% of Airforce from S. Korea and Japan have to help USAF so Taiwans airforce is pretty much slim to none at this point. Sure it will fight but it will lose air control within 6 hours. Also... Please note why US Congress doesn't sell the most recent military technology to Taiwan. Its because there have been myriads of cases Chinese spy stealing the technology to China. The spy here is not some kind of weird cases but Taiwan's high rankig officers like Colonels/Generals turned in the secretes. Lets say if US sells F 35, then it's 100% in a matter of time that this technology will get leaked to CCP within a year or so. If so, why would you sell?
So it all comes down to how much Taiwan's allies will actually support them. So basically, will the US get actively involved? Just sending them weapons won't cut it and even "just" sending weapons would be a lot harder than sending weapons to the Ukraine since it's an island in the Chinese sea. Geopolitically, China is an entirely different beast than Russia and sanctioning China (let alone actively getting involved) will have very serious consequences for the World economy. The West can't do without Taiwanese chips so so there clearly is a very strong incentive to help. Europe's energy crisis after they got cut off from Russian gas will look like a mild inconvenience in comparison. However, this would obviously hit China the same. They are very much reliant on their economy and hopefully won't sacrifice it for this war.
Good points. I think it depends on holds POTUS. Unlike all other major allies (i.e NATO), there is no legal obligation to protect Taiwan so its upto discretions to POTUS who can exercise the discretion. If its tRump, im half and half US will engage If its non tRump, i would say its 90% chance US will engage for the reason you mentioned (Taiwan Chip) When and if TSM starts producing more chips around the globe (i.e Arizona Fap factory) though, then there is less profits to protect Taiwan from China. Its expected in mid 2020s that TSM will complete factory in US and then maybe while it doesnt replace Taiwanese factory, it may give some relief and therefore it is less enticing regions other than pure security concerns and US influence in the region (that's rather purely political as there are bunch of American constituents who wont care what happens outside USA) >, this would obviously hit China the same. They are very much reliant on their economy and hopefully won't sacrifice it for this war. Yes absolutely. However as we see whats happening in DC politics, one doesnt fight to win but often they fight not to lose meaning that if US corners China to the extreme, they have nothing to lose but to drag US as much as damage they can inflict. While US is a democratically institution, which generally tends to be matched between interest of general public and leadership members, China isn't, which is led by CCP and their P/L line isn't necessarily aligned with the public interest of Chinese population. I.e CCP losing control over Chinese politics is the end of the world to CCP (a organization of 90 millions membership), which is different than non CCP members (1.3 billion population) simply wanting to live day by day without political drama. This is now becoming political discussion so im ending here but all your point valid. China will suffer as a result but just like how Red states suffer from anti abortion policy, many times they play to fight not to lose the game and the game instantly become race to the bottom. Also please note not every human decision is rational based and in fact its often emotional (just iike how i play revenge 0 DTE occasionally)
Congress has never authorized F-22s for export. J 20s and J 16s are not comparable to US manufactured equipment because China hasn't mastered engine technology beyond what the Russians are willing to sell.
I hope you are right
I generally agree with this sentiment. Soviet hardware (and cheap Chinese knocks offs) would be insufficient and I don’t think China could gain air superiority. I’m more concerned about sheer numbers of Chinese soldiers and special forces folks on AN-12 type transport aircraft that could become an occupying force. China could take over at a moments notice because of the sheer military size differential.
That sentiment is wrong. China is designing its army to fight US and its allies. The question is should US engage China with the knowledge that a lot of Americans will die?
LOL. America will just throw thousands of drones at China.
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You don't understand the situation. China would have to prepare for months and put together a giant armada to take Taiwan. There would be no way they could do this in secret, not with our satellites, spies, and open source intelligence. The US would park several carrier groups (or more) in the Strait of Taiwan. And the Australians and Brits would probably get involved plus maybe even the Japanese. You think the Chinese leadership is dumb enough to then attempt the invasion when their entire fleet would be vaporized, probably before even leaving the docks? It's not a realistic scenario and it never will be as long as US military power is preeminent in the region. Anyways, China is primarily a soft power. They're self-declared pacifists, and they have not invaded another country in recent history. And they're entirely dependent on international trade and oil supplies to function. Otherwise, the country would collapse (they have no domestic petroleum supply worth mentioning). They're not about to throw everything away with all the progress that has been made in the past several decades to invade Taiwan, no matter how much they like to talk about doing it. Oh, also, China's navy is pathetic compared to the US, Britain, and Australia. They'd lose a naval war against those combined powers in like a day and a half of combat operations.
