The China Taiwan Crash will Destroy THESE Stocks

uh so here's a fantastic piece on what's

going on with China it really just

summarizes some of the things so I saved

this on a larger iPad here and let's go

through it together here and add some

commentary to us so a good summary on

China China's slow stimulus rollout has

added to concerns about the weakening

economy and fueling a debate about how

far authorities will go to bolster

growth keep in mind China has been an

economy that's been growing for about

eight percent for probably the last 20

years and growth estimates now have

fallen to about five percent however

starting about three months ago I

indicated look well about six or seven

months ago I said I don't think this

this reopening wave in China is really

going to be that you know inflationary

of an impetus I don't think just because

the economy reopens to China we're going

to have this massive inflation and this

massive surge of oil prices you know

China's economy has been open for a very

long time we haven't had you know

massive supply shortages simply because

China's economy is open and a lot of

that played out we didn't end up getting

on inflationary impetus again in China

what you got was a lot of service

spending you got people spending money

on uh local travel local Air Travel

local hotels we didn't actually get as

much International as you expected you

did see the high-end enjoy some of the

reopenings such as your sort of Louis

Vuitton level but beyond that you really

saw that that Services rally that

reopening rally a not produce an oil

shock uh that is upwards B not produce

an inflationary shock and C it faded

that consumer spending was pretty

tentative and part of that we could have

expected because going into it we knew

that the regular Chinese consumer the

average Chinese person in China had

about 1 12 of the stimulus of money in

receipts that we had so I I think the

measure was somewhere around an American

on average received about six thousand

dollars in stimulus whereas the average

Chinese received about 500 dollars and

so that that money was very fleeting and

we weren't expecting inflation which we

didn't get uh instead what we got was

flatness and this idea that okay maybe

the economy will grow at five percent

but even ideas that the Chinese economy

will grow at five percent are starting

to come into question now uh I have the

expectation that Chinese growth will

probably be revised down into closer to

three percent uh short of some kind of

uh larger stimulative uh efforts from

China and I actually think it's one of

the reasons over the last six months

we've seen a lot of what what I like to

call

um Cry for Help from China uh and I this

isn't to be confused with like the

nonsense of around the Chinese spy

balloon which maybe I shouldn't call it

nonsense because I'm not trying to

impose like a political opinion on it

what I'm just trying to say is ignore

the Chinese Bible in for a moment take

that out of issues over the last six

seven months whether it was intentional

which it very well likely was or it was

an accident which obviously there's a

possibility of that as well call it

two-thirds one-third or whatever

what's important to know is China's

really been scrambling to beg companies

not to leave to India you've got

somewhere around 22 percent of companies

wanting to leave China versus the

historical average around 15 to 17 this

is a problem for China China obviously

knows it is a massive manufacturing Hub

it is uh and and we know we all know

that when a factory comes to an area you

boost housing you boost Dental Services

restaurant Services food truck services

uh doctor Services accounting services

you name it you boost everything in an

area when you introduce a factory to

that area it's it's fantastic for the

economy you know obviously there are

environmental questions that would also

be something important to pay attention

to but in terms of uh per capita GDP and

incomes an area they go up and so as

part of uh China's sort of reopening

what was really fascinating is if you

really paid attention to what the

Chinese party Congress told us they told

us we love capitalism uh but we still

like socialism but boy we love

capitalism and what they did over the

next six months is they really put Tesla

on a pedestal even though there was

drama and there always is drama about uh

Tesla and China for example you had a

death at the Giga Shanghai

China put Tesla on a pedestal they

wanted to show the world look at what we

did with a company like Tesla look at

how they came to us and made the most

productive most efficient and best

Factory in the world look at the

problems they have trying to build in

Texas or in Germany or whatever when

they could just build in China and look

how easy we made it for them and so they

really put Tesla on a pedestal if this

is really important because it tells us

that China has really been trying to

uh reveal its sex appeal so to speak and

I think that's why secretaries take

blinken had such a phenomenal visit to

China over this last weekend

Lincoln visited China and it was

probably one of the as some argue the

most successful visits of uh an American

really by uh an American official uh to

China in a very long period of time and

and part of this could be because

frankly China is like please we need any

positive publicity we can get because

any positive publicity we could get

would potentially be stimulative without

us having to actually stimulate and so I

think that's really what China is hoping

for and as a result of this you have

this piece here from Bloomberg so let's

continue with the piece because I

basically went on like a four minute

tangent there catching you up to speed

so following investors were primed for

the state Council China's cabinet to

possibly announce new support measures

for the economy after a meeting on

Friday Market expectations were

especially heightened after the central

bank's surprise interest rate cut last

week which economists signaled which

Economist said signaled a looser

