And here we find ourselves on the cusp of… something. Only Trump (ok, maybe Dennis Rodman too) could go to North Korea or at least meet with them in Singapore. Conflict has continued on the Korean peninsula and with the Japanese for a century, and was codified on the map as a contest between two political philosophies at the 38th parallel in the closing days of WWII. Even though we have maintained a military presence in Korea post-armistice, and of course have troop exposure elsewhere in the Pacific theater, it is only in the last few years that they have become a true direct threat to the US. Whether it is the dubious reach of their ICBMs, or simply the potential leak of fissile material and weapons technology to other state- and non-state actors, they have achieved their objective of becoming players of global consequence.
The latest Talchum has unfolded like a WWE match between Little Rocket Man and the Dotard with grandstanding, trash-talking, outright threats, cancellations and reinstatements. What do we make of it as investors? Good theater but not much real-world consequence. Of course nuking Seoul or Tokyo would devastate Asian and global markets, but that was an improbable outcome especially while Trump waved his hand over his “much bigger and more powerful” (nuclear) button. Kim’s regime needs food, energy, technology, medicine, general economic vitality and some degree of acknowledgement and respect on the global stage, none of which would be achieved under a mushroom cloud.
If Trump and Kim part company having not advanced anything, we have the status quo and both leaders can return to their countries claiming they got the other to the table. The market continues along as it did yesterday, last week and last month with no new information. If they come to some accord, geopolitically there is a great deal of relief and we can back up the Armageddon clock a couple seconds, but little changes economically. NoKo coming into the international trading community does not have the same consequence as Iran with their oil and cash wealth. An open North Korea might in the fullness of time become a venue for producing nations to trade and in decades could be a candidate for a German-style reunification, but in the immediate future they are at best aid recipients.
If the talks degenerate into name calling, chair throwing, and fallaway moonsault slams which, if the White House can pick a fight with Canada at the G-7, could happen, we will update this blog from the basement. Absent that outcome, we remain committed to Asia, particularly developing Asia, and see a status quo for the market.