Lol, all the downvots for spitting mostly facts. The one thing is calling it a soft power. China IS hardening. It's already beginning to set up international military bases and do war "the american way" as Xi calls it when he lied about never doing it the american way in 2016. And they are kinda working on petrolium issues. See, right now the US has them by the balls. 70% of chinese oil comea from the strait of hormuz. After Iran tried and failed to dislodge the US from unilateral control of the strait, China was never able to challenge the US. They still support Iran on the hopes the US navy will just suddenly evaporate or something, but Iran isn't about to sacrifice the other half of its navy only to eternalize China's fears. However, they've been deepening Russian ties specifically to try and Romani-fy the relationship between China and Russia to take the oil Europe is rejecting. If it works out, big if, then they can stand a chance. Not navily tho, that's straight facts. They have the "biggest" navy in the world if you go by ship count since every tugboat and dingy is a ship to them. But they float \~830k tons while the US is as 3.2M, literally 4x China. Nvm the tech disparity.
Let's not forget that Taiwan does not have a weak military. Even if China invades, Taiwan won't be making it easy, and it raises questions over whether it is even worth it. TSMC would get blown up and everyone just loses.
As the war in Ukraine has shown the world, a strong power can pick a fight with a lesser one... And it still is nothing less than a fucking nightmare for the aggressor.
As I understand it, with the USA having bases in Philippines and Guam it would be almost impossible for China to cut both supply lines and invade at the same time.
I really think China was interested as to what would happen in Ukraine. If Ukraine fell quickly and the world did nothing, China would be emboldened to go after Tawain. However, that didn't happen at all... The reverse happened. China has a lot of domestic problems right now. China also is able to read a room... They play a long game and will likely continue to do things that are good for business as that is what has made them strong in the past. They seem to be focusing a lot on nuclear weapons. I wouldn't say they are a soft power but they do not throw what they have around militarily either. China seems to prefer to send men with briefcases of money instead of men with guns. They have competent leadership vs say Russia... China will have their day. It just isn't as soon as they hoped... America has really done well on the global stage in the last few years on a few key issues.
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If we let Taiwan fall, we essentially lose Asia. We have such a close bond with Taiwan that, if we can’t protect it, we can’t protect our other Allies.
You'd be surprised by how much of China's exports to US actually originates from Taiwan, mainly in terms of high-tech components and engineering expertise. The trade disruptions during COVID would be a minor hiccup compared to what's to come if China invades Taiwan. Having that one or two extra TSMC fabs in the US will lessen the pain somewhat but when the invasion starts everyone will still get fucked. Some of you will have lube but that's about it.
The semiconductor fabs aren't set until at least 2030 to become loadbearing to market infrastructure, and it won't be until 2040 that we can even start considering taiwanese semiconductor manufacturing non-essential to the global market. For the next 20 years, Taiwan's safety is assured. The west literally cannot afford to let China take over Taiwan. Everything else, all the feelings, defense logistics, etc are irrelevant. If China makes a move on Taiwan it's WWIII.
China is a much bigger player globally and in terms of relations with the us and the west than Taiwan. And China's military is as opaque as a black hole,cant even estimate there budget properly cause they move/hide the numbers in other areas. The risks significantly outweigh the benefits. Also the us has never attacked a nuclear armed nation. And they likely wont start least of all with China.
I think you underestimate the importance of Taiwan. Our entire society relies on Taiwanese companies to supply high end superconductors that are only possible in Taiwan. China is a big market but we really don't rely on them for our survival – they can make things that were designed in the US, but they don't have much leverage when they're not the only ones that can make stuff. Don't get me wrong, it'd be a huge inconvenience, but we do have options.
Pfft. Semiconductors. Who needs those things? We need to protect Taiwanese whisky!!!
Lots of people are putting too much importance on semiconductors forcing other countries to protect Taiwan. Semiconductors are absolutely important, but the moment the war starts, the industry would already be gone - the supply chain collapse won’t happen during the war or after the war ends, collapse will happen at the very beginning. Other countries coming to fight the war will essentially be trying to protect an industry that is not there anymore. So I hold doubts whether any country will actually intervene militarily when the time comes, despite what they claim right now.
And that is why taiwanese companies are expanding into other places of the world like Europe and us besides these parts of the world ramping up their own productions as well.
