by Mish


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The above are charts from Investing.Com.

What’s the Threat of Nuclear War Worth?

If you assign today’s movement to a nuclear war threat here are some possible assignments:

  • Commodities: Gold was up less than one percent, silver up a bit more than a percent, oil fell about 2%.
  • Equities: The Dow dropped less than a percent, the S&P 500 fell about 1.5% and the Nasdaq about 2.5%.
  • Currencies: The dollar index barely budged.
  • Bonds: the 30-year and 10-year treasury yields each went down a mere 4 basis points.

Ho Hum. The market essentially discarded the threat of war.

More accurately, one might even wonder if the threat of war had anything at all to do with today’s action.


Dow Since May 17

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Correction Hasn’t Begun to Begin!

About the only thing that budged substantially today is the VIX.

If nuclear war breaks out, we will likely something like 1,000 DOW point moves. Even then, all an initial 1,000 point move would do is take the DOW back to where it was in May.

If the stock market drops 15% from here, that’s likely just the beginning. It would take a 40% to 50% decline for valuations to get to normal. Overshoots are possible. So don’t blame North Korea no matter how deep the ultimate dive.

Heck, given the move in the VIX, it could have been Jeffery Gundlach triggering the action with his VIX Bet, not North Korea.

At this stage in the bubble, literally anything could provide a trigger.

For a discussion of valuations, please see:

  1. Median Price-to-Revenue Ratio Higher in All Deciles vs 2007, 90% vs Dot-Com Bubble: THE Choice
  2. Bubblicious Debate: Greenspan Says “Bond Bubble About to Break”, No Stock Market Bubble,
  3. Tracking the Amazing Junk Bond Bubbles in the US and Europe

Trends in Sentiment, Asset Bubble, Gold

Finally, please consider my 38 slide powerpoint Venture Alliance Presentation on trends in sentiment, asset bubbles, and gold.

Mike “Mish” Shedlock

War Games: China Say It Will Prevent US From Attacking North Korea First

Shall we play a game?. Let’s play global thermonuclear war. Is this a game or is it real? What’s the difference?

Dangerous Idiot Category: "It’s Time to Bomb North Korea"

Edward Luttwak, an armchair foreign policy idiot, proposes bombing North Korea.

Trump Downplays North Korea Missile Tests, Says Deal With Iran Possible

Trump isn't worried about North Korea belligerently firing off missiles. He now thinks a deal with Iran is possible.

Stock Market “Crash” Unlikely: It’s the Debt, Stupid

Many people have been predicting another stock market “crash”. I have not been in that camp for reasons I will explain below.

Senator Graham Proposes War With North Korea "Would Be Worth It"

"All the damage that would come from a war would be worth it in terms of long-term stability and national security."

Trump Offers Assistance to North Korea and Praises Kim Jong Un

Despite North Korea recently firing another missile, Trump offers cooperation and praise for Kim Jong Un.

Trump Meets Kim Jong Un in North Korea, Nuclear Talks Resume

Trump became the first sitting president to step into North Korea. Kim Jon Un accepted a last-minute invite from Trump.

Health Care Costs Rising Sharply (And It Will Get Worse)

Inquiring minds are diving into Kaiser Family Foundation reports on health care. The charts and stats are not pretty, and they are sure to get worse.

North Korea: Bloody Nose Strategy vs Diplomacy

N. and S. Korea agree to meet to reduce tensions ahead of the Olympics. Meanwhile, the US debates a Bloody Nose strategy