Well folks now we have to analyze three potential scenarios for recession. We're going to look at BNB Parabus and their piece on three scenarios for recession, but we're also going to in this: talk about what China could be doing Is China going to help us out of a recession? What parts of China are going to potentially benefit and are there any potential stocks that could benefit from China's reopening in America A lot to talk about. do. Keep in mind this video is brought to you by and everything on my channel is brought to you by those programs on building your wealth linked down below.

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Okay, so the first piece that we need to talk about is the three recessionary scenarios. So let's jump in over here to exactly these scenarios. And we'll also go ahead and to make things a little less disruptive, just throw up a banner to continue to remind you about that coupon code. All right here we go.

So hike in May then go away it says BNP Parabas. To gauge the degree of political substitution, we modeled a three scenarios based on a risk premium. Okay, in English three scenarios in terms of what can happen with a recession. All right.

and the Fallout They by the way, see a terminal rate of 5.25 That terminal rate for them is down from 5.75 because of the banking crisis. Now they also argue for 175 basis points of cuts in 2024.. So that is pretty aggressive tightening. And remember in my video that I titled the most Important Fed Video ever I Encourage you watch that.

You definitely watch that if you haven't yet. We talk about how the more aggressive the cuts, the better it could actually be for the stock market. Now that sounds intuitive but preemptive. Cuts Like Small little itty bitty cuts are usually ones that that still have a painful stock pivots ahead, whereas large Cuts can be a very good way to sort of turn the money printer back on and set sort of a floor under the recession.

Now, the composition of financial conditions and tightening are noteworthy. They talk about credit spreads this. It's not so important to understand what they wrote there. It's more important to look at the Uh, the conclusions that they have.

so the first conclusions that they make or tools that they use to get to their conclusions. Because we're going to look at three different scenarios. The first is that they look at surveyed lending standards already at recession consistent levels. Now this is a little bit problematic because at first through the banking crisis, we didn't actually see a big spike in tightening lending conditions.

but we have started to see those I drew these red horizontal lines to show you Baseline And basically when you go back to the.com era, that's when you see both the blue and the green above the red, both red lines and then of course the 2008 recession you see both above and then generally in between you have this decline right? loosening credit standards. This is when credit is more available. This is is what more people can take on loans. they spend more earnings per share, go up, growth goes up, and what? you don't have a recession? Uh, however, take and then of course we had briefly coveted over here.

Very brief, but look at where we are again here. We are clearly tightening again in a recessionary level of both. uh, both types of or both measures of tightening standards and the availability of loans. This is obviously consistent with the inverted yield curve that we're probably leaning to a recession now.

Hard Landing Data points. So a point or hard Landing Or sorry, hello, if you can't it's too early to read hard lending data points point to further softening. And so what they show here actually is what happened during the banking crisis. First of all, you could see the trend of lending data.

Look at the trend. The trend of lending data has been straight down. Now some people make the argument that maybe this right here. this plummet in lending data was transitory stress because of the bank crisis and that transitoriness is proven by the rebound here.

But the further argument that people make, which is quite interesting, is the following: They argue that what if we had this Spike on the right because people like meet Kevin started making videos during the banking crisis Yes, I am patting myself on the back saying you should draw down your lines of credit because Banks might start freezing them if the spanking crisis continues. Remember what happened in 2008 In 2008 when the financial crisis hit and the financial crisis stayed Banks Froze lines of credit That could hurt working capital at warehouses. It could hurt credit card borrowing ability. your home equity line of credit, your rental property line of credit, your margin line of credit.

All that stuff could get Frozen And then you don't have access to that Capital anymore. So during a banking crisis, it's very common for people now to just draw down on their credit lines to minimize the risk that their credit lines get frozen. And so it's possible that you actually saw a spike in lending because of that. So if we take out that spike, it is possible that this downtrend in hard lending data does reiterate that we're walking right into our session.

So there are three scenarios given here. One scenario is the increase. Uh is basically there's the Improvement Uh, which basically says that all of the banking stress goes away after one quarter, which would mean by June July the banking crisis is over. In other words, the banking crisis was transitory.

