Geopolitics Is Now the Macro Driver: Iran, China & the Trades That Matter in 2026 w/ Matt Gertken

Quick Overview

Matt Gertken argues that the US currently holds a geopolitical advantage over China in technology and military capabilities, but political instability in the US, highlighted by the potential for a US government shutdown and the possibility of a military coup in China, creates significant uncertainty that could impact global markets, especially oil, as the US and China are the two largest consumers, while geopolitical risks like a Taiwan conflict could destroy the semiconductor supply chain.

Key Points: The US maintains dominance in key technology nodes like semiconductors and has superior military capacity compared to China, which is currently focused on internal stability. Geopolitical uncertainty is high, exemplified by the risk of a US government shutdown and the remote possibility of a coup attempt against Xi Jinping, who is fighting internal political factions. A conflict over Taiwan would severely damage the global semiconductor supply chain, leading to massive economic destruction. The US economy is slowing, evidenced by slowing growth rates and asset price deflation (like housing), contrasting with China's domestic economic pressures (youth unemployment, property bust). The current narrative favors the US in the AI race and geopolitical stability, but the US government's fiscal recklessness (high debt, short-term focus) is a major liability. Gold prices are rising because Chinese investors, disaffected by domestic issues like the property crisis and political instability, are seeking alternatives to holding USD-denominated assets. Matt Gertken suggests that the US advantage in technology and military power means that if China were to act aggressively (e.g., invade Taiwan), they would suffer severe negative consequences, potentially leading them to avoid overt conflict for now.

Context: This segment features an interview between John Gillen of Milk Road Macro and Matt Gertken, Chief Strategist for Geopolitical Strategy and US Political Strategy at BCA Research. The discussion centers on the current geopolitical landscape, focusing heavily on the US-China rivalry, the implications of potential conflict (like over Taiwan), and how these factors influence global markets, particularly oil and technology sectors. Gertken provides context on China's internal political consolidation under Xi Jinping and the structural weaknesses within both the US and Chinese economies.