monetary policy so in other words you

had a surprise cut last week and then

the thought was okay well if we're going

to be in this element of maybe

surprising us with rage Cuts then surely

they're going to end up being some kind

of uh oh dare we say um direct payments

to individuals like stemi checks or

businesses that are really going to prop

up the economy again right

well the state Council stopped short of

releasing any specific proposals rather

than after their their small little rage

cat we ended up uh getting information

like the government is studying new

measures that will be adopted in a quote

timely manner and this really led to

some concerns that maybe stimulus isn't

even close

and there's this idea that uh well we'll

hear some economists who are calling for

it like this quote we should not

hesitate to add more forceful policies

where they are needed is an argument

made by some uh some economists here

some others suggest it's sort of like

squeezing the leftover toothpaste from a

toothpaste tube uh and and everybody's

sort of waiting for that last little bit

of toothpaste to come out which is kind

of weird because it sort of suggests

that like okay well like as if the

toothpaste tube is empty at some point

you're gonna you're gonna realize like

oh the amount of growth in China is

going to be limited I believe this

actually I do think that does create

some risks for companies with uh

exposure to China unfortunately any big

Tech name that has been doing well over

the last six months does have some

pretty solid exposure to China so for

example you look at Apple you look at

Nvidia or AMD and video or AMD for

example 20 20 to 25 percent of their

sales going to China you've got Tesla

somewhere around 20 25 of their sales

going to China these are potentially

Chinese sales uh and a lack of stimulus

in China could weigh on uh revenues for

a lot of these companies so I think this

this Chinese stimulus matters more than

than a lot of us really think because I

think sometimes we hear okay whatever

China is not stimulating what do I care

if the Chinese get stimulus checks but

it really does trickle back to our stock

market at home

the state Council which coordinates

policy among central government

Ministries and at the central bank

called for more forceful policies but

again no time frame the threshold for

stimulus is now higher whereas during

covid you had a more flooding of the

economy now all of a sudden you have Z

sticking to a push for high higher

quality growth rather than that sort of

stimulative check growth you do have

more talk about real estate easing

they've obviously loosened lending

standards for Real Estate a lot to

really try to prop up or put a floor

under the pain that you've had for the

real estate sector but really if you

look at a sort of chart here and I'll

showcase this in just a moment here but

if you look at a chart of Chinese

stimulative support this year compared

to other years and you kind of look at

it as as just a line the higher the line

the more support here it is in my hands

and you can kind of see it on screen now

you can see that we are at the lowest

part you know furthest away from my head

over there is uh as Q2 2023 and we're

pretty low on stimulative uh efforts you

know you got some stimulus going

obviously into the coveted lockdowns

here you got a little bit of uh some

surges of stimulus again when you were

looking at uh you know the Delta variant

when it hit China first or Omicron but

but really other than that uh and then

maybe a little bit of a blast when you

have the reopening but uh outside of

that

oh boy stimulus in in China lately here

has been very very weak and again you

know maybe that's a good thing it's like

hey let's actually build a strong

economy rather than just one propped up

on stemi checks probably a good thing

but that is potentially going to create

some short-term pressure on revenues

from China

Goldman economists don't expect the

central government to issue special

Sovereign bonds the tools used before

whatever a government is also unlikely

to launch another round of shanty town

Redevelopment like it did in 2015 and

then you could sort of have this idea of

well the the Bloomberg piece going into

these various different ideas around uh

around uh potential versions of Chinese

stimulus Chinese stimulus what is worth

noting is China is not uh the kind of

country that that really enjoys uh

showering its constituents with uh

checks mostly because I mean well I

shouldn't say mostly because but

potentially because in China you don't

actually have to shower your citizens

with stimulus checks to win elections

you just win elections because you're in

control

so unfortunately both uh both not uh not

fantastic but I will say I do think that

these positive relations between

blinking and the the United States over

the weekend will end up fostering a

longer Target oopsies longer term and

stronger growth between China and the

United States I think you have a lower

risk of a war between the United States

and let's say with Taiwan and China and

I think you have a greater risk of uh

really just a much slower growing China

now some implications of this of course

Beyond just the potential impact to

Chinese revenues for growth companies or

companies exposed to China another

implication of this could be really

inflation there's this expectation that

if you

have China as a global anchor to

inflation maybe inflation will

ultimately end up falling faster than

people anticipate which obviously is is

a good and would likely be seen as a

good in much of the United States

however if that's coupled with earnings

misses what will then you kind of walk

in into the Mike Wilson territory of

Morgan Stanley which it's funny because

Mike Wilson isn't even using China yet

as as a reason for why we might have an

earnings recession though quite frankly

he should because I think that would be

his uh his better argument rather than

some of the arguments he's been making

so we'll see but when it comes to China

obviously things slowing down I do not

