China Threatens to INVADE | World War Danger & Trump Tariffs

Why is the stock market selling off? It's not just because of what Donald

Trump just said about tariffs, but it's also because of the risk of World War

II. And that's not to be hyperbolic. In this video, you'll find out how

interconnected trade and war can be. The Taiwanese stock market just had circuit

breakers go off. The Singapore stock market just had circuit breakers uh pop

off, which means they basically shut down the stock market because the

numbers are just so bad. Uh and now if you look at the numbers, you've got

copper futures plummeting over here. We're actually at an industrial high.

Usually a good sign for an expansion of industrialization now plummeting off the

right side of the chart. The Chinese stock market today is down 9.2% which is

pretty remarkable. That's like the S&P 500 almost of of China if you will.

Nicay was down as much as 7% but has slightly recovered to about 5 and a

half. Singapore down about 7% a little bit more volatile over here. And then

here's Taiwan down 9.6%. So uh if you add to all of this what's going on in

stock market futures in America, which you could see right here, also down

about 3% on the NASDAQ 100. Dow down about another 2%. Y might start

wondering what the H double hockey sticks is going on and what has evolved

or devolved in just the last few hours. Well, most importantly in the last few

hours, Donald Trump has talked on Air Force One to suggest that don't worry,

this is just the medicine that we have to take and there is no plan to reduce

or remove any of the tariffs that they are going to go through as planned for

the time being. and uh we'll wait and see what kind of negotiations can be

made. This obviously comes after Donald Trump spent the weekend golfing, which

isn't a slam on golfing. It's just a suggestion that well, a lot of people

were hoping he was going to spend the weekend negotiating trade deals, and

clearly that wasn't the biggest priority. So, this has left the stock

market with no other choice but to spend a little bit of time panicking. Now,

usually panics like this are overblown and they create buy the dip

opportunities. The problem is this sort of stock market selloff isn't a stock

market sell-off because of some short-term panic like some bank

collapsing or something that's just going to end up getting patched up and

put back together. uh like a temporary bond market crisis like at the end of

2018 or overleveraged bets uh in 1987 when we had Black Monday and the Federal

Reserve is like don't worry everything's fine like we're good and didn't even

have a recession at 87 right the problem now is that we are essentially seeing a

one-man show Donald Trump uh who pretty much has almost complete power over the

Republican party in Congress and also to some extent over judicial powers

uh reinvision how our economy should function and let's just say a lot of

economists think that is going to drive us straight into a recession. Uh in fact

what we can find is that currently Goldman Sachs is increasing their

recession odds even more. JP Morgan was at 60% last week and raised to 100%.

Goldman Sachs has just increased their odds from 35 to 45%. Just minutes ago,

as Nick T, Nick Tmos, who follows the Wall Street or the Federal Reserve very

closely, points out. And a lot of folks on finit are convinced that Jerome

Powell is going to have to emergency cut rates to bail out markets.

