The war of words has intensified between Donald Trump and North Korea.
Trump called Kim Jong-un a “Rocket Man” bent on a “suicide mission” with Kim responding that Trump is a “mentally deranged US dotard,” threatening to test an H-bomb over the Pacific.
All after Trump threatened to “totally destroy” North Korea in his speech before the U.N. Per CNBC:
"No nation on Earth has an interest in seeing this band of criminals arm itself with nuclear weapons and missiles,” noted Trump before the U.N. “The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea. Rocket man is on a suicide mission for himself and for his regime. The United States is ready, willing, and able, but hopefully this will not be necessary. That's what the United Nations is all about. That's what the United Nations is for. Let's see how they do."
Trump also signed an executive order that would hit North Korea with travel and economic sanctions in an effort to cut off money flow to the country. The order now gives the Treasury Department the authority to suspend all U.S. account access to any foreign bank that conducts any business tied to North Korea trade.
“Foreign financial institutions are now on notice that, going forward, they can choose to do business with the United States, or with North Korea, but not both,” said U.S. Treasury Secretary Steve Mnuchin, as quoted by The Hill.
In another move, sanctions will also target North Korea’s economy by blocking any ships or aircraft that have visited North Korea from the U.S. for the next 180 days. Any ship that has engaged in any ship-to-ship transfers with a ship from North Korea will also be banned from U.S. shores for the next 180 days.
Surprisingly, it looks like China has had enough of North Korea, too.
In fact, it just told its central bank to immediately stop doing business with North Korea, as its banks come under intense scrutiny for their role as a “conduit for funds flowing to and from” North Korea, as noted by Reuters.
It’s quite a rarity for Chinese and American officials to sound so similar with their anger over North Korea’s threats. And while there’s hope the two can bring North Korea to the bargaining table, there are fears that sanctions could eventually fail, leading to a potential humanitarian crisis for citizens of North Korea.
In fact, according to The Economist:
Nikki Haley, the American ambassador to the United Nations, conceded publicly this week to the New York Times that tougher sanctions might fail: We always knew that the sanctions may not work,” she said. “What the goal of the sanctions was always intended to be is to cut the revenue so that they could do less of their reckless behavior.”
While North Korea’s nuclear war threats have been shrugged off by global investors, some have begun to switch from stocks in search of safe havens, like gold as a way to shield portfolios from any downside risk.
"Like a bad horror movie, the North Korea saga intersperses moments of calm, with occasional action to jolt you out of your chair," commented ING's head of Asian research Rob Carnell, as quoted by The Telegraph. "But we have been here now many, many times," he added. "Unless this is the precursor to US military action, which we doubt, then in a little over a day or two, tensions will calm again, making this a good buying opportunity for investors with a strong enough nerve."
We have to remember that markets are resilient. So far, the DOW has continued to set new record highs. However, new tensions could lead to opportunity, and we’ll be looking for those opportunities to recommend in The Cheap Investor.