Now there is a potential that that could end up being true when we specifically look at treasury yields, and you want to pay attention to that. If you want to know if the banking crisis is going to worsen or not, look at treasury yields. Right now, the 10-year is sitting at about 3.4 percent When the banking Crisis began, That tenure was sitting at about 4.8 or sorry, four percent. So you're looking at about 60 basis points higher.

So when yields go down, the value of bonds goes up. Which means bank balance sheets look more robust. Lower chance of a continuation of a banking crisis. However, obviously we are seeing a lot of people move money into money market funds.

I Actually did a video about uh, where you might be able to go, uh, where you can get, uh, savings yields. uh, whether that's through Vanguard or or others. but there are plenty of opportunities for you to get somewhere around a four percent yield right now. uh, or more.

I Mean you could look at hashtag not sponsored Sofi Robinhood Wealthfront money market funds from Schwab or Vanguard There's some, or even Fidelity There's some phenomenal ways you can get four to five percent interest on your money. and that's cash real. It's fantastic, right? Anyway, so uh, banking crisis So far I I think the odds or fall. Calling that, we're going to continue to see a banking crisis.

although I think everybody's still on alert as is reasonable. Scenario number two is a stabilization, that is. We everything basically stays a little nervous for about one year now. I Think it's very interesting how they put this because they basically say, even in an improvement scenario, think about this.

Let's translate this: I Always like translating stuff to English because sometimes the way they write these things is complicated. So uh. in in the good scenario, one quarter of pain. okay, in the medium scenario, you have one year of pain.

in the bad scenario Let's see, we haven't talked about the bad scenario. In the bad scenario, they assume that Equity prices could decline the equivalent to half of the move experienced during the global financial crisis. Well, that's not fantastic because if we zoom out on the S P 500, we know that the S P 500 went from about 152. uh, down about 50.

So they're basically making the argument here that if the banking crisis gets worse, you could potentially see a negative 25 move to the S P 500.. Now remember when I put ticker symbol spy up that's not sponsored spy is just a very common Uh vehicle that people use to invest in the S P 500 as well as if you want the NASDAQ I highly encourage you use Qqqm as opposed to QQQ. It's the same fund with a lot lower fees. Uh, Anyway, okay A little little freebie there.

So uh, growth in all scenarios is lower despite looser monetary policy. Now, this is unfortunately slightly bearish and we haven't gotten to China yet. So I want to talk obviously about China and is China going to help us or hurt us? Well, we'll find out. So growth is lower in all scenarios despite looser monetary policy.

For real: GDP The 0.8 Peak through trough decline in our pre-svb Baseline becomes deeper. So in other words, Things become worse. They move the best case scenario to a GDP reduction of 0.9 uh or sorry, this is a yes, these are likelihood of recession call. Yes, these are the depths for real GDP The 0.8 Peak to trough decline in their Baseline Okay, so these are the declines in GDP as a result of this banking crisis.

So they think that GDP in these various scenarios Here from a baseline estimate, we'll go ahead and call Baseline two percent. Let's say so they think you could see Baseline move down 0.9 percent uh in the Improvement scenario, uh, 1.2 percent in the medium scenario and then the deterioration negative 3.6 Uh. So so that would put us this right here would put us down at negative 1.6 percent. Uh, if you come off of a two percent Baseline that's big.

That's that's a deep style recession and unfortunately, they suggest that we lean towards uh greater severity. Here, you could see risks are tilted towards greater severity, so in other words is actually more bearish. Now, they do suggest that inflation could return to Target earlier than expected their original Target was Q through Q324, but they think that inflation is going to deteriorate much faster. but unfortunately, the damage to the economy could be a lot greater.

Uh, which is not great obviously. so that does potentially knock us on the door of recession. Actually, you can see here in their various different scenarios this is their GDP forecast for Q4 So that's taking the the minuses off of their Baseline So they think that by Q4 we could be in a recession in all scenarios. In all in all scenarios, they're looking at uh negative here and they think that in the good scenario we are going to see the FED cut by about a quarter.

Maybe maybe that's about 10 basis points at the mid, maybe one to two times in the stabilization scenario. but if things really hit the fan, two percent 200 basis points of cuts and again they see risks tilted to the downside. So again I always like to report the bare sides as well. and I want to talk to you about China because this is going to be very important to talk about China but I like to talk about the bear pieces.

not not because I embarrish I Still believe heavily in the Nike Swoosh recovery. the Nike Swoosh remember is wrap it down and then very very long term swoosh up but also very volatile. so a lot of this up and down will be very very expected. But so far we are on this trend.

we have begun this trend. Hopefully we maintain that, but obviously in their their bearish scenario that that would vanish. So now let's talk about China and some stocks that could benefit from China in in this potential cycle here. So the first thing that we should look at is Uh China and and some of the recent news that has been going on and then I want to talk about some stocks.

