Change is Opportunity for Investors

Mike Dunn | Author | Thought Leader

Date: 4/16/21

Change is Opportunity. There is currently enough macro-economic change that we are looking at a buffet of opportunity and risk.

Russia may be days away from a full-scale invasion into Ukraine.
Will China Invade Taiwan before or after the 2022 Olympics?
Israel conducted a cyber-attack on Iran’s nuclear factory. Now Iran is firing anti-ship missiles and mines at Israeli cargo ships.
Russia is also massing troops on their artic border.

Russia Invading Ukraine?

Russia has massed 80,000 troops on the Ukraine border.
Today, Russia is now moving tanks to the border via trains.
The US sent two extra DDG Destroyer warships to the area. However, after President Joe Bidden and President Putin spoke on the phone, President Bidden ordered the two front-line destroyers back to their home port.
A Russian drone has dropped at least one land mine in Ukraine on 4/15/21. Ukraine forces found and destroyed the mine.
Turkey has offered to send more drones to Ukraine.
Russia has begun to prep the Russian citizens with propaganda.
Russia has clearly threatened the US to “Not interfere with Russia’s domestic affairs or else.”
The UN had an emergency meeting today on the impending Ukraine/Russia conflict.
This is the most extensive build-up of Russian forces since the Russian invasion of Crimea.
If investors have interests in stocks or other assets in the area, you may want to hedge your bets or find a way to leverage this change.

China and the Beijing Olympics?

China and their PLAN (Peoples Liberation Army Navy) and PLAAF (Peoples Liberation Army Air Force) this week have intensified their flight and sailing incursions into Taiwan and Japanese territory in both numbers warplanes and warships and the closeness of the traditional territorial waters.

This matters to investors since 40% of the world’s trade goes through these waters. If China can enforce their, illegal per the UN, Nine-Dash-Line of most of the South China Sea, they will control a significant percentage of the world’s commerce.
In addition to the increased military incursions to Taiwan and Japan, the Chinese leadership saber-rattling rhetoric has also reached a new level.
Unless the world stops China, the PLA will invade Taiwan before or after the 2022 Beijing Olympics. Russia waited until after their Olympics to invade Crimea. They did not want to spoil their party. China may do the same.
If China’s PLAN becomes the South China Sea “Toll Trolls,” that will impact the world economy. This is why the US Navy conducts “Freedom of Navigation” missions by sailing near the artificial islands claimed by China in the middle of the South China Sea.

The newest US Response to Stop China in the Indo-Pacific

Today US Defense Secretary, Lloyd Austin, made his first visit to India. The signal is both the US and India view each other as a strategic key to stand up to China in the Indo-Pacific.

Both countries say that “they have common enemies and common values.”
Both countries are now trying to integrate their military communications systems.
Both countries will be scheduling more war games.
In addition to the military, India touts the massive trade with the US.
In 2020, there have been border battles resulting in 50 to 200 military deaths between India and the PLA on their joint border. It has been reported that India’s Special Forces were considered the victor in these skirmishes.
China’s PLA is now massing more troops. However, the narrow Himalayan passes are easily defended by both sides.

The Middle East Fights Over Nuclear Weapons

Last weekend, it was reported that “unofficially” the Israeli Army launched a cyber attack on Iran’s nuclear development facility, putting their atomic bomb development back by nine months. This week, in retaliation, Iran has shot anti-ship missiles at Israeli cargo ships in the Strait of Hurmuz. This is just getting started.

How does this affect investors? Like the Suez Canal blockage, if the Straight of Hurmuz is blocked with mines or anti-ship missiles, there will be a reduction of oil and other trade.

The Artic Northern Passage and Oil Deposits

Russian troops have also been massing and building bases in the Arctic Circle in the Russian northernmost frozen shoreline.

The even bigger payoff is a ship toll passage charge through the ice in addition to oil deposits.
If any country can use ice breakers and allow ships to pass through the ice reliably, that will cut the cargo millage from South China to Europe in half, saving Billions of dollars.
Of course, like the Panama Canal, to save billions, you will have to pay millions. Russia, the USA (Alaska), and even China (yes, China) claim this passage.
Like in the prophetic 1968 movie “Ice Station Zebra,” the superpowers are now focused on controlling the Artic.

In Conclusion for Investors

As always, this blog wants to stay non-political. However, these geopolitical developments must be considered by investors to help make informed asset allocation decisions and to find opportunities.

How do Ukraine, Taiwan, and Israel/Iran Military Actions Affect Investors?