Nancy Pelosi Visits Taiwan is this News or Noise for Your Investments

People who know me know I hate talking about politics. Hate it. Why? Because almost always, people’s minds are already made up before the discussion begins. So, with my dread for politics and politicians in general, why would I choose US House Speaker Nancy Pelosi’s recent, brief trip to Taiwan as this week’s episode for news or noise? Because it could be setting the stage for MAJOR market and economic moving news in the months or quarters ahead.

I’m Chris Perras, Chief Investment Officer with Oak Harvest Financial Group. And This is our investment team’s mid-week release when we examine a news item, headline, or story making the rounds from publicly available sources and ask, “Is it News or Noise?” for your money. This week we take on Speaker Pelosis recent trip to Taiwan and its implications for your money.

So, Ms. Pelosi went to Taiwan last week. She did it against the advice of the White House’s security council. She did it against the advice of the department of defense. She did it even though U.S.-China tensions are already high, and Washington has been trying to get China’s help on the war in Ukraine and other trade matters. She pretty much did it against the advice of everyone in Washington DC except a small group of ultra-conservative Republicans. Go figure.

She was there for barely 24 hours. And China’s response? Immediately their government fired off statements condemning the visit and warning of its “severe impact” on US-China relations. The day after she left, China’s military launched “air and sea exercises” and released a plan for drills surrounding the island for the next four days through the weekend.

A map shows that the drills encircled the island more completely than previous exercises. A former US Navy captain and former director of operations at the US Pacific Command’s Joint Intelligence Center, Carl Schuster said China has “gone a lot farther than they ever have before.”

Is this news? Huge news. Yes. Taiwan and more specifically Taiwan semiconductor manufacturers, manufacture over 50% of all outsourced, global semiconductors. Last report, TSMC’s market share was 53%. Viewers, Listeners, this understates its importance because they lead the world in the most advanced chip manufacturing processes.

Currently, TSMC and its South Korean rival Samsung are the only foundries capable of manufacturing the most advanced 5-nanometer chips.
5G cell phone chips? TSMC. Data Center chipsets? TSMC. Virtual Reality and game console graphics chips? TSMC. Driverless cars? TSMCs makes all of them. Their manufacturing technology and processes turn semiconductor chips designed on a software platform into physical and useful products embedded in almost every piece of technology you come in contact with on a day-to-day basis.

And China, just last weekend, ring-fenced the island country for four days putting up a blockade in or out of Taiwan. Let this sink in. If or when China does this for real, and it is not a drill, or worse yet, launches a forceful takeover of Taiwan? The American electronics and technology consumer user is toast. The global technology user is toast. If you thought inflation was bad now? Imagine what your life might be like without those cheap technology devices. Is this news for your money? 100%, 1000%. And even more so as we push into 2023 and closer and closer toward the 2024 Presidential election when China might tactically choose to take further action on or against Taiwan. If you want some more detail on this subject, there’s a link in the description to a good piece that CNBC published last Wednesday. Keep this subject top of mind for all of 2023.

At Oak harvest, we think our clients are best served by us helping them plan for their future needs, instead of focusing on the past. The future is always uncertain and that’s why our advisors and retirement planning teams, plan for your retirement needs first, and your greed’s second.

Give us a call to speak to an advisor and let us help you craft a financial plan that helps you meet your retirement goals. Call us here at (877) 896-0040, and schedule an advisor consultation. We are here to help you on your financial journey into and through your retirement years.
I’m Chris Perras and from everyone here at Oak Harvest Have a blessed week.