Korea Killed the Market

Includes: DIA, EWY, KEF, KF, QQQ, SPY
by: Alex Filonov

There is a lot of speculation floating around which blames EU problems for the current state of stock market. Some people also blame anticipated US financial regulation.

Wrong! Both of these themes are yesterday's news. Yesterday's news doesn't move markets.

I think the news which sunk the market yesterday was from Korea. The situation there is really bad. Seoul is under constant threat from North Korean artillery, that's why South is usually very careful about everything they say and do. But now the situation is crystal clear: a Northern sub entered the waters of South Korea and sunk a warship. That's an act of war, loud and clear. The South has to respond. The question is how. And the US has an obligation to help South in case of war.

The main problem is that the government of North Korea, if this gang of murderers can be called government. I have the impression that they are completely crazy. OK, they have maybe 5 nukes, they can kill millions even if one hits Seoul. But they will be wiped out from the face of the Earth in such a case! They probably don't know any other way to behave aside from bullying and presenting themselves as fearless machos.

I hope that this situation doesn't lead to war. But hope is not an investment vehicle. That's why the market sold out. I don't expect significant improvement until this situation is resolved one way or another.

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