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Trump North Korea warning, repeated Kim threats, hit stocks

Written By | Aug 9, 2017

The increasingly unfunny Kim Jong-Un. Cartoon by Branco. Reproduced with permission. (See below)**

WASHINGTON, August 9, 2017 – Stocks were cruising toward a modest gain Tuesday afternoon, with widely followed averages once again tickling new record highs. But all of a sudden, in mid-afternoon, headline risk returned sending averages into the red zone where they stayed into the 4 p.m. closing bell.

Speaking to the media from his vacation spot in Bedminster, New Jersey, President Trump responded forcefully addressed the increasingly belligerent language coming from the out-of-control North Korean dictatorship.

According to a late afternoon report from the Wall Street Journal,* the President declared

“‘North Korea best not make any more threats to the U.S…. They will be met with fire and fury like the world has never seen. He has been very threatening beyond a normal state,’ he continued, referring apparently to North Korean leader Kim Jong Un….”




Quickly catching wind of the news, Wall Street turned on a dime. Selling quickly replaced buying, sending all three major averages down modestly on the day, as the WSJ article notes:

“On Wall Street, the president’s comments shook up an otherwise quiet summer session. The Dow Jones Industrial Average closed down about 33 points, or 0.2%, to 22085, snapping a 10-session streak of consecutive gains. The S&P 500 and Nasdaq Composite Index each fell about 0.2% as well.

“[Safe] Haven assets rose. The yield on 10-year Treasury notes fell, while gold bounced back from its lowest level of the month.”

Those safe haven assets included gold, which lately has looked wobbly again as its latest attempt at new 2017 highs began to falter. After continuing weakness in the first half of the trading day, gold did a 180, and closed up $1.80 an ounce to stand at $1.266.50 at the end of its trading day. Silver, platinum and copper also closed strongly.

As markets open Wednesday morning, commodities, unsurprisingly, are catching a bid. Likewise, gold and other precious metals as well as copper – all likely due to the reckless Kim Jong Un follow-on to Trump’s remarks. North Korea’s Dear Dictator upped the ante instantly by threatening an attack on Guam. He’s clearly playing with fire. But like most monomaniacs, he’ll continue to push this dangerous envelope until something gives.

The markets, obviously, are increasingly nervous about the whole ever-accelerating flap, and have opened sharply down Wednesday morning, with all three major averages in the red and with the NASDAQ particularly hard hit.

We’ll be back at least briefly this afternoon with an update, particularly if and when the smoke and saber-rattling recedes enough for us to get a better read on market sentiment going forward.

*Most WSJ articles are behind a paywall, so this link may not work for you unless you’re a subscriber.

**Cartoon by Branco, reproduced with permission and by arrangement with ComicallyIncorrect.

 



Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17