By Eric Peters, CIO of One River Asset Management
“I think the Chinese leadership at this juncture is overwhelmed by its internal challenges,” said Taiwan President Tsai Ing-wen.
“My thought is perhaps this is not a time for them to consider a major invasion of Taiwan,” she continued, and reasonable people across the planet prayed she’s right.
“This is largely because of the economic, financial and political challenges, but also because the international community has made it loud and clear that war is not an option, and that peace and stability serves everyone’s interest.”
War, of course, is always an option.
And peace and stability do not serve everyone’s interest, they serve almost everyone’s interest.
For the few, war is lucrative. Which is why conflict features so prominently in human history. After a brief respite in hostilities, the war in Gaza resumed. Fighting continues unabated in Ukraine. And mankind’s enduring struggle to tame nature showed no sign of material advance. That said, the UAE announced a $30bln climate fund in partnership with Blackrock, Brookfield, and TPG. The hope is to leverage this sum to attract $250bln in investment by 2030, with an increasing focus on the Global South, which stands to suffer most profoundly in this war.
And if you squint your eyes and gaze at the horizon, you can almost see a world where China becomes more focused on internal growth than its Taiwan ambitions. With the West increasingly intent to disengage economically and with over 20% youth unemployment, sluggish growth, and a stock market at 4-year lows, it would be in Beijing’s interest to seek peace and stability.
The prosperous nations of the Middle East seek peace and stability as they determinedly drive to diversify their economies away from oil and gas. And it’s not inconceivable that we are approaching an end to the conflict in Ukraine, having accomplished little more than untold suffering.
Take those three conflicts off the table, focus humanity’s efforts on our battle with nature, perhaps throw in some productivity gains due to AI, and you have the makings for an increasingly prosperous world. Let’s hope this is what the market in its infinite wisdom sees, rather than the recent rise in asset prices being little more than hopes for a Fed pivot.