# Geopolitics Is Now the Macro Driver: Iran, China & the Trades That Matter in 2026 w/ Matt Gertken Source: https://www.youtube.com/watch?v=fYrdjsOKqO8 Recap page: https://rapidrecap.app/video/fYrdjsOKqO8 Generated: 2026-02-12T16:06:22.996+00:00 --- ## 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. ![Screenshot at 00:00: The opening title card introduces the two participants, John Gillen \(@MilkRoadMacro\) and Matt Gertken \(@mgertken\), setting the stage for a discussion on geopolitics and macroeconomics.](https://ss.rapidrecap.app/screens/fYrdjsOKqO8/00-00-00.jpg) **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. ## Detailed Analysis Matt Gertken asserts that the US currently holds a clear advantage over China in both technological innovation, particularly in semiconductors, and military capability. He notes that China's internal situation is characterized by Xi Jinping consolidating power, fighting internal factions, and dealing with a struggling domestic economy marked by high youth unemployment and a property sector bust. Gertken points out that US political instability, such as the recurring threat of government shutdowns, is a significant risk, but the US still possesses inherent advantages. A key geopolitical risk discussed is a potential conflict over Taiwan, which Gertken believes would be devastating to the global semiconductor supply chain. He notes that Chinese investors are increasingly looking away from US assets due to domestic instability and are buying gold, which is rising as a hedge. Gertken emphasizes that while the US government's fiscal situation is precarious (high debt, short-term focus), the structural advantages in technology and military power mean that China would likely avoid a direct military confrontation because the cost would be too high, both economically and militarily. He contrasts the current situation with past events, like the Soviet Union obtaining nuclear weapons, suggesting that China's current move toward technological self-sufficiency and centralized control is a long-term strategy, but their immediate actions are tempered by the fear of massive retaliation and economic collapse. ### Geopolitical Advantage - US dominance in semiconductors and military power contrasted with China's internal focus on stability and consolidation of power under Xi Jinping - Xi Jinping is consolidating power by removing perceived threats, like the former Vice Chairman of the Central Military Commission, who was associated with corruption scandals. ### Risk Factors - Key risks include potential US government shutdowns and the ongoing Sino-US tech/military rivalry, where China's attempts to catch up in AI and chip manufacturing are being met with US export controls. ### Taiwan Conflict Implication - A conflict over Taiwan would immediately destroy the global semiconductor supply chain, causing massive economic destruction. ### Chinese Domestic Issues - China faces significant headwinds, including a property bust, high youth unemployment, and a populace increasingly disillusioned with the regime's governance, leading to foreign investors seeking alternatives (like gold). ### US Economic Context - The US is slowing down, evidenced by falling asset prices (like housing) and a lack of fiscal discipline, although the Federal Reserve has managed to keep inflation under control institutionally. ### Conclusion on Conflict - Gertken believes China is unlikely to take aggressive military action against Taiwan or the US because they know the consequences would be catastrophic for their economy and military apparatus, despite internal pressures. ![Screenshot at 00:00: The opening title card introduces the two guests, John Gillen of Milk Road Macro and Matt Gertken of BCA Research, for the discussion on geopolitics and macro drivers.](https://ss.rapidrecap.app/screens/fYrdjsOKqO8/00-00-00.jpg) ![Screenshot at 00:23: John Gillen summarizes that the geopolitical landscape is becoming more volatile than the markets, highlighting the core discussion topic.](https://ss.rapidrecap.app/screens/fYrdjsOKqO8/00-00-23.jpg) ![Screenshot at 01:30: Matt Gertken is welcomed, introducing him as the Chief Strategist for Geopolitical Strategy at BCA Research.](https://ss.rapidrecap.app/screens/fYrdjsOKqO8/00-01-30.jpg) ![Screenshot at 02:33: Matt Gertken explains that the Iranian situation poses a vital choke point for oil markets, affecting 20% of global oil and LNG supply.](https://ss.rapidrecap.app/screens/fYrdjsOKqO8/00-02-33.jpg) ![Screenshot at 04:08: John Gillen transitions to advertising the Milk Road Macro newsletter, which covers detailed analysis on charts, Fed moves, and recession signals for subscribers to stay ahead of macro moves.](https://ss.rapidrecap.app/screens/fYrdjsOKqO8/00-04-08.jpg)