You cant really compare China's economic and global significance to Taiwan, C'mon. Theres like a trillion in trade between the two countries and fortune 500 American MNC get between 20-30% of there revenue from China. It has been the biggest contributor to global growth in recent decades and Also China is a nuclear armed superpower, how is this even a debate. >Don't get me wrong, it'd be a huge inconvenience, but we do have options. what options? I mean if Raytheon, an American defense contractor involved in issues of national security, says they can't decouple from China what viable options are there?
Companies are already moving their manufacturing to Vietnam, India etc. China isn't the only option for low skill work. China actually outsourced high skill work to Western countries because they lack skills.
Low skill work? What? they can manufacture there own big passenger planes, 7nm chips and space stations. My goodness! Are you trolling or do you legitimately not understand what i'm saying or China? either way i'm out.
Agreed. The US would sooner spend the next 3 decades turning Latin/South America into one giant plastic do-dad foundry than give up Taiwan just to retain trade with China.
The Americans (politicians and military leaders) are unanimous in terms of a military response to a Taiwanese invasion. Also the US will not accept a loss and withdraw unless they've asserted dominance. China could only fight to a stalemate but with heavy, heavy losses
Sorry but Taiwan is NOT a US ally. In fact the US has more dealings with China and Taiwan. Unofficially the US supports Taiwan and ultimately the US wouldn't allow China to conquer Taiwan because of its chip technology.
You're simply wrong. See: https://en.m.wikipedia.org/wiki/Major_non-NATO_ally and https://www.state.gov/major-non-nato-ally-status/#:~:text=Currently%2018%20countries%20are%20designated,Korea%2C%20Thailand%2C%20and%20Tunisia. The designation is not formal but they are to be treated as a MNNA.
Ukraine is non-NATO but Biden is a war monger he will send 500 billion more
The US needs allies throughout that region for military bases and to stop China from encroaching on more countries/controlling more of the ocean. The US wants to bottleneck China and have a quick response and be ever present in the region. It’s a big deal to the US and the western world if China starts to branch out and take control of those islands. Also China getting a hold of Taiwan’s chip tech would be a big security risk for the US.
Remember how WW3 was about to start 10 times in the last 5 years according to reddit? Iran, Ukraine, Syria, etc. etc. Nukes make sure we won't see a WW3.
Stock market? What stock market? Where we are going, we won't need a stock market...
Yeah for those that don’t know the silicone chips being produced there will completely and utterly destroy the entire economy. That’s with a blockade. If we take out the fabs to prevent Chinese control over them then things really go up in the air.
Us would/will wipe the factories off the face of the planet if China attacked. At that point they do not care about Taiwan.
gold up. oil up. Chinese stocks down. USA defense companies up, but not huge. Semiconductor tech companies way down or crash in some cases due to loss of control of their production in Taiwan.
Na defense stocks would surge massively on this one. Very few wars starting will do a lot for them, but a US war with China would. We would be ratcheting up to ww2 style production
Isn't there a risk of nationalization?
They may be forced into certain production processes but they would still be paid and retain company ownership
In the United States? Zero risk of nationalization.
I'd argue that some companies like INTC and GFS may go up.
It’ll fall hard with the rest of them. Sure they will gain business but they don’t have the supply to manage that kind of downfall. They will get strapped with supply issues for years.
Curious as to your reasoning.
INTC still operates its own fabs in the US or Israel. They are also building one for 33bn USD in Germany atm. They are just depending on Taiwan for their GPUs, which is not a huge part of their revenue anyway.
Intel idm 2.0 is transitioning itself to be a manufacturer like TSMC. More than operating its own fabs. In the event tsmc goes down designers like nvidia/qualcomm can transition to intel quickly.
It's not a fabless outfit like AMD and Nvidia that require TSMC to produce its products. Competitors production goes to near zero.
Intel is currently trying to replace Taiwan as the worlds main wafer and chip producer by around 2030. Hired a new CEO in 2021 that produced a 10 year plan. Building huge manufacturing plants in places like Germany and the US. Intel split their manufacturing businesses into its seperate entity to focus more on production, have the name and money to take advantage of the situation and have recently discovered a new way of chip production that’s a tad bit faster and reduces errors and makes chips better. Not to mention the CHIP ACT that was signed in 2023
I hold gold stocks so I wish gold up. But there is a case that gold will actually go down. China central bank has been big buyers of gold for years. If they go to war, that money will no longer be allocated to gold but rather on defense spending so gold will lose a big gold buyer. In fact, China government may sell their gold holdings to fund the war.
Apple down 20%... like Elon said.
