Geopolitics Is Now the Macro Driver: Iran, China & the Trades That Matter in 2026 w/ Matt Gertken
Speakers
Summary
- Iran & Oil Risk: A US strike on Iran is viewed as "more likely than not" in 2026 due to regime instability and geopolitical friction. While Iran is deterred from closing the Strait of Hormuz voluntarily, a regime collapse could lead to desperation attacks on energy infrastructure, creating a massive supply shock.
- China's Economic Trap: China is suffering from debt deflation and a property bust (6 years running). The leadership is prioritizing security/control over economic vibrancy, and without a "fiscal bazooka," the economy remains depressed.
- US Tech Dominance: The US maintains a 5-10 year lead in AI and the semiconductor stack. China's command-and-control model struggles to foster sustainable general-purpose technology innovation compared to the US market system.
- Gold's New Driver: The rally in precious metals is driven less by standard inflation and more by fears of US governance erosion (fiscal dominance, potential capital controls) and Chinese investors fleeing their domestic property/equity markets.
Trade Ideas
Matt Gertken
Chief Strategist, Geopolitical Strategy at BCA Research
Gertken advises investors to "increase your holdings of emerging markets" specifically naming "India, Mexico" due to structural reforms and manufacturing shifts. As supply chains decouple from China (Friend-shoring), countries like Mexico and India benefit from increased foreign direct investment (FDI) and manufacturing bases. India specifically has managed inflation well and has a growing population workforce. Long India and Mexico ETFs. Global recession dampening export demand; political instability in local markets.
Matt Gertken
Chief Strategist, Geopolitical Strategy at BCA Research
China's domestic economy is "extremely depressed," burdened by high debt, and the government is refusing to use a "fiscal bazooka" to reinflate assets. The leadership's focus on security over economics means the private sector will continue to suffer debt deflation. Without a massive stimulus (which Xi is avoiding), there is no catalyst for a sustained equity recovery. Avoid Chinese Equities. Xi Jinping suddenly pivots to massive fiscal stimulus (the "bazooka").
Matt Gertken
Chief Strategist, Geopolitical Strategy at BCA Research
"The US is still the place to be." Gertken disagrees with the "sell America" narrative, citing independent central banking, tech leadership, and favorable demographics (immigration). Despite the noise, the US remains the "cleanest dirty shirt" in the global economy. Until Europe stabilizes or China fixes its debt crisis, global capital has nowhere else to go for safety and growth. Overweight US Equities. US political instability or a severe recession.
Matt Gertken
Chief Strategist, Geopolitical Strategy at BCA Research
Gertken states that US strikes on Iran are "likely" this year and that the Iranian regime is unstable. He explicitly says, "In the short term you want to be long oil." While global demand is wobbly (due to China), the geopolitical risk premium is underpriced. A kinetic conflict or regime collapse in Iran could trigger a massive supply constraint, forcing prices higher regardless of the demand backdrop. Long Oil futures or Energy Equities as a geopolitical hedge. China's economy collapses faster than expected, crushing global demand; US/Iran tensions de-escalate unexpectedly.
Matt Gertken
Chief Strategist, Geopolitical Strategy at BCA Research
"The Americans clearly have the advantage... not only innovating these large language models, but also the semiconductor stack." Geopolitics is now a tech race. The US has a structural advantage in the "micro level" of compute and chips. If the US wins the AI race (which Gertken believes they are winning), capital will continue to concentrate in US tech leaders rather than Chinese competitors who are "5 or 10 years behind." Long US Semiconductor and AI infrastructure plays. Regulatory crackdowns or a hot war over Taiwan destroying chip supply chains.
Matt Gertken
Chief Strategist, Geopolitical Strategy at BCA Research
Gold is rising due to fears that "US governance is collapsing" and potential future capital controls, alongside Chinese investors "hoarding" commodities because their property market is broken. Precious metals are acting as a hedge against the US fiscal situation and a safe haven for Chinese capital trapped by domestic deflation. As long as US debt concerns persist and China's economy lags, this bid remains. Long Gold and Silver. US fiscal discipline returns unexpectedly or the Fed tightens aggressively, strengthening the dollar.
Up Next
This Milk Road Daily video, published February 12, 2026, features Matt Gertken discussing INDA, EWW, FXI, MCHI, QQQ, SPY, USO, XLE, NVDA, MSFT, SMH, GLD, SLV. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Matt Gertken · Tickers: INDA, EWW, FXI, MCHI, QQQ, SPY, USO, XLE, NVDA, MSFT, SMH, GLD, SLV