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The Mother of All Tail Risks

Posted August 04, 2022

Matt Insley

By Matt Insley

The Mother of All Tail Risks

Flashback to 2018: a trade war breaks out between the US and China. Investors wait anxiously for the latest update on tariffs. 

After everything we’ve been through since then, it seems almost quaint, doesn’t it? 

A pandemic shutdown… the end of the Fed’s easy money policy cycle… and now a war in Europe that threatens energy and food security. 

Tariffs? The impact on financial markets is a rounding error compared to the havoc we see now. 

But informed investors know that events happening right now could mean a REAL trade breakup with China is right around the corner. And they’re busy figuring out what that will mean for their stock portfolio.

Nancy Pelosi’s visit to Taiwan this week has set off a ripple effect. (Which might go way beyond what she had hoped for her stock portfolio).

As we speak, China is encircling the island democracy of 25 million (see maps below). They’ve already started firing missiles around the island as part of live-fire drills. 

Here’s why you need to be ready for things to spiral out of control, and make the pandemic, Fed rate hikes, and the Ukraine war look almost “quaint.” 

Send your opinions to, TheRundownFeedback@StPaulResearch.com

Your Rundown for Thursday, August 4, 2022...

One Number You Should Worry About 

Sometimes the greatest risks are right in front of our noses. We saw it with Russia’s invasion of Ukraine. The military amassing around an erstwhile province in broad daylight. 

“Oh, this is just for military exercises,” the Kremlin assured us.  

Here’s what China’s doing right now:Taiwan 540

Source: China News Agency 

 

And the US is lurking next door:

TaiwanMap 540
Source: India Today

Just as was the case when Russia encircled Ukraine, analysts are complacent. There are too many reasons why is would be against China’s interest to invade Ukraine. 


But this number is a reason — a very cynical reason — why it is in China’s strategic interest to invade:

35 Million 

There are that many more single men in China than women, according to recent census data. Half of whom are in the “marriageable age” range. 

For context, Taiwan has a total population of 23.5 million. 

China is still wrecking their economy with pandemic lockdowns, depressing wages and job opportunities for all of these single men. 

The tit for tat with the US if China starts inching toward a forceful reunification with Taiwan — a move that may start by turning these exercises into a blockade — will be much worse than a few tariffs.


The entire trade relationship will be torn apart, piece by piece. 

Stay tuned for a look tomorrow at what stocks you might own that could get crushed.

Market Rundown for Thursday, August 4, 2022

The S&P 500 is flat to start the day. 

Oil has slipped 1.1%

Gold is up 1.18% at $1,785.

Bitcoin’s following the precious metal up about 1%. 

Send your comments and questions to, TheRundownFeedback@StPaulResearch.com

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