5. The New Cold War: China, Iran, North Korea, Russia and Venezuela
The trade war with China has changed the public view of China from what was generally believed before the Trump Administration took office. Today, China is seen as a global superpower both economically and militarily, which, left unchecked, will dominate the globe both economically and militarily. Further, Russia continues to test the global community by extending its reach into the Ukraine, Georgia, Crimea, Syria, Cuba and Venezuela. Both Iran and North Korea continue their belligerent behavior toward the United States and others around the globe. Further, both Iran and North Korea have worked diligently to develop nuclear weapons which could hit the United States and our allies. Another problem state is Venezuela, which, while not a military threat to the US, certainly is a potential proxy of China, Russia, Iran and other bad actors.Since World War II through the collapse of the Berlin Wall, there has been an idyllic belief in the “American Way” where our institutions of democracy and capitalism will ultimately prevail leading to world peace. Recent decades have shown these potent rivals are not transitioning to democracy and capitalism. Rather, these forces are pushing back. This set of factors suggest an environment where a New Cold War is developing with respect to China, Russia and others.
A New Cold War posture will make competition for natural resources more intense and contribute to higher commodity prices. Beyond our commodity thesis, another beneficiary for the New Cold War are cyber security companies and ETFs. We are investing in Palo Alto Networks, Inc., CrowdStrike Holdings, Inc. and ETFMG Prime Cyber Security ETF (HACK).
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