Bill Blain: "North Korea Is Waving A Red Flag In The Bull’s Face. What Will Donald Do?"

Submitted by Bill Blain of Mint Partners

Mint - Blain’s Morning Porridge – August 23rd 2017

“Out on the road today, I saw a deadhead stick on a Cadillac.. A little voice inside my head said, “Don’t look back. You can never look back.””

Interesting start to the last week of summer: a nasty dose of considered North Korean provocation, disbelief at what Hurricane Harvey is doing to Texas, handbags betwixt UK and EU on “negotiating seriously” over Brexit, and all these before we even get a whiff of this week’s EU data and US payrolls on Friday. I won’t even bother about Jackson Hole last week – yawn – we’ll talk about Central banks come September.

The market reaction to the latest North Korean missile flight tells us everything we need to know: Risk Off. Equities wobble, gold up, bond yields down and gold higher. Markets understand the reality: the Trump Jump is now well and truly over – Treasury yields are right back down there, the dollar is down 10%, stock markets have gone short, yet the US populace. But if there was a snap election tomorrow….. Don’t even think about it..   

Deliberately firing a missile on a trajectory over Northern Japan sends clear messages from the Kim Jong Un regime: 1) we are able to do it, and 2) but, we didn’t fire it in the direction of US Guam. Although the ballistics would have been well understood (ie it wasn’t going to hit Japan), it ratcheted up the fear by triggering alerts. It demands a US response – which will keep markets on tenterhooks. Firing the rocket from a site near downtown Pyongyang’s airport also sends the US a clear challenge about limits on what a “measured” response might mean.

So much for the Northerners wanting to negotiate – as the Americans were telling us just last week. You’d almost think the N Koreans were trying to wind up Trump?


They are waving a red flag in the Bull’s face to force a reaction. The S Koreans have already sent a couple of bombers to aggressively practice bomb drops – calm and measured. What will Donald do? After last week’s “Fire and Fury” rant, the N Koreans are expecting him to fulminate, look stupid, make some further angry comments – in short more bluster. They will continue to goad him into doing something “angry”… at which point America gets the blame, and China can step in as peacemaker.

Exactly how this plays out is going to keep markets guessing. Add it to the general head-shaking re US market prospects.

Meanwhile, Tropical Storm Harvey is proving another difficult challenge for Donald.

The storm is circling back, powering up again over the warm Gulf waters, and could well prove a double whammy if/when it hits the coast again on Wednesday. $20 bln insurance hit. However, I’m told not to worry about oil supply disruption – ports, pipes and refineries are simple to fix and reopen, and there is plenty of oil in store. Houston is a big place – and much more than just an oil city – its probably the number one centre re Medicine. The costs and the dislocation to a major part of the US economy are bound to have a short-term impact on the economic data, and sting the insurers, but these Texans are a resilient bunch.

What’s potentially more interesting is what Donald now says about Global Warming. Historically big storms flatten the Gulf Coast on a predictable basis – Houston has been flattened before – but sea temperatures are rising, making storms more violent and difficult to predict and prepare for. Maybe it will take a big one hitting the White House South to persuade his Donaldness that Climate Change is a serious matter..? 

Back this side of the pond…

Having spent the weekend in France and getting less than 1 Euro to the pound out the cashline machine, I am increasingly worried about the outlook for the UK. The EU is “exasperated” by the UK approach to Brexit – which is triggering all kinds of doom and gloom. Meanwhile, the Labour Party has adopted a policy on Brexit… whatever it might be. They are making the assumption the Europeans would be willing to accept transitions agreements.. but, hey, if it makes Theresa look more isolated, its worth pursuing..

Meanwhile, Dodgy’s Brexit Team has presented Brussels with a whole series of position papers (ah, the persuasive power of Powerpoint), and proposals calling for flexibility and pragmatism and giving us what we ask for. The EU say the proposals are “light” on details and sequencing. Brussels has a clear agenda and isn’t prepared to accept any ambiguity in the process.

Either we Brits are being geniuses in our approach, or it’s another example of how we simply don’t understand Europe. If we were dealing with 27 individual countries, then sure; each one would come to mutually beneficial agreements on new trade arrangements.

But we aren’t dealing with 27 countries.

We are dealing with One.

We are dealing with the unelected, unrepresentative representative of these countries; the self-perpetuating nomenklatura of the EU. It would be a massive mistake for our negotiators to assume the will of the EU somehow represents the collective will of the member countries. (I really should have used the “One ring to bind them all” quote from LoTRs as my quote-line this morning…)    

I have a sneaking suspicion this won’t end well. While individual countries and leaders may be sympathetic to the UK, they won’t be in meeting where Sauron, sorry Junkers/Barnier, hold the floor and Macron is juggling for European hegemony with a French accent.

Finally, at last a crypto-currency I understand.

