Comparing the 2008 decline to the 2022 decline: what will cause the decline to continue?
I give credit to Michael Kramer for finding a similarity between the S&P 500 decline from 2008 to the market decline of today. The image below was from late May and as of present day, the stock market movements continue to look identical


Many wonder what will cause the market decline to continue.

From the people that are focused on the stock market, all I've seen are chatter about a higher CPI or consumer sentiment continuing to worsen. However, looking at the price of commodities, they've come down considerably to the point where Elon Musk is saying that inflation has peaked.

One thing that I've been paying attention to for the past few months is the growing tensions between China and Taiwan. With 90% of the world's advanced semiconductors being produced in Taiwan, an attack on Taiwan is detrimental to the world. Taiwan conducts the majority of exports through airfreight. With the Chinese air force and navy doing drills around Taiwan, it looks like the country is seeing a blockade disguised as a "military exercise" from China.

If an attack does happen, which I see happening soon, then I wouldn't be surprised to see the markets plunge in response to the news.

Contrarians and optimists will point out that Taiwan is only vital in terms of manufacturing capacity. With $ASML $LRCX $AMAT $KLAC and other semiconductor equipment firms being non-Taiwanese, as well as the fact that we have other chip foundry companies that don't produce chips in Taiwan, like $GFS and $INTC, the world will still be alright.


As I mentioned earlier, with nearly the entire production capacity of our advanced chips being wiped out, the tech sector, which has been the driver of economic growth and who has a strong influence over the rest of the world economy, will be struggling like never before. The damage from the tech sector will leak into other sectors. Demand for goods and services will plunge.

Even if things will be alright with the existing infrastructure we have, the world would have a harder time creating jobs in general. Innovation creates jobs. Without having a larger driver of innovation, it will be hard to create jobs in general. World War 3 would inspire countries to draft citizens into the military and that can be seen as a way to create job growth during a crisis. Defense spending will surge as nations will need to buy weapons and equipment for their new soldiers. However, many of the communication equipment, missiles, vehicles, etc. that the military needs to successfully complete missions depends on whether defense firms can secure a sufficient supply of chips or not. And with nearly all of the production of advanced chips wiped out, soldiers will have to fight old school.

In sum, pay attention to the growing tensions between China and Taiwan. The impacts of those tensions are currently sending small shockwaves to the world. Once war happens, the shockwaves will be big. The chances of a major shockwave coming are higher than many think.
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Whew, dark morning🤣🤣 I think it would take that type of catastrophic shock of an event to make the markets continue matching the 2008 trajectory. Russia invading Ukraine is one thing; China & Taiwan would significantly compound the economic shock globally, adding tech issues to the fuel & grain commodity issues were hearing about already (sure its much worse, just the two I’ve heard most about).
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Pay attention to the months of October and April
The months of October and April are known as the most dangerous months in Taiwan. These months are when the waters are calm and best suitable for an amphibious assault from invaders.

US Speaker Nancy Pelosi will arrive in Taiwan within a few hours from now (as of time of writing). Scrolling through Twitter, I've noticed that over the past few days alone, there's a surge in the number of videos of Chinese military vehicles entering the Fujian province, the Chinese province that is directly across from Taiwan. These videos reminded me of the months of videos of Russian tanks and military vehicles going to the Ukrainian border before the invasion.

While the media focuses on Ukraine, few people are paying more attention to Taiwan. If war happens, the world will be impacted in a detrimental way. Taiwan has 61% of the world's capacity to produce chips that are 16mm and smaller. Having the majority of chip production offline will make it difficult for the world to produce more electronics. And with tech being the main driver of global economic growth, seeing the sector grind to a halt could bring the world into the Great Depression.

$TSM is going to be the biggest business casualty as nearly all of its foundries could get destroyed if an invasion happens. $UMC will be another casualty.

As for $INTC $GFS and other foundry companies that don't have factories in Taiwan, they will see a surge in business from $NVDA $AMD $AAPL etc. But because their capacity is a lot lower than TSMC, these fabless chip companies will either pony up and pay a lot more to have their chips produced or risk not having any foundry willing to produce their chips when they can gain more profit producing chips for another firm.

$ASML $LRCX and other semiconductor equipment companies will see surging demand as foundry companies aggressively ramp up investment in building more factories.

While Pelosi's visit won't trigger an immediate invasion, it could inspire China to ramp up its military capacity in the Fujian province to the point where they are ready to launch an invasion in October.
Global footprint of GlobalFoundries $GFS
A great thing about GloblaFoundries is that its foundries and manufacturing centers are located in the US, Germany, and Singapore.

Many foundries are located in Taiwan. This is problematic as tensions between Taiwan and China grow. The closest factory that GlobalFoundries has to Taiwan is Singapore, but at least most of its factories are in the West.

While investors in the semiconductor industry like $TSM because of its scale and for having the largest market share, the majority of its foundries are in Taiwan. A Chinese attack on Taiwan would destroy most of TSMC's factories.

$INTC and other chipmakers also have foundries in Taiwan, but they're starting to build foundries in other places like the US, Israel, Ireland, Germany, etc.

If an attack on Taiwan happens, at least GlobalFoundries can still operate like usual.
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