🥊📈 U.S./China Tensions Through the Roof
Happy Hump Day everyone,
Last week we saw Uber announce they were free cash flow positive, Robinhood laid off 23% of staff, Hungary is allowing corporations to pay taxes in euros or dollars, the $1.337B Mega Millions jackpot was won in Illinois, and West Virginia is cutting ties with JPMorgan, Goldman, BlackRock, and other big financial institutions.
Enjoy this week’s Hump Days!
- Humphrey, Rickie & Tim
In the Markets
Featured Story
On Tuesday, House Speaker Nancy Pelosi arrived in Taiwan despite repeated warnings from Beijing claiming that her visit was in defiance of its sovereignty. Pelosi’s departure from the island today (Wednesday) leaves military tensions over Taiwan to their highest level in more than two decades, an escalation that is set to persist long after she returns home.
Nancy Pelosi, the highest-ranking U.S. official to visit Taiwan in a quarter century, framed the visit as part of a broader struggle over the future of democracy stating that her trip signalled “America’s unwavering commitment to supporting Taiwan’s vibrant democracy.”
Pelosi met with several pro-democracy activists with ties to Hong Kong, Tibet and mainland China at Taiwan’s National Human Rights Museum. She also met with the vice president of Taiwan’s legislature where she appeared to refer to Taiwan as a country, a reference that could further agitate Beijing. U.S. foreign policy adheres to a “One China” policy that acknowledges — but doesn’t endorse — the claims by Beijing over Taiwan. Although, Pelosi’s office denies the trip nor her statements contradict longstanding U.S. policy regarding Taiwan.
China retaliated against Taiwan announcing new bans on imports of Taiwanese citrus and other food, saying it detected pests, excessive pesticide residue and Covid-19 in recent shipments. Additionally, China’s People’s Liberation Army (PLA) said naval, aerial, strategic-missile and other forces conducted joint training on Wednesday to the north, southwest and southeast of Taiwan prior to the live-fire drills that are slated to begin Thursday. Depending on the launch sites and missile types, experts say, the PLA projectiles could fly over Taiwan — a gesture that would be seen as a major escalation.
While the U.S. claims there has been no change in its Taiwan policy, lawmakers have made high-profile visits in recent months, and President Biden has repeatedly suggested the U.S. would intervene if China were to attack Taiwan. The Russian invasion of Ukraine has the rest of the world watching what is developing in the Taiwan Strait with a very close eye. Pelosi may have left the island already but the effects of her visit will be felt for months to come.
Weekly News Roundup
Nancy Pelosi Arrives in Taiwan as China Warns of Disastrous Consequences (WSJ)
House speaker Nancy Pelosi arrived in Taiwan on Tuesday for a show of American solidarity for the island, becoming the highest-ranking U.S. official to visit in 25 years. Pelosi defied repeated warnings from Beijing and the visit angered Beijing over what it regards as a challenge to its sovereignty. Shortly after her arrival, Beijing issued a volley of statements condemning the visit, sent fighter jets over the Taiwan Strait and said it would conduct live-fire exercises around the island.
RH: Tensions are at all time high and the rest of the world is watching China’s every move with a 100x magnifying glass.
Ukraine Grain Shipment Departs for First Time Since Russian Invasion (WSJ)
Under a deal aimed at easing global food shortages, Ukraine dispatched its first grain shipment since the start of Russia’s invasion. The deal between Ukraine and Russia, brokered by the UN and Turkey means that grain stuck in Ukrainian silos could get safe passage through the Black Sea. However, even with this deal in place, the U.S. Department of Agriculture predicts Ukraine will only be able to export half the tonnage of the season before.
RH: This first shipment is a test to see if Russia will actually play nice. Going forward, this will help (at least a little) toward easing the high food prices we’re seeing across the developed world.
Yellen Says Economy is not in a Recession Despite GDP Slump (CNBC)
Treasury Secretary Janet Yellen said Thursday the U.S. economy is in a state of transition, not recession, despite two consecutive quarters of negative growth. Yellen directed attention toward the strong job market, strong household balance sheets and resilient consumer spending. Yellen insisted that a recession meant a “broad-based weakening of our economy” that includes substantial layoffs, business closures, strains in household finances and private sector slowdown; none of which we are seeing.
RH: More on this story linked in the video at the bottom of this e-mail!
Charts of the Week
How long will technology outperform? Even after a brutal 2022, the tech sector relative to the overall market is still at levels last seen in 2000…
Chart Source: J.P. Morgan