We are reposting a repost of a piece we did last September.
Our sense is Mr. Xi is testing and doing the calculus if the U.S.is willing to fight WWIII over Taiwan.
Taiwan and U.S. officials have expressed alarm over nearly 150 flights near Taiwan in the past week by Chinese military aircraft. The Chinese aircraft have included J-16 jet fighters, H-6 strategic bombers and Y-8 submarine-spotting aircraft and have set a record for such sorties, according to the Taiwan government. – WSJ, Oct 7
Taiwan is now the most geopolitically important country in the world in a way that no Middle Eastern country ever was. Semiconductors are the new oil, and Taiwan produces almost 2/3rd’s of semi global manufacturing.
Loose Lips, Sinks Battleships
No doubt Mr. Xi was taking copious notes as he viewed and listened to this very destabilizing and damaging interview, in which the POTUS effectively stated that America’s NATO allies were expendable. We called out how dangerous this talk was in our 2018 post, The Day “Strategic Ambiguity” Died..
Tucker Carlson: So membership in NATO obligates the members to defend any member that is attacked. So let’s say Montenegro, who joined last year, is attacked, why should my son go to Montenegro to defend it from attack?
President Trump: I understand what you are saying. I have asked the same question. You know Montenegro is a tiny country with very strong people… They may get aggressive, and congratulations you are in World War III…But that is the way it was set up, don’t forget I just got here. – GMM, July 2018
Trump is gone but Mr. Xi knows the country is divided and 74 million Americans voted for Mr. Trump.
If the Evergrand crisis spins out of control, will Mr. Xi need to Wag the Dog?
摇狗 Yáo gǒu?
As with all things in the market, it doesn’t matter until it matters. It is starting to matter.
Currently, low risk, high impact event with the temperature rapidly rising.
No Pom-Poms
Sorry, folks, we don’t do pom-poms at GMM.
Nevertheless, we have given up on how markets will react — to just about any and everything, for that matter — as tensions ratchet up in the Straight. We have are suspicions, and they don’t make us sleep better at night even in this everything market where everything is bullish.
Protect your Blind Side, folks. Keep the Taiwan Straight on your radar.
The Taiwan Strait Getting Hot, Hot, Hot…2.0
The Taiwan Strait Getting Hot, Hot, Hot…
One of GMM‘s most excellent followers, who we very much like and respect, responded with this:
In an interview with Fox’s Tucker Carlson last night, President Trump seemed to question the raison d’être of NATO and foreign alliances in general.
Tucker Carlson: So membership in NATO obligates the members to defend any member that is attacked. So let’s say Montenegro, who joined last year, is attacked, why should my son go to Montenegro to defend it from attack?
President Trump: I understand what you are saying. I have asked the same question. You know Montenegro is a tiny country with very strong people… They may get aggressive, and congratulations you are in World War III…But that is the way it was set up, don’t forget I just got here. – The Day “Strategic Ambiguity” Died. GMM July ’18
Wonder what our dear reader is thinking now?
Global Macro Monitor 