expect a five to five point four percent

GDP which is a large expectation that a

lot of folks have right now I think

it'll realistically end up falling uh

certainly in the fours if not even lower

than that and uh that that will have

some implications to uh growth and so I

would I would just be mindful of which

of the companies you're investing in

have exposure to China I know a lot of

people are trying to make the argument

that oh well China's at a bottom you

know it's it's time to to Really invest

in China now the time is now if Chinese

stocks are at the bottom

um I would I would caution that because

because we I don't know that anybody

really knows where the Chinese bottom so

to speak in an earnings recession is so

uh keep that in mind when it comes to

China uh as Steve just mentioned Lincoln

said the U.S does not recognize Taiwan

Independence I thought they did

previously is this a flip-flop so

there's you have to be careful here

there there are individual commentary uh

that you get and then there's the

official policy of the United States we

have to be clear the official policy of

the United States has not changed the

official policy of the United States

follows the one China policy

okay that is Taiwan China same thing

that is the official on the books policy

and when they cozy up and they have

their meetings and their dinners and

they go on a walk together which is

actually exactly what blanken did they

had like a 2 or working dinner and they

went on a walk together and whatever you

know a lot of this is for cameras

obviously but uh but they you know it is

important as well

they have to start off the dialogue with

hey we just want to be clear we still

have an official policy that is called

the one China policy and they reiterate

that policy because Taiwan already knows

about that policy and so on one hand you

have to kind of picture it like this

don't worry Taiwan we're just gonna tell

him we're still on paper I have that one

Taiwan One China policy okay don't worry

I'm just gonna go over here and talk

manufacturing and economy and taiwan's

like oh we don't like this but we can't

do anything anyway and then China's like

okay now that we are clear that uh

there's only one China let's talk

business you know so it's it's kind of

like you have to get the out of

the way and you get the Optics out of

the way and then you can actually really

talk business so in my opinion this this

you know not recognizing Taiwanese

Independence the United States never has

uh they they purposely make this

confusing because it's called politics

for a reason it's supposed to be BS I

mean think about like okay I'm not

trying to go down this rabbit hole but

just to give you an example

says we didn't do gain a function

research okay maybe we didn't do gain a

function research at the Wuhan lab in

China or otherwise right but we did

sponsor and financially support directed

Evolution which is just another

definition of nearly the same thing

directed evolution is sort of like

taking taking a group of monkeys and

then infecting them with you know covet

let's say or some other virus and then

taking the most infectious of that batch

and infecting a new group of monkeys and

then of that batch taking the most

infectious and affecting the next batch

and you do this you know dozens of times

to try to study the most virulent uh

viruses I mean when covet first hit it

was it was much more powerful than it is

today uh you know people are killed

normal people were just dying uh way

before the vaccines if you knew people

in their 30s and 40s dying you know

children obviously much less but the

point is you know that was a very very

powerful virus one first hit and even

Delta to some extent It's relatively

weak today uh so but the point of that

is again let's get away from like

vaccines and covet and all this stuff

the point of that is to say the

government has uh tools to mislead us so

that way they can on one hand say no we

don't do that then they just have a

different definition so it's like of

course the United States uh supports

Taiwan and of course when they're

visiting Taiwan they're like we'll

defend you if you're ever invaded uh you

know and then when they visit China

they're like we have an official policy

on paper that says

there's only one China okay let's get to

business uh so it's

it's all politics it's all

but but to some extent to some extent

all the politic BS theater is designed

to keep everyone happy and just focused

on spending money at you know your

shopping mall or whatever to just keep

you a happy working American

it's all kind of part of the game anyway

okay so that gives you uh some deeper I

hope perspective into China if you like

my perspectives as always check out the

programs on building your wealth linked

down below right China peace done let's

uh let's now jump on over and see if uh

good old CNBC has any commentary no we

do have another Mike Wilson piece uh

that came out a little more detail today

although still a little scrappy so uh

stay tuned we'll be uh we'll be covering

that uh first I want to see what can

commentary we have going on over at the

cnbc's uh probably it's going to take me

just a moment to to grab that here

looking at uh some of this other

commentary Intel how to deal with your

you know Intel's been announcing deals

like crazy so if you didn't notice Intel

also had this massive deal with Israel

that was announced and uh I mean you're

talking about a 25 billion dollar

facility that was announced uh and I

believe Intel expects probably somewhere

around 15 18 in subsidies and some

massive tax breaks over there relative

to the corporate taxes they paid in

America and uh real this is is it's um

in Intel going all in on Intel 2.0 which

is really the uh Foundry you know

division yes yes yes died suddenly as a

reference to vaccines I know I know all

right so anyway let's um let's and that

is different from what you had before

died suddenly you know like because

there were no coveted vaccines when

there were no coveted vaccines anyway