Market Strategist, Confluence Investments
The Return of Great Power Competition: How Your Economic World is About to Change
DATE: September 7, 2023 6:00 pm
“Tensions between the United States and China continue to worsen, with the two nations hurtling toward each other in a geopolitical game of chicken, that in a worst-case scenario, could possibly end up in a war. In the distance, a few possible offramps still hold promise, but the two powers are charging at each other so fast that it will be tough to make the turn onto any of them.”
That’s how Patrick Fearon Hernandez began a recent analysis of the great power competition under way between the U.S. and China. The competition is sure to affect each and every one of us and the world economic system we take for granted. On Sept. 7, he will speak on this theme to the Baltimore Council.
Take the issue of defense preparedness. China has the world’s biggest navy and is building up all its armed forces, while America’s military shrank dramatically as part of the “peace dividend” at the end of the Cold War. Restoring the US military, building up weapons stocks and reviving the defense industrial base will require a “draconian” shift of resources, meaning higher taxes or sharply reduced nondefense spending, he said in his August 7 analysis.
Take trade. The US maintains punitive tariffs on Chinese exports and tight restrictions on semiconductors and now is trying to return major industries that have grown in China to friendly shores. The administration says it wants as large a technological lead as possible, a goal straight out of the Cold War. This requires tight controls on U.S. technology.
China’s growing financial troubles could affect us as well. Their economy is faltering. Major property firms have collapsed. Youth unemployment is soaring, and the government’s response is to stop publishing the statistics. China’s slowdown is affecting investments in China and it could affect global stock markets.
Patrick Fearon-Hernandez is a Market Strategist for Confluence Investment Management in St. Louis. He analyzes global economic and geopolitical developments and maps their implications for investment strategy. His geopolitical, economic and market insights can be found on the firm’s website. Patrick’s global, top-down approach to investment strategy builds on his early career experience at the North Atlantic Treaty Organization, and the Central Intelligence Agency.
His last appearance before the Baltimore Council was three years ago, a superb presentation that’s worth another look.
Investment Strategist & OSINT Intelligence Analyst – Confluence Investment Management, 2019-present
Lead Portfolio Manager, Multi-Asset – AdvisorNet Financial Partners, 2016-2019
Portfolio Manager, Private Equity – Terra Nova Ventures, L.P., 2008-2015
Foreign Currencies & Precious Metals Analyst – A.G. Edwards & Sons, Inc., 2006-2008
International Economist – A.G. Edwards & Sons, Inc., 2001-2006
Investment Analyst & Newsletter Publisher – Vostok Latino-America Investments, 1998-2001
Financial Analyst – Intel, 1997-1998
Asset Allocation Analyst – The Acacia Group, 1996
Economic Consultant – North Atlantic Treaty Organization (NATO), 1995
Intelligence Analyst – Central Intelligence Agency (CIA), 1989-1994
Master of Business Administration, Arizona State University
Master of Public Policy, John F. Kennedy School of Government at Harvard University
B.A., University of Notre Dame
CFA charter holder
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