Unfortunately, most traders are under the impression that Jerome Powell is

nowhere near cutting rates because the labor market is just too dang strong at

the moment. Instead, people are actually more worried about potentially those on

margin getting absolutely eviscerated or some form of devolution into World War

II. Now, that's a lot to process there. So, let's just process this one step at

a time. Uh, first, a lot of large hedge fun hedge funds received margin calls on

Friday. We know this thanks to financial the financial times reporting. Uh Bill

Aman who has seemed pretty dang stressed lately is um suggesting that he doesn't

have margin just options outstanding. Let's just say his behavior has been uh

even picked up by Grock or you know the GPT version from Elon Musk as um being

almost a borderline panicky lately. Take a look at this. I asked Grock, "Are you

noticing any change in stress in Bill Aman's tweets lately, especially the

last week or so?" I'll just read it to you so I don't impute any bias here. In

the last week, posts on X attributed to Aman suggest a shift in tone that could

indicate heightened stress or urgency. Remember, this is the hedge fund manager

guy we were talking about in the last video who was going on CNBC panicking

for 30 days to slow the spread while he was shorting the market. Now, he's

always got some kind of play going on behind these. It's it's what frustrates

a lot of people. People don't really believe them as far as they can throw

them. But anyway, I'll keep reading here. For instance, on February, sorry,

on Friday, April 4th, he reportedly wrote that it was quote much too early

to form a view about Trump's tariff strategy, reflecting a cautious,

measured stance. However, by Sunday, April 6th, his rhetoric escalated

dramatically to quote, "We are heading for a self-induced economic nuclear

winter, and we should start hunkering down." This rapid pivot from restraint

to alarm within two days could signal increased anxiety or a reaction to

unfolding events possibly related to economic policy or market conditions. In

other words, he saw stock futures. The phrase economic nuclear winter is

particularly hyperbolic, suggesting emotional intensity that might stem from

stress. So, let's just put it this way. Grock sees hedge fund managers actually

freaking out at the moment. Interesting. So, why? Well, look, there are two

things at play here. Obviously, tariffs regarding earnings. Okay, when earnings

go down and margin goes down, companies have less money to buy back their stock

and their EPS goes down, which means not only see a valuation compression, but

that valuation multiple is a multiple of a smaller number. Okay, the result is

stock down. Simple. A bigger potential problem is actually the risk of and I

just want to like sound calm in in saying this because it always sounds

hyperbolic as well, but it's actually the potential escalation of war with

countries like China. See, I've previously talked about what's called

the democ democratic peace theory. Basically, by closing the door to

negotiations with China, we increase the risk of military conflict with China.

That's because trade typically prevents war. The more peacefully integrated you

are with other countries, the less likely you are to go to war, the more

likelier you are to use diplomacy talking to resolve issues. By turning

inward, however, focusing on domestic production, we actually increase the

risk of military conflicts rather than decrease them, especially when it comes

to China and Taiwan. Because at the same time as us looking in, we are closing

the door to China, which we talked about in the last video. And see, something to

remember here is that as much as you might not have liked Joe Biden, and mind

you, I'm very much in the middle. I don't have a horse in this race. I'm

just trying to inform. As much as we may not have liked Biden, we can maybe

collectively say it since he was basically a zombie president.

the his strategy was positive talks with China, some restrictions on chip, you

know, uh imports and exports. Uh and then also spending more on supporting US

industry, particularly propping up, uh the US version of Taiwan Semi and also

Intel or other foundaries with in the United States to fabricate our own

advanced chips. But see, Donald Trump is actually doing the opposite in both

examples. rather than talking more to China and investing in the United States

in terms of manufacturing, we're actually doing is talking less to China

while defunding the chips act and taking money away from these sort of chip

programs. So, we're kind of doing the opposite on both ends. Now, a lot more

to talk about in just a moment, but quick 30 secondond pitch. If you have

not checked out the Meet Kevin membership yet, we just did a 1-hour

long emergency live stream on Sunday when futures came out to talk about what

to do, how to play this, thoughts about trades and the economy. If you want to

be part of those sessions, make sure you join the ME Kevin membership. The price

is going up permanently on April 15th. That gives you some time now to lock in

that price because once you lock in that subscription, you'll maintain that

subscription rate forever. So even if the subscription cost in the future

doubles for all the new entrance, you'll maintain your subscription price. Check

it out over at mekevin.com. Deadline is April 15th. Now maybe that's good for

fiscal deficits, but the problem is there are now reports that China may

invade Taiwan within the next few months. I mean, you could just look on

screen here. It's from 1945. So, you know, we have to question potentially

how how serious some of these internal leaks are or the credibility of this.