The Whoppercoin allows you to save and trade cyber tokens earned when you buy the burger (but only in Russia thus far). Forget Bitcoin mining or such nonsenses.. buy lunch, wallet the digital token, and expect the Whoppercoin to appreciate 500% by tea-time… isn’t that what all crypto-currencies do?

Back to the day job…


Haus-Targaryen 07564111 Tue, 08/29/2017 - 06:19 Permalink

This NK thing is so old and tired and still it riles up the trailer-park dwellers. I can find headlines EXACTLY LIKE THIS from 20 years ago, back when our financial system could take the hit of Seoul getting wiped off the map.  Lets say Trump decides "enough is enough" and decides to to teach that fat kid a lesson or two and blasts his missile bases into 10,000,000 pieces.  What then?  Kim won't sit there and take it.  He'll also have China at his back, given their OWN admission.  Lets say he opens up on Seoul.  The number of pieces of artillery pointing at Seoul with Seoul in range is measured in the TENS of THOUSANDS.  Even if each piece only got ten rounds off before getting blown off the planet ... it'll literally be raining high-explosives on one of the most densely populated areas in the world.  Lets assume this firestorm doesn't interrupt supply chains or cause the capital markets to behave wildly (because why would they do that?) ... lets JUST look at insurance claims. You have, lets be conservative here ... 100,000 high-explosives raining down on the city within a 15 minute period. How many fires get started?  How much infrastructure is destroyed?  How many buildings lost? Lives lost? Vehicles?  Insurance claims would be in the tens or hundreds of billions of USD.  No insurance company in the world could eat those losses, meaning either bailouts by governments and taxpayers or bankruptcy.   Remember AIG some ten years ago?  Take that and multiply it by orders of magnitude.  But then we WOULD have supply chain issues, capital markets freezes, risk-on asset reallocations and then there are all the consequences of those policies.  No, the fat kid knows he has the world by the balls. Not from a military perspective, but from a financial one.  He can create an event that destroys the western financial world without much effort, given its fragility ... and he only has this power so long as the system remains.  It is for this reason I think he is in a rush to get his miniaturized nukes on ICBMs ... because once our system does collapse, he loses this power to end the world.  He thus is using this unique opportunity and geography to arm himself to make the idea of taking him out unthinkable in a few years.  The fat kid isn't an idiot.  

In reply to by 07564111

gregga777 Haus-Targaryen Tue, 08/29/2017 - 06:21 Permalink

Just thought I'd mention that most insurance claims are voided by acts of war. Even if they aren't it can take decades to settle claims. Just look at what happened in WW2 in Europe. Claimants who couldn't produce death certificates couldn't collect on insurance claims. In 2017 some people's descendants are still waiting to collect. Those wily insurance companies. Somehow they knew that governments might be a tad overwhelmed or outright plainly unwilling when it came to issuing death certificates.

In reply to by Haus-Targaryen

Squid-puppets … Haus-Targaryen Tue, 08/29/2017 - 06:34 Permalink

This is what Trump should say:"NK poses an unparalelled threat to our allies. Were it in my capacity I would have the will and the means to deal with this threat. Regrettably, the Deep State of America has such a tenacious grip on the levers of power in Washington DC, with no genuine intention of servicng the people of America that nothing will or can be done despite my best efforts, intention and clear vision of the problem"

In reply to by Haus-Targaryen

Kobe Beef jcaz Tue, 08/29/2017 - 11:33 Permalink

Diplomacy:1) Secure a UN resolution: No more missile tests. They will not be permitted to happen.Military:I imagine American satellites are well aware of preparations for launch before they happen.1) Destroy those missiles, sites, crews, commands before they get off the pad.Escalation:1) Should North Korea fire on the South, exterminate them. Every site, every base, every city. Total War. The Koreans are not my people, and their survival is not my concern. The West can find someone else to make flat-screens and go on without them. The Korean peninsula is an acceptable loss. Diplomacy:1) China. The Korean War is now over. We are serious, and we are powerful. Sit down and discuss the new features of your region. World War III is not in your interest, and will not further your aims.  

In reply to by jcaz

The Wizard MK13 Tue, 08/29/2017 - 10:25 Permalink

Why are there so many US bases spread around the world? The Economic Hitman told us. The corporate US requires control of resources to preserve the status of the fiat world reserve currency. The founders of this nation are rolling in their graves. The headline should read:Bill Blain: "The Deep State Is Waving A Red Flag In The Bull’s Face. What Will Donald Do?"

In reply to by MK13

1033eruth Haus-Targaryen Tue, 08/29/2017 - 10:36 Permalink

China already explicitly said that if NK initiates aggression, they will stand aside but if the US does, then they will support NK.  Its apparent that NK is trying to provoke the US.  The only thing that I'm afraid of is that we'll take the bait.But we've got more bullshit articles always baiting the American public.  As if this should concern us at all, it was JAPAN that had the missile fly over, not the US.  No one hurt, no one injured = EXCEPT EGOS!I don't think there is any institution that wants us to go to more than the MSM.

