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I'm no geopolitical expert, but I do try and keep an eye on how things develop in the world so that I can arrange the puzzle pieces into some kind of order.

The situation in Afghanistan is very fluid, although it's clear that the Taliban are back in command.

But which version of the Taliban will the Afghanis (and the world) have to deal with?

Twenty years have passed since the US invasion in 2001, and some reports have suggested that this Taliban has evolved from the Ultra-Extremes that previously defined the regime.

This BBC snippet (a Taliban 'who's who') isn't such a rosy picture:


In the year following the US-Taliban peace deal of February 2020 - which was the culmination of a long spell of direct talks - the Taliban appeared to shift its tactics from complex attacks in cities and on military outposts to a wave of targeted assassinations that terrorised Afghan civilians.
The targets - journalists, judges, peace activists, women in positions of power - appeared to suggest that the Taliban had not changed their extremist ideology, only their strategy.

My general rule is that economics beats political ideology in the end.

Change takes time, and the more extreme the ideology, the longer it takes to compromise...

Many are saying that the US has left the door wide open for China as if geopolitics is a simple zero sum game.

It absolutely isn't, and there are bound to be tensions with geopolitical rivals if China supports the Taliban too boldly.

The Uighur situation isn't going to win them any Taliban friends either...

So, what will China do?

Here's an excellent primer ๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡


Will China get embroiled in the graveyard of empires? | ORF
Afghanistan is a complex geopolitical playground and remains one of the worldโ€™s fiercest battlegrounds.

And this is the simple 'why' ๐Ÿ‘‡


Finally, Chinese economic investments in Afghanistan will potentially grow as Beijing seeks to get access to โ€œits unexploited reserves of copper, coal, iron, gas, cobalt, mercury, gold, lithium, and thoriumโ€. According to a geological study, Afghanistan has reserves of rare earths and minerals estimated at up to ย US $3 trillion. The war-torn country may have 60 million tons of copper, 2.2 billion tons of iron ore, 1.4 million tons of rare earths (lanthanum, cerium, and neodymium), and deposits of aluminium, gold, silver, zinc, mercury, and lithium.

The Taliban has declared that it will transition Afghanistan under an โ€œopen, inclusive Islamic governmentโ€ and ensure the safety of Afghan citizens and foreign missions.

Here's what China's foreign ministry spokeswoman Hua Chunying had to say:


โ€œChina expects these statements to be implemented to ensure the situation in Afghanistan achieves a smooth transition, curbs all kinds of terrorist and criminal activities, and allows the Afghan people to be far away from war and to rebuild their beautiful homeland,โ€
โ€œAfghanistanโ€™s Taliban has expressed many times a desire for good relations with China, with an expectation that China will take part in Afghanistanโ€™s rebuilding and development process, and will not allow any forces to use Afghanistanโ€™s soil to harm China... We welcome this.โ€
โ€œChina respects the wishes and choices of the Afghan peopleโ€

(Hmmm. Must have missed the Afghan elections...)

Another conflict to throw into the 'geopolitical tensions' melting pot...


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utrust

China is basically in a recession or something...

I can prove it with pictures and lines... ๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡



All three data points were released overnight and all three missed estimates and came in below the prior figure...

  • Chinese Industrial Production YY (Jul) 6.4% vs. Exp. 7.8% (Prev. 8.3%)
  • Chinese Retail Sales YY (Jul) 8.5% vs. Exp. 11.5% (Prev. 12.1%)
  • Chinese Fixed Assets Investment Ex. Rural YY (Jul) 10.3% vs. Exp. 11.3% (Prev. 12.6%)

A V shaped reversal to the V shaped recovery.

There's a LOT of noise around China right now.

Targeted policies on for-profit education, anti-trust against big tech, US-China relations, Taiwan, property crackdown, Evergrande heading towards bankruptcy/nationalisation, bond defaults etc. etc.

To me, there's still more to come, and this graphic is a superb visualisation of the regulatory cycle in China and where certain industries currently sit... ๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡


Nuvest Capital

Over-regulating everything as the economy slows is an interesting policy choice...

I remain unconvinced that China can outgrow their debt burden... ๐Ÿ‘‡๐Ÿ‘‡


Can China outgrow its debt?
Achieving this transition whilst deleveraging is a monumental challenge. Chinaโ€™s rise or fall (and everything in between) will have a huge impact on the investing landscape for years to come.

Attempts to manage the slowdown will likely see them cut rates.

Perhaps lessons have been learnt from Japan, but who truly knows?


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Trading USD using the Dollar Smile ๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡



The Dollar Smile a very simple framework, attributed to former IMF & Morgan Stanley economist Stephen Jen.

Simply, the USD does best in two situations:

  • When the US economy outperforms the rest of the world
  • Risk off / Safe haven, especially when growth slows

When doesn't the USD do so well?

When everyone else is growing just as fast (or faster) than the US.

Simples.


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