Uh so first obviously as we just had house Speaker Kevin McCarthy meet with the President of Taiwan Now remember this followed in August Nancy Pelosi Visiting Taiwan directly now the Speaker of the House is a really important position because you're the third position from the presidency and obviously China wants to reunite Taiwan with China and Taiwan's like Fu we don't want to be Chinese we like capitalism so we're our own independent country and the more the United States recognizes Taiwan the more potentially in Flames Issues in China uh or or the Chinese political regime. although China has been very I have to say and and I am not like a big uh proponent of China but I will say they have become a lot more level-headed when when Nancy Pelosi visited China oh my God wake up Kevin when Nancy Pelosi visited Taiwan uh we saw Beijing freak out with uh, you know massive military drills that ended up Landing uh, missiles in uh, Japanese economic water and Taiwanese water. Obviously this time around level-headed Now back then they still thought they were in control of the world. in August they were still under covet lockdowns.

They thought they were perfect. Uh, they thought China could do an all wrong China has actually been I think uh recognizing their humility and I actually give them props for that because since the Chinese party Congress and the elimination of covet controls, you've actually seen China become a lot more moderated. They've been moderate from what we can tell in their relationship with Vladimir Putin they've been more moderate in their relationship with Emmanuel macron that they have not uh, uh, basically, uh, uh, how, what's the word when you say uh, China don't go to war with Ukraine They haven't condemned the war in Ukraine, but they've been. They've been calling for peace.

Uh, and they've been doing so with Putin. They've been doing so with Macron of France. They've been doing so with other world leaders and they've been talking up capitalism more. Which in my opinion, the more you see China talk up capitalism, the lower likelihood China ends up invading Taiwan because that's more of a communist push, right? We're going to imply or impose communism back on Taiwan This is insane and I Don't think anybody has said this before, but I'm going to make a projection here if China continues down the path of enjoying capitalism with uh, well, we'll call it socialism with hints of capitalism.

Uh, you know Elon Musk is going to visit China this weekend and they're probably going to put Elon Musk on a pedestal. An example of how wonderful capitalism is for China and how Great China is a place to do business because they realize a lot of Manufacturers are leaving China because of the coveted lockdowns I Think there's a possibility and I'm making this projection here: April 8 2013. Somebody please put this on a calendar and remind me in five years, Kevin made this projection, hold me accountable I Think it is more likely if China stays on this capitalism path that China ends up forging the greatest partnership capitalistic partnership and trade partnership with Taiwan in a capitalistic and independent way. That is a greater possibility than the possibility that China actually invades Taiwan I Really believe that? Uh, so we'll see.

we'll have to pay attention to it. But we also want to talk about how this applies to taking us out of recession. The potential for recession in America right? So we're going to talk about that and that's how we're going to link this with this: BMP better at this piece here. but I Want to give you some baseline here.

So obviously you have these meetings here. Uh uh. There's obviously there are complaints about sanctions and blocking China from getting Advanced manufacturing. Then there are complaints that China is just stealing our Advanced Manufacturing Technologies by stealing Technologies from Asml.

Don't get me wrong, which is a Dutch company the Netherlands As we like to say in Europe though Holland Anyway, um, there's a lot of tension between the countries, right? But then how could potentially China affect our recessionary? Outlook Well, Barclays has a piece on this and I think it's quite interesting. Let's take a look at the Barclays piece here. Look at this: China's recovery is being powered by Services demand stimulation rather than straight up stimulus to people limiting external spillovers. Okay, that's great, so that means less risk of a negative GDP result from China Uh, dragging the entire world economy down.

While this minimizes uh, the potential benefit to U.S stocks as a whole. Because think about this: if: China if the Chinese are spending more on local Services local restaurants local Hospitality local travel, then they're not spending so much on American Goods necessarily. However, which is is not necessarily a boon to American companies. However, it could be a boon to American companies who have a lot of exposure to China who sell stuff within China.