In reply to by Haus-Targaryen

European American south40_dreams Tue, 08/29/2017 - 06:12 Permalink

Spend all this money (we don't have) on fixing our own country. Cull the Zionist Jew Parsites who make trillions on spreading our toxic form of  "Freedom" and "Democracy" to sovereign countries, who, by the way, haven't attacked any country in hundreds of years, but who won't play by the satanic deep states rules.Yes, let's believe our Bolshevik handlers lies, that N Korea is a threat to all mankind. The American malleable mushed mind is so fucking brainwashed by now, we'll "JUMP" when the yell "Frog"...they know what's best for us.

In reply to by south40_dreams

gregga777 European American Tue, 08/29/2017 - 06:17 Permalink

The 535 war criminals in the United States CONgress are all beholden to AIPAC and are committed to sending more American kids to die for Apartheid Israel in insane Middle Eastern wars. The Israelis have a saying:

"The idea is not for us to die fighting for Israel; the idea is to get Americans kids to die fighting for Israel."

Fucking parasites. Just like hedge fund billionaires, banking gangsters, CON Street Swindlers, Anglo-Zionist FAKE NEWS Media presstitutes and Hollywood pedophiles. But, you'll NEVER find them wearing the Uniform of an American soldier, sailor, airman or Marine.

In reply to by European American

holgerdanske Tue, 08/29/2017 - 06:04 Permalink

"Having spent the weekend in France and getting less than 1 Euro to the pound out the cashline machine, I am increasingly worried about the outlook for the UK. The EU is “exasperated” by the UK approach to Brexit – which is triggering all kinds of doom and gloom." I share your sentiment, except I am worried abut the EU. It is dying far too slowly, and in it's death throes, you might get hit by the tail.Die, monster, die!

wisefool Tue, 08/29/2017 - 06:09 Permalink

Best Korea Make huricane. Bin laden only make buildings fall in to their own footprints at free fall.Trump should be fired up today when he gets to Bushland. Lots of tax money gonna get spent this time too.

Marcecamb Tue, 08/29/2017 - 06:11 Permalink

I got lost into the details of the "news".Let's step back and see the map. The last time I checked, USA location is a tad far from Korean peninsula. Whatever hapenned with the "No foreignentanglements"? My american friends please go home. You have an awfull lot of rebuilding to do back there. Peace.

gregga777 Tue, 08/29/2017 - 06:11 Permalink

These filthy rich hedge fund parasites are all products of decades of Goldman Sachs Feral Reserve System money printing. They'd make their own mothers and daughters into prostitutes to keep their "2 and 20" skim going with the suckers, er, I mean muppets, uh, I mean marks. Why does anyone think that the American People give a rats ass what these parasites think about anything? It's all parties, hookers and blow to them.

Last of the Mi… Tue, 08/29/2017 - 06:17 Permalink

but sea temperatures are rising, making storms more violent and difficult to predict and prepare for Tells you all you need to know about the article. Fake new, fake science, fake politics. Manufactured propaganda mill reading.

wisefool Tue, 08/29/2017 - 06:25 Permalink

The airports are not open in bushland (Texas) yet, but I bet they flew the Kim Jong-Un family out of there. Just like they did the bin ladens on 911.It makes the most sense when facing a disaster like this.

dogismycopilot Tue, 08/29/2017 - 06:34 Permalink

Trump will do nothing, because he can do nothing.Fat Boy runs Barter Town.Fat Boy is backstopped by China, he's got a gun to the head of Seoul, Russia will sell him gas and food because they need the money (sanctions effect), Japan is gutless, and the Ukrainians will sell him rocket motors all day long. Fat Boy is holding the tiger by the tai.Touch a hair on his head and he lets the tiger go.GOD I LOVE THIS SHOW!

Doom and Dust Tue, 08/29/2017 - 07:07 Permalink

I am increasingly worried about the outlook for the UK.

I on the other hand am increasingly enthusiastic about my sterling shorts. Will be buying well into parity too.Also I've been inundated by headhunters (IT finance) where I live, most likely to do with UK-based businesses setting up subsidiaries and even moving.Brexit is turning out an enormous blessing for us continentals. Should have campaigned for it really. And with a government AND opposition this incompetent, all that control taken back won't be doing them any good either.

gregga777 Tue, 08/29/2017 - 07:13 Permalink

How does the United States Missile Defense Command know in advance that North Korean rockets carry no nuclear payload, and, therefore, should not be intercepted?

(Almost) everyone is being played. This is all Anglo-Zionist FAKE NEWS Media war hysteria. They are getting richer off of deliberately created volatility.