Tag: China
Bi-Weekly Geopolitical Report – The Great Chinese Purge (February 23, 2026)
by Patrick Fearon-Hernandez, CFA | PDF
One defining feature of the world today is the large share of the global population living under political systems that are authoritarian or moving in that direction. With 1.405 billion people, or about 18% of the global population total, China is the best example of that. Still, we suspect that many people in the West don’t appreciate how authoritarian the country is or how this structure can affect investment prospects both within China and around the world. After all, the end of the Cold War in 1991 allowed many in the West to adopt the pleasant notion that Communist dictatorship was a thing of the past. The great Chinese economic opening and reform program of the last four decades also helped obscure what was happening on the ground from Tibet to Hong Kong.
Now, under General Secretary Xi, a long program of purges in the Chinese military and defense industry has come to a head, driving home just how authoritarian the country has become again. In this report, we examine the purges and their potentially large implications for whether China launches a military seizure of Taiwan and discuss the likelihood that China can remain stable in the event that Xi dies or is incapacitated. As always, we wrap up with a discussion of the ramifications for investors.
Don’t miss our accompanying podcasts, available on our website and most podcast platforms: Apple | Spotify
Confluence Mailbag – #7 “Global Shifts and the Next Market Drivers” (Posted 2/5/26)
Bi-Weekly Geopolitical Podcast – #79 “Investment Implications of the New US National Security Strategy” (Posted 1/12/26)
Bi-Weekly Geopolitical Report – Investment Implications of the New US National Security Strategy (January 12, 2026)
by Patrick Fearon-Hernandez, CFA | PDF
As required by law, the new United States administration released its updated National Security Strategy in December 2025 (NSS 2025). As many observers have noted, the document marks a dramatic shift from the traditional NSS documents of the Cold War and the Globalization eras, not only in terms of threat assessments and priority initiatives, but also in terms of length, tone, and focus. In this report, we drill down to the investment implications of the new strategy if it is implemented as written. Our bottom-line assessment is that the new strategy could lead to significant changes in the global security environment, which in turn portends big potential changes in the global investment environment as well. The new strategy could mean significant shifts in global trade and investment flows, in the nature and origin of investment risks, in the policy responses that might be expected in a crisis, and among the most important policymakers worldwide.
Since we at Confluence have long tracked the evolving geopolitical landscape and identified many of the changes now incorporated in NSS 2025, we have been ahead of the game in adjusting our global strategies. Many of the investment implications we identify here are consistent with the ideas we have presented previously, such as a trend toward fracturing and disintegration among the nations of the world, less efficient trade and investment flows, and increased risk of conflict. In this report, we also offer several new ideas that complement these observations.
Don’t miss our accompanying podcasts, available on our website and most podcast platforms: Apple | Spotify
Bi-Weekly Geopolitical Podcast – #76 “China’s Rising Power and the Implications for US Hegemony” (Posted 10/27/25)
Bi-Weekly Geopolitical Report – China’s Rising Power and the Implications for US Hegemony (October 27, 2025)
by Patrick Fearon-Hernandez, CFA | PDF
In a recent report, we noted that the world is now transitioning away from its 30-year era of Globalization, when the United States mostly embraced its traditional role as global hegemon, i.e., the big, dominant country that provides international security, ensures relative order, and issues the reserve currency. Our previous report showed that the world is now entering a new era of Global Fracturing or, potentially, Chinese Hegemony. In this report, we take a deeper dive into the current US-China balance of power. We show that in all key aspects of power — military, diplomatic, technological, and economic — the balance appears to be shifting noticeably in favor of China. As this monumental shift in international relations becomes more obvious, US leaders and voters are increasingly struggling to decide whether they want to cede hegemony to the Chinese, defend it, or reform it into something that is more “America First.” Whatever they decide, the US role as global hegemon is changing as China’s relative strength increases. We conclude our report by discussing the investment implications of this change.
Don’t miss our accompanying podcasts, available on our website and most podcast platforms: Apple | Spotify
Bi-Weekly Geopolitical Report – US Influence on the Wane: New Evidence (September 29, 2025)
by Patrick Fearon-Hernandez, CFA | PDF
World history goes through phases, not as a cycle of recurring situations but as a series of “regimes” or broad sets of trends and relationships. Each regime is complex, since it encompasses issues such as the political landscape in various countries, the dominant global approach to economic policy and trade relationships, the structure and operation of security alliances, and even cultural norms. The most recent regime was the post-Cold War period of globalization that ended around 2008. Since each regime is so complex, and its elements or facets can change at a different pace, it can be hard to know for sure that a transition is taking place. It can be even harder to know what the new, following regime will look like.
Importantly, several major developments over the last few months have confirmed that the world is still transitioning away from the Globalization period. These developments have also provided added evidence about what to expect during the incoming regime of Global Fracturing or, potentially, Chinese Hegemony. As shown in this report, one key message is that the US continues to lose influence in international affairs as it steps back from its traditional role as global hegemon. Recent evidence of this includes the latest United States-China trade talks, the Russian drone incursions in Poland and Romania, and Israel’s attack on Hamas officials in Qatar. These developments are in line with other examples in recent years, such as the Obama administration’s decision not to enforce its “red line” against Syria’s use of chemical weapons in its civil war and the Biden administration’s chaotic withdrawal of US forces from Afghanistan. In this report, we discuss the latest developments and outline how they might affect financial markets going forward.