Geopolitical Tensions Increase. But Does it Matter?

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Our View

It's getting harder and harder to overlook the geopolitical unraveling. Over a year ago, I said the first war the US will enter will be in the Middle East, and yesterday the Israeli military said it launched strikes against more than 1,300 locations that targeted Hezbollah’s military infrastructure. The Pentagon said it was sending additional forces to the Middle East: “In light of increased tension in the Middle East and out of an abundance of caution, we are sending a small number of additional US military personnel forward to augment our forces that are already in the region.”

Then there’s the China Sea, where a host of adversaries are just waiting to sink our ships and down our jets. I personally do not think the US is prepared to fight on three fronts. In the China Sea, the PRC is constantly ramming Filipino Coast Guard cutters, and in a message to Beijing, the leaders of the United States, Australia, India, and Japan said on Saturday they were “seriously concerned” over tensions in the South and East China Seas and announced a slew of new initiatives on maritime security, including the first-ever interoperability exercise among their coast guards. 

I have to ask you something: if you woke up tomorrow and a war had broken out, would you be surprised? I wouldn't. China has been telling us to stay out for the last 10 years, and it's only getting worse.

What better time to start turning things up? The government is more focused on the election than it is on trying to cool things down, and then the United States, Australia, India, and Japan announce new sea patrols. I think warning lights are flashing all over, but you know what? The markets won't care until they do!