by Bill O’Grady
The Kim regime has become increasingly belligerent, launching a number of ballistic missiles and testing what appears to be a hydrogen device. It is also claiming it has miniaturized a warhead, meaning, if true, North Korea is a nuclear power.
The U.S. has indicated this development is unacceptable. Although the Trump administration still says that “all options are on the table,” a full-scale war would be catastrophic and may be impossible to contain. The U.S. wants China to bring North Korea to heel; so far, the Xi government has been reluctant to push hard against Pyongyang. Meanwhile, Japan and South Korea are becoming increasingly worried about North Korea’s behavior.
Although the Hermit Kingdom has been the topic of reports on numerous occasions, an update on the basic geopolitical issue of North Korea is warranted given the volume of recent news. In this report, we will examine the motivations of North Korea and surrounding powers, including South Korea, Russia, China, Japan and the U.S. As always, we will conclude with potential market ramifications.