Royston Leonard / Mediadrumworld/ZUMA Press/Newscom Leave it to Donald Trump to threaten to rain “fire and fury” on the North Korean people the same week the world observed the 72nd anniversary of the U.S. government’s vindictive atomic bombings of Japanese civilians.
Global markets are closed for the weekend, so we will need to wait until tomorrow evening to see how investors react to the latest back-and-forth between the North Korean government and President Donald Trump. In North Korea’s latest salvo in its war of words, a state-run newspaper declared in an editorial that the country’s Paektusan army is now “on standby to launch fire into its [the US’s] mainland, waiting for an order of final attack.” The comments follow a Friday report from KBS World Radio, the official international broadcasting station of South Korea (which is owned by the Korean Broadcasting System), that “North Korean authorities have dispatched emergency standby orders to the leaders of the ruling Workers’ Party committees and civil defense units.” Here’s more from Fox News: “North Korea took its turn Saturday in the country’s escalating, back-and-fourth with President Trump, with the state-run newspaper saying leader Kim Jung Un’s revolutionary army is “capable of fighting any war the U.S. wants.” The assertion was made in an editorial that also states the Paektusan army is now “on the standby to launch fire into its mainland, waiting for an order of final attack.” The editorial also argues that the United States ‘finds itself in an ever worsening dilemma, being thrown into the grip of extreme security unrest by the DPRK.
With markets about to close for the next 2 days, the question on every trader’s mind is: ” should i carry risk over the weekend, or should I dump it all in case North Korea fires another test, or non-test, ICBM launch which may be just the provocation Trump needs to give the green light to a squadron of B-1 bombers to begin a bombing campaign.” After all, Trump himself tweeted this morning that “military solutions are now fully in place, locked and loaded, should North Korea act unwisely.
Secretary of Defense James Mattis made the following statement:
Mattis making a statement like this indicates not only that military operations are possible, but that active planning is underway if not completed. This situation looks to get more tense in the near future and the outcome as to whether military action takes place may lie with China’s ability to bring the DPRK under some sort of control.
One scenario would be for China to take preemptive action to remove the regime and occupy the North as a buffer to the South.
A few things have happened since yesterday afternoon’s blunt warning from President Donald Trump that “North Korea best not make any more threats to the United States” or “they will be met with fire, fury, and frankly power, the likes of which this world has never seen before.” One is that North Korea promptly made an explicit threat to United States territory in Guam, musing about creating “an enveloping fire at the areas around” the island’s extensive U.S. military assets using “medium-to-long-range strategic ballistic rocket Hwasong-12.” This was not the first such threat from Pyongyang, though it was more explicit than most, and certainly the first to come just hours after a sitting U.S. president invoked the imagery of nuclear holocaust.
On July 4, North Korea tested a Hwasong-14 ICBM, rushing closer to posing a major nuclear threat to the U.S. Just a few weeks later on July 28, the Kim Jong-un regime tested its second ICBM, this time with a range that may include major cities in the continental U.S. To make matters more concerning, the Defense Intelligence Agency has said that North Korea could successfully arm an ICBM with a nuclear warhead as early as next year.
First thing this morning we reported that according to a 500-page report by the Japanese Defense Ministry, North Korea may now be in possession of a miniature nuclear warhead. That said, the report did not move the market because the Japanese report was largely inconclusive and did not claim with certainty that this is the case.