Peace Breaks Out On The Korean Peninsula
After 65 years of an armistice (signed July 27, 1953) the Korean War looks like it maybe heading to its conclusion with a full peace treaty … that is, of course, if the they and the other parties to the armistice, China and the United States, can come to terms. The optics of the historical meeting between South Korean President Moon Jae-In and KimJong-Un at Panmunjom in the demilitarized zone between North and South Korea give me hope, hope that this may represent the cooling of the perennial Asian geopolitical hot spot and a return to normalcy on the Korean Peninsula. This would represent a major positive and a major departure from the from the status quo.
The Market Doesn’t Care
The market’s reaction to this extraordinary thaw in relations is zero. As I sit here writing this post an hour before the close on Friday, April 27, we are virtually unchanged on the day. Several months ago the market swung violently as the Twitter war between President Trump and Supreme Leader Kim flared in the wake of renewed North Korean missile and nuclear testing. Ostensibly the reason given by North Korea for resumption of its testing was fear that the South and the United States were continuing to plan and prepare to attack the North. These new peace overtures seem to dispel that eminent threat. So I think this is a big deal, and certainly in the best interest of both Koreas and the world.
“Dirty Harry” Diplomacy
Clint Eastwood, as rogue San Francisco police inspector, “Dirty” Harry Callahan, is a very scary guy. He is steely-eyed and clearly does not mind killing people. After thwarting a robbery and killing two of the perpetrators he confronts a third wounded, still-armed robber:
“I know what you’re thinking: ‘Did he fire six shots or only five?’ Well, to tell you the truth, in all this excitement, I’ve kinda lost track myself. But being this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you’ve got to ask yourself one question: ‘Do I feel lucky?’ Well, do you, punk?”
The felon decides to drop his weapon.
After the Trump Tweet barrage earlier this year (“Little Rocket Man,” “North Korea best not make any more threats to the United States, they will be met by fire and fury like the world has never seen,” or “my button [i.e. 44 magnum] is bigger than yours.”) China, North Korea’s patron saint, may have said this guy (President Trump) may actually be crazy enough to do something militarily against the Kim regime. Ergo, China may have told Kim, we don’t need this aggravation any more on our southern border … cool it! Obviously this is pure speculation on my part but it certainly seems a possibility.
Of course much can happen to unravel this new era of good feeling, including future presidential tweeting. For now it appears to be a great step in the right direction and I give credit where credit is due. President Trump may have gotten this one right. I don’t care if it was by accident or shrewd intent, things appear to be moving in the right direction on the Korean Peninsula. The media, general and otherwise met this news with great skepticism. I think it is an additional geopolitical tailwind that the markets should celebrate, and not by trading flat.
What’s your take?
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