On the Brink of a ‘New Cold War’
Investors are caught in the middle between the world’s two largest economies, again. The United States is “politicizing” the stock market and risking a “new cold war,” claim Chinese officials, but where you stand depends on where you sit.
The US House of Representatives will pass legislation soon to prevent traders getting ripped off by stock market frauds. This has been going on for ages, but it’s now politically convenient to do something about it.
You have voters wanting revenge for coronavirus, most stock market frauds come from the place that it originated, this legislation will definitely hurt that place, but you don’t have to name it explicitly in this bill!
Wang Yi, Foreign Minister for China, is onto this. He ordered a news briefing this weekend, and pictures were beamed straight back to Washington. He knows winners write the rules and that his country still doesn’t wield the USA’s economic power, but he insists that Beijing’s position ever changing is “wishful thinking.”
The state has “red lines;” Taiwan is a province, Hong Kong will have new security laws. The US administration will test those lines, and investors will either turn a blind eye or start getting behind aerospace and defense stocks in anticipation of it bubbling over.
There are certain companies called upon in that worst-case scenario, but assuming the war stays cold, it’ll remain a trade war. We spent most of last year writing about it and can confirm that market volatility follows trade talks very closely, so stay on your toes!
