RE:Is America starting WW3 with a new breed of weaponsObscure1 wrote: https://www.cnn.com/2022/03/11/business/alibaba-stock-sec-delisting-chinese-companies-intl-hnk/index.html?utm_source=optzlynewmarketribbon
The USA just kicked sand in China's face.
China's support of Russia will come at a very steep cost to Russia which will make China stronger every day.
Perhaps the USA finally sees the writing on the wall and is prepared to do what it does best.
I agree with this post and your previous post. Thanks for posting.
What is going now with the sanctioning of a major economy and use of banking systems such as SWIFT as part of the sanctioning regime is likely to have profound implications for international trade and the world financial system. The second and third order effects could be very large and the interrelationships between them complex and difficult for even the pros to figure out. This complexity increases risk in the world financial system and more risk means lower asset prices
Here are some additional thoughts
1....with the sanctioning of the Russian airline, the Russians are returning many leased planes. The lessors will likely have to write off billions in unpaid future lease revenue over the next couple of quarters. This is a short term and immediate effect on the SP of these leasing companies, many of which in this case are European. Longer term Aeroflot will run out of spare parts which will ground the whole airline and the airplane parts and maintenance industry will take a hit.
2....more importantly, many countries will reluctant to store their money in US dollars and especially with US banks for fear that these assets may be frozen at some future time at the whim of US politicans no matter how big your economy is (that genie is now out of the bottle). This in turn will affect on the value of the US dollar over time and its status as the world's reserve currency. I mentioned in an earlier post that the pipeline deal signed between Russia and China last month will settle payments in Euros not US dollars. This is the beginning.
3....US energy policy under Biden is already having significant unintended consequences - it is strengthening hostile regimes to the West such as Venezuela, Iran, China, Russia and North Korea. Africa and to a lessor extent South America is already under the wing of China and hence China controls many strategic commodities such as cobalt and lithium which are vital to the future economies of the US and Europe.
How all this will play out as people figure this out and decide what their reactions will be is almost impossible to measure right now. It is simply too new and complex. We have already seen the immediate effects of this complexity- higher market volatility from day to day. This volatility is a clear signal that the pros don't know what to do and haven't figured out what to do. Even with all my years of experience, I am in the same boat.
When you combine this with excessive government debt and high inflation, it does not paint a pretty picture going forward. One thing for sure IMHO is that the poor in the world are going to take the biggest hit and how they react could change a lot things including "whose who in the zoo". I remember Cardinal Leger saying in the 60s..."unless the developed countries help the poor in the world they will at some time come and get the riches". Perhaps we are starting to see that.
With all that in mind, I agree with Obscure. My current portfolio stance is clearly not FOMO!!!
If I am wrong about all this then IMO it is better to be safe than sorry and I will still be OK.
As the Captain in the old show Hillstreet Blues would say to the officers at the beginning scene in each show - "Be careful out there!!"