However, the Washington Post has also been reporting about this uh escalated

attention or concern within the Department of Defense that this trade

war could potentially lead to China invading Taiwan. Now, this is

problematic because we've already seen China posture for invading Taiwan and

disinformation campaigns, election interference, uh drills, military drills

over the straight of Taiwan otherwise. But now, intelligence sources are

suggesting that invasion could occur within 6 months. They provide three

different scenarios. One where you just sort of like choke off the Taiwan

straight. Uh 90% of their gas and food comes from uh the straight. So block

that off. You basically choke them out. Scenario two would be missile strikes

directly against uh Taiwan's defenses, the Patriot batteries that we've given

them, maybe hacking power grids or internet infrastructure and disabling

them or striking them directly. A third scenario could escalate to also striking

US bases in Japan, Guam, and the Philippines. Not great. Now like my take

that there would be some invasion of China in Taiwan or of

Taiwan was pretty low. Uh up until this trade war I thought there was a 95%

certainty we wouldn't see China try to invade Taiwan. However, and

unfortunately now the facts are changing. We are becoming more distant

from China and this actually increases the odds of conflict with China

potentially closer to a coin toss 50/50. Now, the unfortunate downside of this is

as we isolate from China and the longer this trade war goes on, the more the

United States risks overplaying its hand. We believe that China needs us

more than we need them. But the reverse is true. China has become substantially

more resilient over the last seven years. Manufacturing in excess away from

us, partnering with other countries around the world and actually creating

manufacturing deflation, making them so much more competitive than our factories

likely could ever be short of massive government infrastructure spending,

which seems unlikely right now in the face of fiscal deficits. Unfortunately,

we're just in a place where a trade war with China does increase the risk of

China taking over Taiwan. Taiwan manufactures 90% of the world's

advanced chips and losing access to Taiwan would be devastating. It's one of

the reasons why Taiwan wants to or Taiwan Semiconductors wants to extend

manufacturing to the United States. But that plant has taken a while to get a

hold of actually completing and has been repeatedly delayed by years. Hopefully,

it'll finish in uh Phoenix. I've been to the plant myself uh very soon. But

anyway, uh this tariff war also risks expanding conflicts with countries like

Russia and Iran. See, Russia and Iran might actually view the United States as

weaker during this conflict. Uh this Russian peace deal we were supposed to

have between Russia and Ukraine is already devolving. There were promises

that there wouldn't be strikes on energy infrastructure. Energy infrastructure

strikes are already beginning. There were promises uh that uh a peace deal

was going to be signed in regards to critical minerals with Ukraine and the

United States. that fell apart as we gloriously saw on TV in the Oval Office,

which isn't good because it's just led Russia to increase its demands while at

the same time getting closer to Russia. The United States has uh now about uh

six or more B2 bombers stationed at Diego Garcia for potentially striking

Iran. Uh these are, you know, uh planes, bombers capable of delivering 30,000

pound bunker busting bombs to attack Iranians uh Iran's nuclear energy

infrastructure. Iran threatens to develop a nuclear weapon, which they've

been saying for a while. But Trump has lately kind of escalated some of the

tensions with Iran, suggesting that the bombings uh the likes of which no one

has ever seen before, would be likely if they didn't negotiate a deal with Trump.

