Dire Straits

So, there is no longer any Nancy Drew Mystery. US House Speaker Pelosi will be in Taiwan today, says Bloomberg; she will meet with President Tsai Ing-Wen on Wednesday, says the Financial Times. That is no real surprise given Pelosi's track record --she visited Tiananmen Square in 1989 and was arrested and detained-- and given going was the better geostrategic damned-if-you-do-damned-if-you-don't choice.

What happens next? Nobody knows – but it doesn't look good at all. Let's unpack why.

First, those who have kept their heads in the sand are forced to wake up and smell the deeply unpleasant coffee. There has been a lot of that in 2022. There is *a lot* more to come yet, e.g.,

"There are no war risks over Taiwan." No, there always were. Until the geopolitics is resolved (how?), there always will be.

"Markets are wrong to link Russia-Ukraine to China-Taiwan." Because I don't want to have to shift more of my portfolio or supply chain.

"Markets haven't moved yet." As I said around 24 hours ago in a work chat, they will as soon as Pelosi arrives or confirms she will arrive. And here we are.

Second, those who were aware of the above issues but were out of the news loop are having to play rapid catch-up. That apparently includes US Secretary of State Blinken, who stated, "We don't know if Speaker Pelosi plans to visit Taiwan or not." Is the White House also in the dark?

Third, we have to consider who is responsible for driving this crisis.