North Korea: The blackest of swans

When asked which black swan was most likely to unsettle markets, particularly given how low volatility is, Ben Griffiths highlighted North Korea as being the one to watch. Fast-forward two weeks to today, and it seems to be unfolding as we speak. 

At Livewire Live Ben told Matthew Kidman: 

“I rarely hold geopolitical issues up, but I am somewhat anxious about how quickly North Korea becomes a major issue that unsettles markets. Trump almost can’t back down. He has a number of attack dogs in his ministry that want to get on with things” 

7 possibilities for the US

The situation seems to be accelerating rapidly, with rhetoric getting stronger. In a Bloomberg article outlined the Check-mate situation faced by the US administration. On the option of a surgical strike: “It probably wouldn’t work well enough. North Korea’s missiles and nuclear facilities are dispersed and hidden throughout the country’s mountainous terrain. Failing to hit them all would leave some 10 million people in Seoul, 38 million people in the Tokyo vicinity and tens of thousands of U.S. military personnel in northeast Asia vulnerable to missile attacks -- with either conventional or nuclear warheads. Even if the U.S. managed to wipe out everything, Seoul would still be vulnerable to attacks from North Korea’s artillery.” 

The remaining options are no more palatable, as discussed in the 7 point Q&A. (VIEW LINK)