Submitted by Eric Peters, CIO of One River Asset Management

Anecdote

“What really matters?” he wondered, the Pacific Ocean far below, magnificent, the flawless symmetry of its swell.

“Brexit doesn’t really matter,” he thought, which is not to say it won’t create waves if it ever happens.

“Italy matters more,” he thought, delicate ice crystals creeping in from the edges of his oval widow, nature’s order, grace. Europe’s political project has been fraught from the start and will remain so till the end. But it remains superior to what came before. An Italian exit would spark economic chaos for a time. A market crash for sure. But those things don’t matter much. “A disintegration of the union and a return to continental conflict would really matter, but Europeans are exhausted, spent,” he thought, unconcerned.

“Does Mohammed bin Salman matter?” Not at all. The Sunni Shia civil war started in 632 AD, and still rages. Their leaders come and go. Each temporary peace succumbing to blind hatred, intrigue, power lust. The Middle East doesn’t matter, never has.

“Does populism really matter?” Of course. But it may yet prove healthy, a natural response to the grievances of those left behind, a wake-up call before something worse.

“Everything finds equilibrium, peacefully or otherwise,” he thought, the air at 41,000 feet -81 degrees Fahrenheit, flowing smoothly. “Nafta, tariffs, these trade disputes don’t really matter,” he whispered, though their chill will be felt for a decade.

And his attention turned to China. In two years, something utterly remarkable has happened. Obscured by the incessant talk of political polarization and social division, Americans have been quietly led to form a powerful bond. Republicans, democrats, business leaders, our middle class, blue collar workers, military generals, our young and old – united. And we’ve not yet begun to comprehend the consequences.

"327mm Americans now see China as our rival, our adversary, an enemy, a rising threat to be contained. And that really matters."

* * *

Making Enemies:

“How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World,” was the title of the 65-page White House Trade and Manufacturing Policy Report in June.

“A highly centralized and non-transparent Chinese government which is aggressive in its military posture with its economic strength and treats intellectual property and religious minorities horribly, poses a far greater threat to the US than Russia,” warned US Secretary of State Pompeo in September.

“Chinese security agencies masterminded the wholesale theft of US technology, including cutting-edge military blueprints, and using that stolen technology, the Chinese Communist Party is turning plowshares into swords on a massive scale,” explained VP Pence in Oct.

“The attack by Chinese spies reached almost 30 US companies, including Amazon and Apple, by compromising America’s technology supply chain, according to extensive interviews with government and corporate sources,” reported Bloomberg in October.

“The US has had enormous concerns for years about the practice of Chinese firms to use stolen American IP, to engage in forced technology transfers, and to be used as arms of the Chinese govt’s objectives,” said Security Advisor Bolton this week.

“The US was pursuing Huawei’s CFO as part of a criminal probe related to attempts by Huawei to sell US-made equipment to Iran in violation of sanctions,” reported the FT this week.

“When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power," tweeted Trump.