So I wrote down some examples here: Tesla right now sits at about 22 percent 22.9 percent of its sales to China. That could be between the 20 to 30 percent going into the future Nvidia and AMD 25 of their revenues come from China Some of that will be getting hit just like Taiwan semiconductors or Asml. Some of that will be getting hit. Asml is another company that sells to China and they will sell um, uh, 7 to 22 nanometer Advanced lithography machines to China They're not allowed to sell the three and five nanometer machines.

Uh, anyway, that doesn't so much matter. Um, but the point is, there are a lot of companies that have a lot of exposure to China And Barclays makes the argument that look, even if we go into recession, there are actually ways that you can expose your portfolio to China without directly having to invest in Chinese stocks To potentially get some upside of investing in China Uh, ASMR is another one. look at Apple for example, Apple would be another one that gets revenues obviously from China Uh, which is fantastic. That would be fascinating to see if we can get an Apple.

Maybe if we can get an Apple 10K Oh, look at this. I Happen to have an Apple 10K here and let's see where some of their revenues come from in China If we could get a breakdown of revenues, which we probably can pretty quickly, let's just do a fine for China in here and I'll go ahead. and uh I don't want to cause any kind of epileptic problems so I won't page through that. We'll go and pull China here in just a moment.

But what you can do to find this out? Oh I already found it 16 greater. China So what you can do anytime you want to know how much a company sells to a particular country is just look at the 10K which is just the annual report and they usually have a segment Revenue piece. Look at that. 16 of Apple sales come from China You know Something that I want you to know is that as the dollar weakens, you can actually have a foreign exchange benefit to earnings per share by having exposure to China Now remember when the dollar was strengthening these companies, we're losing money due to FX adjustments.

Now they are potentially gaining money due to FX adjustments. Max Thank you for mentioning this. You are correct as folks: Starbucks has exploded in China I Have not had the balls yet to invest in China but I'll tell you this. the Chinese or the the Starbucks earnings call over here I Want to see that what they mentioned over here in China this is I just looked through this.

Usually we do this in the course member live streams. We go through fundamental analysis like this. Uh, but I want to look at look at all these mentions for China We continue to grow our store footprint. In Q1 we surpassed 5500 stores in China Do keep in mind they basically doubled their stores in China during Co during covet like they used covet Zero to just build and we haven't actually seen the revenues from that yet which is pretty incredible.

So you've got some huge Starbucks exposure in China which makes me very excited about S buck stock. I've been so tempted but I really want them at like 80 bucks I Think their valuation is a little high for coffee, but you know I'm not I'm not trying to downplay them as coffee. okay I I Did drive down into town yesterday just to get myself Starbucks because I'm at like one of these like Mormon hotels and and uh, they they don't open the coffee shop as early as I need and they close it way earlier than I need. So I could basically never get coffee here.

And the coffee in the rooms is like it's like Mormon beer. it's worthless. Uh, and and that's nothing against Mormons Okay, I'm a big fan of Mormons Okay, I've got a designated Mormon uh I think they're great people, hard-working people. but I'll tell you, when it comes to coffee, don't rely on the Mormon spaghetti coffee.

Uh, but anyway, so um, a point being here, there are some really big opportunities to expose yourself to China without actually exposing yourself to China uh and and that those are those are uh, through companies now. Uh, there are obviously some risks, right? and uh, on that note, I want to talk specifically about uh, this video. This is a video that I'd like to react to when it comes to China Keep in mind China's also been meeting with Brazil uh, they're they're going all over the place. Uh oh yeah, here we go.

Uh, us is pushing China to its own Red Line former Morgan Stanley and uh and some other individuals Warren here. So we're going to look at this together as soon as Kevin can figure out exactly how to do that. So while I figure out how to do that I think it'd be very easy to just say and remind you to check out the programs on building your wealth link down below because we've got that expiring coupon code on the 12th and the prices will be going up prices Trend up over time. so the sooner you get in, the sooner you lock in the best price guaranteed.

Okie Dokie! So let's go ahead and remove this. Clean this up a little bit. Then we can throw up a banner. Why don't we throw up the stream yard Banner Banner Here Shout out to uh, Streamyard Met Kevin.com Stream Yard where you can record and live stream and throw up all these banners and everything very easily.

