The primary US stock market indices – the Dow Jones, NASDAQ, and S&P 500 – ceased their growth, which had lasted for several weeks. As stated in earlier articles, even such a robust increase in the US stock market cannot be termed a new rising trend. The fundamental backdrop remains unfavorable; the Fed continues to raise interest rates and is unlikely to abandon its objectives in the near future, and geopolitical conditions have deteriorated dramatically in recent days. In addition, the DOW Jones and S&P 500 indices have not been able to surpass their previous highs, which, from a technical standpoint, maintains a high probability of the current decline continuing. However, the Fed's condition has not changed in a long time, and this fact alone is sufficient to continue anticipating a decline in stock indices and individual equities. However, geopolitics must be addressed.
Yesterday, we wrote about the "Kosovo conflict," but it turns out that it is not the only one. A confrontation is also erupting between China and Taiwan, a de facto autonomous region. It all began when China began conducting massive military exercises directly off the coast of Taiwan. In reaction to these actions, Taiwanese authorities began organizing defensive exercises against a potential Chinese attack. The world began discussing Beijing's desire to reclaim the island it formerly owned but lost when the Kuomintang Party fell in 1949. It should be highlighted that Taiwan is not a sovereign democratic state, yet some nations acknowledge its democracy. Taiwan is also a very economically powerful territory. Thus, China would prefer not to separate it from its economy. In addition, Beijing believes that Taiwanese authorities will grow closer to the United States and that China will receive unfriendly territory near its coastlines on which direct enemy military sites can be placed. Even if this does not occur, if an effort is made to grab Taiwan, the United States has threatened to employ its military troops and will provide military support.
Consequently, the essence of the disagreement is evident. The United States desires Taiwan to retain its independence, although it does not formally recognize Taiwan's independence. China desires complete control over Taiwan but fears US intervention. Consequently, Nancy Pelosi's plane should still land in Taipei tonight, and Washington stated that it had no fear of Beijing's threats. Members of his government have been to Taiwan multiple times without Beijing's authorization. In addition, Beijing warned the United States that any attempt by Pelosi to visit Taiwan would be viewed as "playing with fire" and "catastrophic consequences" would ensue. Perhaps this is known as "threats to prevent unwanted actions"; perhaps the conflict in this region of the world will erupt.