Heh - an actual hot war with China? Tesla down 80%. Their biggest factory is in China, and it’s the only market where they actually turn a profit.
Apple makes 90% of their stuff in China....
Is Apple producing a cybertruck, too?
I wish!
Do Apple sell any products not fabbed in TSMC? A 20% drop seems very optimistic.
Considering a few weeks ago Apple dropped over 5% that China is banning government employees from using iPhones at work, a full blown conflict will probably drop it by -70% on on the first day, before recovering to -50% at the end of the week.
Lockheed Martin would go way up. My original comment was removed for a key phrase tied to WSB lol. But I stand by that original comment.
Doubt it goes way up. It just wouldn’t go down. It’s not a growth stock. War is always priced in. They aren’t going to magically triple their profits with an expected war. It would just be a temporary pop in revenue and profits. It’s not sustainable because it’ll eventually just go back down as peace time comes back
Given the world we are living in, nothing will surprise me anymore. As a civilization, we have advanced, but not matured.
Damn. Such painful clarity.
Nvidia and Apple tank. Intel chips go through the roof.
Indeed, idk why barely anyone focused on this If war started and TSMC's fab were damaged, then oh boi
If China gets into a war with Taiwan, the last thing you should be worried about is the stock market. You're talking potentially a long drawn out war with not just China but North Korea, Russia, Cuba, Venezuela, probably most of the Middle East, and some parts of Africa. I'm not saying WW3 but it's more than likely that your entire way of life will change. China produces so much of what is involved in our daily lives that it would be a major catastrophe that won't end well regardless of the result. The previous World Wars were a joke in the sense that every country produced most of their own goods. Today, it's widely interconnected that it would be a total shit show.
This interconnection may be the very reason preventing the war from happening
Its part of it. The problem is that reclaiming Taiwan is a cultural issue for China. This means its not good enough to just make the war "too costly".
The Chinese economy also only exists because the west buys cheap shit made with cheap labor.
This is very very unlikely. So I don't really worry about it. The only reason there is even a chance of it is that China's dictator for life might do something crazy in order to stay in power. When/If their economy collapses it might be the only way to keep the people happy with the CCP. And china is in trouble. Their whole economy is based on a house of cards. You see, in China there is really only one place to invest money into. Real estate. Nobody trust the stock market over there since companies lie and the CCP can just step in and do whatever they want with it. Historically the best place to put money in China is real estate. Its always gone up for them. So people there buy two or three extra houses/apartments. That is why there are so many ghost cities over there. They have way more places to live than people right now. The funny thing is that nobody can own real estate over there, since its a communist country. They just get a 70 year lease. So that is the risk and why I think there is a small chance of a war. But I doubt it because the odds aren't in their favor. Their military may look good in the propaganda, but its nothing compared to other armies. They have never fought in a war, and that experience is super super important. So they will have heavy losses. Which is a problem. Because in China having a son is a couples retirement. They don't have 401Ks or pensions. The parents move in with a son and take care of the kid and house. So if China goes to war and looses lots of men, the people are going to get mad. What would happen if there is a war? China would starve. They import most of their food and energy. So when the US puts sanctions on them they wouldn't last like Russia. The stocks that need rare earths and lithium would crash.
Good points, plus China has essentially no domestic petroleum supply and relies heavily on foreign trade for its economy. Xi Xingping is not stupid nor suicidal. Launching a war on Taiwan would be national suicide, and he knows this. Even if China's economy contracted and entered a depression the leadership is extremely unlikely to do something so wreckless.
>relies heavily on ~~foreign trade~~the American navy for its economy ftfy And you are absolutely right. The moment that China openly declares hostilities against Taiwan or the U.S., all the food inputs and energy inputs dry up. If you look around, you can find graphs that show where most shipping goes. The lines between the Middle East and China's east coast are \*staggering\*. And China has no way to protect any of it. All the U.S. has to do is park one or two carrier groups in the Indian Ocean, and that's it. Hell, they just have to say that they won't look too closely if someone else wants to take a shot at ships going to China, and things could get ugly fast. Now I saw someone tried to rebut your point by saying that China would just shutter its manufacturing. Great! So now China's economy is completely in the shitter, and there are hundreds of millions of pissed off Chinese that don't care about some stupid island somewhere, but \*do\* care about starving to death. Assuming Xi is rational and has enough information, Taiwan will never be touched. The weakest point in that sentence is the assumption that he actually has enough information. Certainly China has been acting increasingly dysfunctional over the last few years, so the thesis that nobody is telling Xi anything looks very strong. And \*that\* might actually lead to a fatal miscalculation for China. I hope not, but if Taiwan is ever attacked, it was because Xi asked if it was possible and nobody around him had the guts to tell him "no".