It's a great software. Okay, so let's listen to this together so let's see. Let me know if the volume is okay while it's playing or if there are any issues in the chat. Please and let's go discuss.

Warrants: The risk of a hot war between the US and China is growing. Yale Senior Fellow Stephen Roach is the former chairman of Morgan Stanley Asia. He also wrote the book Accidental Conflict America China and The Clash of False Narratives Stephen It's always great to get your take on all things China and I'm wondering how you would you know now you're a professor how you would grade the calculus that was done by Kevin McCarthy in meeting with the Taiwanese President at this moment in time. Well, Melissa on I I Think um, nothing happens by accident in Washington when it comes to China and the same is true of Um China with respect to the United States uh McCarthy like his predecessor, Nancy Pelosi Uh, there's no big secret as to what um their their the message they're sending is guy just indicated they're uh, offering support for Taiwanese Independence They won't say that explicitly.

but uh, that is. uh, the not so subtle subtext and it's obvious that there's tension between Taiwan and China. That's obvious, we know that. But what I want you to know is when you hear about the Taiwan China flood that we hear about what I want you to know about is this article right here.

Look at this line right here: The possibility of war in Asia something that was long Unthinkable has prompted governments and companies to assess their exposure to China Now think about that folks. I Want you to think about that for a moment. What does what does China not want companies to do? It should be obvious. You should know the answer to this: What does China not want companies to do? They don't want companies to leave.

So if Bloomberg is saying dude, the more we escalate fear-mongering and War the more our companies leave. So think about this for a moment. Nancy Pelosi visits visits Taiwan China freaks out with all their military drills, companies start leaving. then China's like we done effed up.

We don't want companies to leave. Okay, let's kill Covet Zero. Let's invite companies back. Let's get Elon Musk to come to China Let's talk about how great capitalism is and let's stop being so angry against Taiwan And so when you hear the fear-mongering of Taiwan and China and this War I really want you to think about how many companies are now leaving China including Apple going to like Indonesia and India I Want you to think about how many companies and how much money China stands to lose just by fear-mongering and the odds of War go down, the more fear-mongering uh uh uh, there is because the more fear-mongering there is, the more companies leave, more companies leave, the more China's like, okay, we're screwing up.

so just think about that as you're listening to this fud. and I'm not saying it's fake news. There is a very real argument to be made about war between China and Taiwan. But I want you to think about both sides.

It's very important. Let's keep listening and for China that is, that is their red line and they push back last August and they will most assurely push back. After this meeting it wasn't. You know quite the same thing, but you know it.

It clearly raises a real warning flag for them that, uh, we're going to, uh, keep, uh, you know, uh, putting our foot on their throat I was in China see I disagree with that I don't think we're putting our foot on their throat. What we're doing is we're promoting capitalism and China's actually starting to accept that as he should. Last week, Um, I was in the same meaning that Tim Cook was at and you know sure he was saying positive things about Apple's relations with Uh China and because he wants to keep doing business with him in terms of selling products, but also in, uh, offshoring, uh production to to China at considerable saving to American iPhone addicted consumers. Uh, so he's walking a you know, a fine line here.

And then you know the Select committee. We know where they're coming from. Uh, they want to bash anyone and anything that has anything to do uh with with China and they will, um, you know, drag these guys. All the multinationals you decided will probably be uh, brought in front of their committee and interrogated just the way.

Uh, The Tick Tock Uh, CEO was her ring and that's not a big deal. That's really not a big deal. Let the CEOs be brought before select committee. This doesn't matter.

Um, last week in Washington and remember that Tick Tock CEO is not the CEO of bite dance that Tick Tock CEO is a puppet, you know. McCarthy said after this meeting that he believes that there's a bipartisan position on the need to speed up arms deliveries to Taiwan. So um, you know the rhetoric is certainly there. and I don't think that there's any sort of hidden messages to what what the intent is when it comes to Taiwan and China Stephen.