Uh and I think what's happening is a lot of countries are starting to say,

including Russia and China, you know what, maybe we all need to band together

and compete against the United States. Now, it's worth noting Iran does have

missiles that could reach about our 4,000 uh military members on the island

of Diego Garcia. It's right at the edge of some of the limits here. Uh and we do

have an increased military presence there, which could be just a sign of

posturing from the United States or a sign that we actually think more

conflicts are going to arise in that region. You know, Iran, you know, they

argue that we're sitting in a glass house throwing stones. And I'm not

afraid of Iran. And I think the United States can cream Iran. What I'm more

aware of or worried about is that at the same time as we have these trade wars

going on with China, we have Pete Hegth telling the military to potentially get

ready for war with China over Taiwan. You know, he recently published a memo

which a lot of was a direct copy and paste from project 2025. Okay. A lot of

people said the Trump administration would be distant from that, but that

didn't appear to be entirely true. But anyway, uh this comes at a time where,

you know, we're vowing to cut Department of Defense funding by 8% per year over

the next four to five years. That's a lot because you're compounding that 8%

cut over and over and over again. But we're also now creating potential

conflicts with China, Taiwan, in Greenland, the Panama Canal also pisses

China off, mind you. And then obviously a priority as well is sec making sure we

have uh a secure Cape Horn that's the tip of South America for shipping lanes

and otherwise. But when you put all this together, you know, there's there's a

lot here. There it's this is these trade wars are not just about money or about

stocks. They are geopolitical as well. and their concerns that what we're

really doing is we're entrenching the relations of our enemies that we're

strengthening uh the ties that uh Russia has to China and to Iran and to North

Korea and also the new partnerships that they're forming in frustration with

other countries or call in solidarity with other countries over this tariff

disaster. So, I don't know that these tariffs are really going to accomplish

many of the goals that Donald Trump is seeking to achieve. Uh, in fact, I think

the best thing for markets going forward would not be a bailout from Jerome

Powell, which is almost entirely unlikely, but rather some form of return

to the democratic peace theory, a return to cooler heads and negotiated solutions

with regard to tariffs, tariffs or otherwise. It's also worth remembering,

you know, our CIA is heavily involved in the Russia Ukraine war. You know, we we

basically provide targets to Ukraine in terms of which targets to strike, when

to strike them, which weapons to use. We hold the keys to the HIMAR's missile

launchers we provide to Ukraine. So, if we want to disable them, we can at any

time. I mean, the CIA at one point was believed to have pointed out the

location of the Russian Moscow, uh the SIP, the ship, which was basically

considered the Russian, you know, the flagship of Russia's Baltic fleet. uh

and uh Ukraine famously destroyed it but this was because of intelligence

provided by the central intelligence agency. So you have to remember the

United States whether we like it or not we are heavily exposed to these various

different conflicts. Uh and at one point one of the reasons we had sort of

limited some of the uh equipment that Ukraine was given was to prevent the

odds of Russia losing so badly that they resorted to using nuclear weapons. Well,

a similar thought processes can occur with China as well. And the tariff

warfare doesn't doesn't help with all of this. So look, shortterm, is it possible

that you know markets are going to fluctuate wildly? Of course. I mean,

just this morning, we saw NASDAQ futures down over 5.5%. Right now, they're only

uh down about uh 2% or 3% rather. But but those numbers don't really matter

over the long term. Of course, the market's going to fluctuate. There are

going to be rallies again in a bare market. Uh a recession is generally

priced over over years. Uh you know, certainly uh many months at least 6

months, minimum of 6 months to price a recession. uh you know average duration

of recession is probably somewhere around 9 to 18 months in terms of market

pricing but you could have recessions that last two to three years uh and you

could potentially see that uh for a very long period of time. So when people

question like, "Hey, Kevin, you know, why why are these random stocks falling

that are unassociated with tariffs or China or whatever, it's usually because

as we price in not only the risks of a potential uh military conflict around

the world, we're also pricing in a a compression of the entire stock market.

Uh, and this is unfortunately quite complicated because how how do you

successfully price all of that in? It's very difficult. So what do most people

do?" Well, most people just turn and say, "All right, you know what? we're

just going to at this point fold and we'll just move into gold, which doesn't

perform the best in a recession, does better in inflationary times. Uh or

we'll just move into cash or treasury bonds. Uh you know, that's probably

still at some point, at least in my opinion, maybe on the earlier side of um

potentially playing out. Some people think that bonds have already played

out. I personally think if if markets are truly going to price in a recession,

Treasury yields have a whole lot for the fall and that could lead to some nice

upside in the bond market, but we'll see. So anyway, uh thank you so much for

watching this video. I hope this is all very helpful to you. Uh but this gives

you a little bit more color on why futures are falling. This is not just a

matter uh of uh earnings at companies. This is a matter of the broader world

considering what could these tariff conflicts devolve into longer term.

Anyway, thanks so much for watching. Why not advertise these things that you told

us here? I feel like nobody else knows about this. We'll we'll try a little

advertising and see how it goes. Congratulations, man. You have done so

much. People love you. People look up to you. Kevin Papra there, financial

analyst and YouTuber. Meet Kevin. Always great to get your take.

We'll see you in the next one. Goodbye and good