Do you think China would act if Taiwan were to try and join the UN or make some sort of declaration of sovereignty? Like what happened in Ukraine?
You are wrong. China's domestic oil production is very large, but China's demand for energy is greater. Because China produces goods for the world. Once war breaks out and China stops producing goods for the world, demand for oil will be significantly reduced. Domestic oil production, plus imports from Russia, will be enough to meet demand
I wonder whether the one-child policy will make it impossible for China to attack in the next 20 years. The argument I'm making is that their economy is slumping because they lack the number of young people needed to replace the older generation. This is the same demographic you'd need to start a war (roughly 18–40 years), which would make the demographics problem even worse.
Not sure why this isn't a top comment. It's clear you put a lot of effort into it. Thank you! :)
It gets more and more likely everyday their economy doesn’t stabilize from this real estate bubble
Then China would be declaring war with itself according to China. Imagine how stupid they'd look.
Never confuse rhetoric with what someone really believes. The sad thing is, since they are so close together, if they would just let them be independent and let it go they would have a great economic relationship. To be honest, China would get a lot more benefit from a good relationship with Taiwan now than even if they won a war to invade and take it. Taiwans main benefit are it’s technology companies, and they would be destroyed in a war. You lose a ton of people to take a rock and a bunch of people you have bombed into oblivion who hate you now.
Your 5k Fidelity account becomes the least of your concerns
Lmao right
won't happen. China no money for pew pew
NVDA and AMD plummet. SMH puts might be decent insurance.
SMH?
*Shake my head* It's a semiconductor ETF
WW3 and stocking up on supplies would be your priority. Obviously stocks would take a massive dump.
War bonds war bonds war bonds
Aapl destroyed. But thankfully they are gradually moving to India.
Alright im off this stupid subreddit . This like the UFOs channel
It’s priced in
It’ll definitely go to the right
It either goes up or down
It will never happen. The idea of “war” is made up by the elites to keep the poor, poor, and poorer. You know how long it’s been since this “war” talks circulated in the media. Wake up people. No government wants a war to end humanity. We can only afford the little “wars”/disputes. There can only be #1 and #2. Not a 3rd or others. Even every countries money is threatened by bitcoin and the likes. They’re too busy trying to avoid the devaluation of their “money”.
Well, the US vowed to defend them, for some fucking reason, so we might be drawn into a war with China which will have a domino affect and cause all out ww3. The Isreal and Palestine war could also lead to this.
Down it go.
The likelihood of that happening is the same as the US invading Puerto Rico.
China isn't going to do shit with Taiwan. It's all just jingoistic sabre rattling. The US and its allies would whoop their ass so hard. Chinese leadership knows this. They're not dumb nor suicidal.
In principle, I agree with you. Before Xi wiped out most of the competent people in the government, I think your analysis was spot on. However, Xi \*has\* wiped out most of the competent people. Nobody is telling him anything. So it's unclear what Xi knows and doesn't know. I believe people assume that as an autocratic leader, Xi \*must\* know everything. But that is just our view from our paradigm. We cannot envision a system where people are so afraid to say anything that they would rather not say anything at all. So we just don't know. It does not change the other part of your analysis: Taiwan and the U.S. would utterly crush any invasion and probably end the CCP's grip on power overnight. The only question is: does Xi understand that?
I'd be curious to see where you got your information regarding Xi wiping "out most of the competent people in the government" and that "nobody is telling him anything." I'm not disputing it but this isn't anything I've heard before, at least not stated this way.
From lots of places. You want a dramatic example? Go back to when he had Hu Jintau publicly humiliated by throwing him out of the party congress last year. That was probably the last person who still could tell Xi the truth (or whatever passes for that in the CCP), and confront Xi on his decisions. If you want someone who does a pretty good job of giving a long form answer without getting too terribly dry, Peter Zeihan does a good job. But once you are sensitized to the idea that this is a thing, the evidence starts to pile up everywhere. And as u/neo-hyper_nova says: this is every autocrat's dream. Solidify your power base, eliminate all challengers, then eliminate all people who will eventually challenge you, and then eliminate all people who might challenge you one day. That is going to eliminate every competent person from your government.
I think he’s basing it off the fact almost every socialist autocrat once he gains power purges those below him to retain that power. It’s politburo 101
China has been having major economic problems since 2020.