When it comes to the multinationals, you know, if you were in the position as you were before to advise these companies, what would you say in terms of you know whether or not they should be prepared that they have to pull their business out or in some way pair it back? Well, a lot a lot of multinationals have made major commitments to China and they certainly don't want to pull out. but I think at the same time Melissa there in their boardrooms, they're all talking about contingency plans about hedging uh, their offshore production uh, away from China Apple's already done that with a shifting some iPhone assembly and production to Vietnam and uh India a small amount. but uh I think you know all multinationals who have made such a massive commitment to China uh wanna at least begin to work hard on a plan B here. what is your guess on what the retaliation from China might be? You know not only do we have this going, we have also you know the hearings on Tick tock not that long ago and so do you think that it would be a hit to U.S companies in China or would it be something more along the lines of of a sort of like a defense, not a military but maybe a cyber or something like that as opposed to on industry.

Oh look last last October excuse me last August they uh, certainly had a major, probably the the single largest uh pla military exercise uh in the Taiwan Straits um uh in years, if if not ever and you know I I think you can you can I actually have a an image on that. Let me throw that up. take a look at this. uh, there we go there we go this uh, this shows you their military exercise and how missiles landed in economic Waters around Taiwan and Japan and uh, it was.

It was a pretty big exercise, but again, we're not seeing that again. Today we're seeing a relaxation I Worry that this individual talking uh at CNBC here is is promoting the the original China not this revised China that we've seen over the last only four or five months. He's talking about the China from eight nine months ago and I know it seems crazy that you know an entire country could flip-flop Uh, but um, something to think about. All right, let's keep going here.

You can look for a a similar type of response. maybe not as extreme, maybe just as extreme. Uh, we don't know, they have moved uh, aircraft carriers? um you know in in In in the Taiwan Straits uh close to the Uh to the island and they they are reported to have other ships significant um uh, presence or ships in the area as well and whether or not they uh, move them into the same type of um, uh, warning position I am I have no idea Stephen Thank you. Nice to see you Stephen Roach Um, it's one thing to move away production out of the country, but you can't move your coffee store out of the country.

If that's what you do, you can't Yeah, and we're building more of those over there. Okay, so you know this gives you more of this sort of traditionalist argument. Uh I I think that China has has substantially uh, revised uh since then and I'm hopeful and I Look to continued new signs of this Uh, so it's it's worth to note now Deep's here in our chat is uh, is making a fair point uh that China has also warned uh, against or of worst case scenarios. uh and this is a very realistic point of view as well.

That yeah, we have to keep in mind that we are in a global recessionary time and there are a lot of tensions. But you also have to remember that China has to play to some extent both sides. They have to make the argument that hey, wait a minute. look, we we still love Socialism.

We still demand our power and things could get really, really bad. Of course they have to say that by default I'll go ahead and play that segment because um, Mr Deep's here was very nice to Uh to provide uh insight into that. So let's see if we can play that here. Be prepared to deal with worst case scenarios and be ready to withstand High wings choppy Waters and even dangerous storms they're making the allusion to obviously that hey you know look we're going through a global transition here in economic uh, mad house right? So um anyway I I think it's it's very interesting and uh, you know what what? Ultimately they want to do though and this is my belief is is build out business uh and prosperity for companies because that's going to help them lead to um, common their ultimate goal of common Prosperity uh and uh and so they're remember remember for example, when China took over solar panel production when they really started solar panel production back in and I think it was around 2013.

they not only now today make the most solar panels, but they make the best solar panels something to watch for. Uh so let's see let's listen to this segment as well. This is a pretty interesting piece. Uh, this gives you just a little bit of a contrast.

Also from the 20th party com party Congress this was in about I think it was November China's manufacturing sectors. it's the largest in the world as or is foreign exchange reserves. We have made breakthroughs in some core Technologies in key fields and boosted emerging strategic Industries We have witnessed major success in multiple fronts including men's space flight, lunar and marching exploration. Whatever.

I mean the whole thing is is a lot of just Chinese prop. but I'm sure the point of showing that is to show that yes you can obviously show the bear case scenario. Obviously, we know that and we could say yes. this would be bad for companies with exposure to China.

But when we consider the transition of the recent actions and the recent speeches bragging about capitalism bragging about Elon Musk and Shanghai look for example, you really only have to go to the South China uh Sun post uh, they are. They really show you that uh here I'll just pull it up really quick. They show they give a They give my favorite example here and the example that they give. if I could find the darn thing.

the example they give is they show how Manufacturing in China succeeds and they use Tesla as an example. And that's one of the reasons why Elon going to China is so powerful right now. because you're really highlighting that China doesn't want to go to war. They want more manufacturing here.

