August 2, 2022, 10:08 am EDT
Tension Between US and China
The tension between US and China rises up quickly as Nancy Pelosi is going to visit Taiwan where China claims Taiwan belongs to China.Both Shanghai and Hong Kong indexes were down more than -2% accordingly.
China had threatened the US with the potential conflict without details. It is likely that more confrontations are going to happen in the future.
In our opinion, this could be one of the triggering events for a major breakdown on the vulnerable stock markets. China’s ambition is to expand its power throughout the world like belt-and-road, south China sea islands, Taiwan’s ownership, threatening Japan, the US, India, Australia, Canada, etc.
It is when the confrontation reaches the boiling point that the US has to respond strongly rather than compromise and retreat.
China’s economic troubles also appear in falling housing markets, out-of-cash bankers, and troubled job markets. The US also suffers recession and inflation altogether. Thus, both countries need to use the wars to redirect the focus.
Once US and China exchange fires, the stock market is going to see high volatility to the downside.