Weekly Update
It is the Kim and Donald show. As in Kim Jong Un the North Korean Supreme Leader, and Donald Trump the US President. Donald Trump threatened to ‘totally destroy’ North Korea and made fun of Kim as the ‘Rocket Man.’ Kim responded by calling Donald Trump a ‘mentally deranged U. S. dotard.’ For those not in the know, a dotard is someone who is old, useless, and demented. Also refers to someone who is lethargic and dull. The two have been exchanging colourful threats and insults back and forth now for some time. North Korea followed the latest one up by suggesting they might test a hydrogen bomb over the Pacific. Trump called Kim a ‘madman.’
If this were the WWE, we suppose this might pass as entertainment. Instead, these are two world leaders threatening to blow the world to smithereens. While the ongoing ‘tit for tat’ threats passed back and forth between North Korea’s testing of missiles into the ocean and sometimes over Japan have at times negatively impacted markets, the markets now seem to be ignoring the two with their ongoing spat. Except it is difficult to ignore Donald Trump’s threats to destroy North Korea and then realizing that North Korea has the capability to do a lot of destruction as well.
Lost in the shuffle is that China, and to a lesser extent Russia, have said that if the US were to attack North Korea then they would have to get involved and support North Korea. Recall that during the Korean War 1950 – 53 the Americans had pushed deep into North Korea and appeared to be on the cusp of seizing the entire peninsula. China responded by sending in 500,000 troops to assist the North Koreans and they successfully pushed the Americans back to the DMZ zone where the war ended in a stalemate and armistice.
Also lost in the shuffle was the Fed meeting this past week. The Fed announced that they will be starting to cut its $4.5 trillion balance sheet starting in October. Initially it will be $10 billion a month. Fed chair Janet Yellen said that it will be gradual and predictable. The Fed left interest rates unchanged at 1.25% to 1.50%; however, they expect to raise interest rates one more time this year, probably in December and then three hikes in 2018. The somewhat more hawkish tone sent interest rates slightly higher, steadied the stock markets that merely inched their way higher, caused the US$ to jump higher and gold sold off.
This post was published at GoldSeek on 24 September 2017.
Follow on Twitter
Recent Comments