It's one of the reasons they ended Covet Zero. It's one of the reasons they are being more neutral in response to this reaction of the President of Taiwan coming to visit. Kevin McCarthy MO more neutral in the face of Ukraine balanced with Russia balanced with France balanced with Brazil. Now don't take it from me.

listen yourself to the latest actions that China is taking and when we do that I think the fun that comes out of China is a little excessive and I think it's unlikely that there's going to be a war between uh, the Uh between the two I actually think it's much a higher. There's a higher likelihood that China ends up helping us grow uh GDP and uh, now of course. Look, we know that uh, a lot of people are hoping that China's uh reopening was really going to help commodity prices pop up. So far, that hasn't happened.

For example, here's a piece from JP Morgan JP Morgan showing that hey, China's dodging the global inflation that we're seeing, but we're not seeing commodity price booths. Instead, somehow we're able to uh to to maximize growth with goods and services. So you have sort of localized travel inflation, but not exported inflation. Uh, no, uh, no major issues in terms of inflationary Dynamics affecting Global inflation which is fantastic.

You've got an inflection point in uh in Chinese real estate with finally a bottom being found uh at companies like evergrant, and uh, in other companies affected by the real estate. a burst that we've seen. and that's not to say that China is perfect I Don't want to sound like a you know Chinese apologist here by any means. The idea is simply to say that making bets on a war between China and Taiwan I think are your Edge case scenario I Think you're probably looking at more of a let's say five to ten percent chance rather than a base case that we're going to see War Okay, now just to add a little bit more clarity on China Take a look at this: Goldman Sachs Research here from April So just about within the last week here, both Services PMI and Construction Pmis have reached their highest levels in China since 2012.

government-led infrastructure building remains robust, suggesting policy makers are more patient than in previous cycles and are unlikely to withdraw support and take a look at this on Monday March 27th First Vice Premiere of China said that China's development form at the development Forum rather that opening up is China's basic National Policy See this is the recent rhetoric from China You want to be paying attention to not the fear rhetoric because this is the most recent look at the most recent highlight what they're doing: They are launching a ceremony of quote invest In China event they're calling 2023 the year of invest in China and no matter how the international situation changes, China will Quote only open its door wider and wider? This is fantastic and we're seeing Tesla China sales increase. We're not only seeing Tesla China sales increase, but take a look at this. we are seeing manufacturing activities start surging again at the removal of covet 0, which is also fantastic. We have more data and research here as well.

Let me see what what is this one here: Trade volume returning back to Trend even though China is losing a share of U.S Imported manufacturing products they're trying to get back to these levels. Uh, the piece that I was talking about with China encouraging foreign development. This was great. South China Morning Post Now I Actually, please subscribe to them even though I know they're Chinese propaganda.

but I do that because I love looking at what they're propagandizing and what they're doing is they're taking people like Elon Musk and they're putting him on a pedestal. Look at this. Uh, uh. the premiere former Shanghai party boss who was poised to take over the Premiership he did during the upcoming reshuffle, he took over.

Uh, he says uh, the following: uh, the directive in China is quote to facilitate the launch of landmark foreign funded projects. Calling to mind what happened in Shanghai with the quote Tesla Gigafactory, which was one of the Premier's largest achievements during his uh, his term in Shanghai Whether more projects like this will be launched is something we should look forward to. So compare the recent rhetoric to the old rhetoric: China Uh, see, look at this. According to the survey of the American Chamber of Commerce in China last week for the first time in 25 years, China was no longer considered by most of its member companies to be a top three investment destination.

China is waking up. They're realizing they've done screwed up. So when you hear the flood in China come to meet Kevin for at least the other side of the perspective. That maybe this war perspective is overblown and that not investing with exposure to China could be a big mistake.

Now again, I Don't invest in Chinese stocks I invest in American companies that get my exposure to China For me, like example, you invest in Apple you're getting 16 exposure in China Fantastic way to do it. The more China wins uh and and tries to compete for manufacturing dollars, the cheaper it becomes to manufacturing China And and the better the win is for companies like Tesla and China or Tesla and Apple or Nvidia or other companies. So I'm a big fan anyway. Uh, that is uh, that officially concludes my peace.