North Korean test blast nukes U.S. stock markets Tuesday

Kim-chee hits the fan. Wall Street stock and bond traders do their own version of “duck and cover” as Tuesday risk-off selling blast damages market’s latest recovery attempt.

Bombs away! Image derived from YouTube video still excerpted from "Dr. Strangelove." (With apologies to Slim Pickens)

WASHINGTON, September 5, 2017 – Going into the Labor Day holiday just past, it felt good to take a day or three off from August 2017, that just-ended, meat-grinder of a trading month investors like me have recently endured. However, my enjoyment was tempered by a bad feeling I had – call it a premonition of sorts – that some bad actor, somewhere, would get the statistically worse trading month of September off to a horrendous start.

Lo and behold! That’s precisely what happened. The DeathMaster heading up North Korea’s never-ending Kim Dynasty set off a powerful underground nuke over the weekend. Making things worse, this test blast is reputed to have been considerably more powerful than either of the nukes the U.S. dropped on Hiroshima and/or Nagasaki to bring the War in the Pacific to a rapid close.

Being reminded of this horrific event is still enough to stand one’s hair on end. But realizing that one of this century’s top madmen, Kim Jong-un, drives home a simple but powerful threat: We can successfully launch an ICBM; and now we have really big nukes we can super-glue to these missiles, if necessary, and make The Burning of Los Angeles a reality.

Wall Street reacted with a predictably impressive swan dive Tuesday morning, of which more anon.

Read also: Trading Diary: Our stock portfolios heading for Splattsville?

Second-guessing this situation is an exercise in futility. Still wet behind the ears, the still youthful Kim is clearly an out-of-control maniac. But like most out-of-control maniacs, he’s dumb like a fox. Clearly, like his predecessors, his dual aims are to

  • Force his opponents to buy his regime off – again – since the only thing the Norkies have ever been able to manufacture is death and terror, and since he knows from his father’s and grandfather’s experience that the West will always cave.
  • Once he’s received his payoff check from the West at a treaty table all full of smiles and flapdoodle, having given his solemn pledge he’ll never be bad again, he’ll trot back to his secret Evil Room to plan, with his closest minions, his next elaborate extortion plot. All the while, of course, his scientists, likely under the threat of death, will continue refining the Norkie attack capabilities, having never ceased their efforts, of course, while the fake “treaty” with the West was being “negotiated.”

Rinse. Repeat.

The Trump Administration is in this pickle right now not because of its alleged belligerence and ineptitude, but because it’s been unceremoniously plopped right on Trump’s presidential table by the past three two-term administrations. Whatever their other merits and demerits, all three consistently managed to kick the North Korean can down the road and declare Victory and Peace in Our Time.

So much for fake White House leadership. Result: The North Korean Kim-chee continues to hit the fan with alarmingly predictable regularity.

Trump and his generals will probably have to bring this nonsense to a head fairly soon. Someone has to, and it won’t be pretty. The U.S. stock market, sensing some kind of end-game is now in the cards, has launched September with a tactical nuclear blast of its own, sending the averages down sharply Tuesday morning.

As the morning began, the Dow Jones Industrial Average (DJIA) was off sharply, recovering a bit before resuming what’s beginning to look like a waterfall decline. As we write this commentary around 1:15 p.m. ET, the DJIA is off a nasty 275 points (-1.26 percent) and it looks like it’s headed lower. The broader-based S&P 500 average is off nearly 29 points (-1.2 percent), while the tech-heavy NASDAQ, volatile as usual, is off an even-worse, losing nearly 96 points at the moment for a 1.5 percent drop.

It stands to reason that the NAZZ would get hit particularly hard today. When it comes to actually cranking out computer chips of all kinds and sizes, not to mention actually assembling the world’s leading technology products, South Korea, Taiwan and even the Chi-coms rule the earth.

A nasty nuclear or artillery message sent in the direction of Seoul could even destroy an elaborate international supply chain like Apple’s (stock symbol: AAPL) vaunted Tim Cook masterpiece. (The stock is currently off 1.6 percent to stand at $161.41 per share.) What death and destruction could North Korea rain down elsewhere in East Asia? Or in Silicon Valley, perhaps?

The political speculations we’ve just detailed are not real yet, of course. Nor do we wish to raise fears any more than they’ve already been raised by North Korea’s Terrorist-in-Chief. But the very fact that some of all of the above could happen has investors in retreat, heading for gold, silver, resources and, oddly but perhaps appropriately, Home Depot (HD). As Houston already knows, you need somewhere reliable to go to get the stuff you need to rebuild from a recent disaster.

Tuesday could be one of those good days to pick up bargains in stocks you no longer felt like chasing. But right now, it might be more prudent to stay on the sidelines, avoid panic selling (for the moment at least), and try to figure out what groups, besides gold and home improvement stocks, might benefit if some kind of violent conflict between the U.S., the Norkies (and perhaps others) gets underway.

Even in the worst of times, this is the cold, rational way investors have to think.

This is a nasty way to launch September on Wall Street. But we can just imagine the gleeful giggling happening right now in Little Kim’s inner circle, as North Korea’s own Mini-Me plans his next hilarious prank on the U.S.

Stay tuned.

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