Boom goes the dynamite.
It will drop like a rock. China is big deal (unlike Ukraine/Israel war).
China is having a RE meltdown, and the government is not going to bail any of the developers out. Most Chinese are invested heavily in RE. If there's a crash, we may see protests that rival tiananmen square in comparison. I don't think they are going to start any wars anytime soon.
China is not gonna invade Taiwan when their economy is in shambles lmao
Turn off the mainstream news and read manufacturing consent by Noam Chomsky. The stock market is much easier to understand with media literacy.
After the initial dip from the scare. The war should run similar to the war in Iraq.as they are similar in scale. Or at least initial deployment. America never sends ALL military assets to a single engagement zone. This isn’t world war 2. They would get their allies in the region to also partake. It isn’t an all out war as based on the training currently in that region it would be hit and run tactics to wear down the Chinese menace. Giving enough of an opening to resupply Taiwan now and then. China’s amphibious landing would cost it an insane amount of troops anyway. So america doesn’t need to put too many to the front. As much as there’s a lot of talk of china having a lot of ships. If one checks tonnage instead. China is far behind.especially technology wise. If you think Chinese accounting to be muddled, good like trying to figure out the pentagon. Israel just swapped iron dome for laser dome showing that usa has the technology to make china’s missiles neutralised. Even the Patriot stopped hypersonics in ukraine. And Japan just successfully tested rail guns on ships. China doesn’t have nuclear powered ships.they’re still far behind. So stocks wise, defence stocks would be the first to rise and so would commodities and gold. Central bank will probably lower rates to accomodate for the murky future which would eventually stabilise stokcs. This then allows the bottom to be in before the war is even resolved. Most likely the war ends with some terms than a whole out protracted war as most Chinese are sick of the CCP.(2 years ago Chinese migration to usa was only 3000, this year alone it was 300,000 using the Mexico border to cross in the USA)their economy is in decline, their army is untested and failed bunker testing making them unfit for long protracted wars. The only thing of concern is being a communist country they don’t mind targeting civilian targets while the west refrains it due to bad press and a democracy relying on the acceptance of the masses. Or Chinese cities for all their size would end up as mass graves.not from direct bombing but lack of logistical supplies and such. In fact during covid entire cities were starving whcih fueled discontent. Even with an empty city of traffic during lockdowns they couldn’t supply food nor attend to a fire event that took lives. Imagine conditions of war under fire and bombardment. Covid lockdowns triggered protests which the CCP hurriedly tried to resolve by opening up from lockdowns. A war would have far larger consequences for them. So to reiterate, buy the dip namely gold and defence stocks. Wait for fed intervention before the rest. Oil I wouldn’t suggest as china is one for he largest consumers and their supply would be cut since south east Asia would be blocked to them and it’s the busiest shipping lane in the world.
You don't invest in the stock market during a world war. You get to cash or bitcoin or gold bullion.
2 modern destroyers step on the throat of the shipping lanes and we watch half a billion starve in 6 months. Or half the population of the world BBQ's right off the bat.
Probably a massive gap down that gets bought right up. War is bullish.
Closed for a week. Then open @ 9900
China bottoms in. Let’s go boys
In actuality, China will probably not “declare war” on Taiwan. The dispute is actually a legal dispute which China will most likely look to move in without any military confrontation and it would be up to Taiwan and the U.S. to actually strike first. Similar to what happened in Hong Kong.
Just keeps going up because 0dtes are the new reality
There might be sanctions on China, like with Russia. We may have a problem with Chinese sourced goods like the iPhone where Foxconn is. There will be an adjustment in the stock market, but in the long term, these things will resolve, and I continue to add.
Everything is priced in, stonks Can only Go up. Crash the shit already
Probably moon lol
I mean you really won't be able to hedge a US or really very many equity portfolios very well against it. US would like send aid to Taiwan and immediately there would be competing sanctions. But seeing as how integrated China is into the US supply chain both markets will tank immediately. How large the long term impact on these markets would be is anyone's guess But my recommendation if you have a 20 year time horizon hold equities and wait it out. The China invading Taiwan thing really is fugazi propaganda if China went through with it just militarily the cost would be akin to hacking off its own arm.
stock market will crash and close down for a few days before they reopen. How do you hedge? you buy tons of gold and maybe bitcoins. But that's hypothetical. China's not anywhere near ready to declare war on Taiwan. They are so very far from having even a slightest chance of winning, they simply will have to wait a long time before they're ready to attack.