North Korea update - 08/11/2017

North Korea Issues "Emergency Standby Orders" To Civil Defense Units: Report

Zero Hedge,

11 August, 2017

With markets about to close for the next 2 days, the question on every trader's mind is: "should i carry risk over the weekend, or should I dump it all in case North Korea fires another test, or non-test, ICBM launch which may be just the provocation Trump needs to give thegreen light to a squadron of B-1 bombers to begin a bombing campaign." After all, Trump himself tweeted this morning that "military solutions are now fully in place, locked and loaded, should North Korea act unwisely. Hopefully Kim Jong Un will find another path!" 

While we don't know if Kim will "find another path", late on Friday KBS World Radio, the official international broadcasting station of South Korea (which is owned by the Korean Broadcasting System), reports that according to Radio Free Asia (RFA), in a potential warning that Pyongyang may be preparing yet another imminent escalation, "North Korean authorities have dispatched emergency standby orders to the leaders of the ruling Workers’ Party committees and civil defense units."

More details: 

Friday's RFA report quotes a source in Yanggang Province as saying that the Central Military Commission of the party delivered the orders via e-mail.

The e-mail apparently arrived even before the North publicly threatened to retaliate against the U.S. “hundreds of thousands of times” over newly approved U.N. sanctions.

A separate source in the North has reportedly told RFA that the state-run Rodong Sinmun newspaper carrying the North’s statement was distributed by military helicopters in Jagang Province on Tuesday. The source said it was the first time military helicopters have been used to deliver the newspaper except when the paper carried new year's messages by North Korean leader Kim Jong-un.

And while the report has yet to be confirmed by other news outlets, traders are furiously hitting refresh on the website of 38North.org for the daily satellite image update of North Korea's missile launch preparedness, which has yet to hit and which could mean the difference between another sleepy, boring open on Monday and a VIX surging above 20, 30 or more depending on what "path" Kim Jong-Un picks over the next 48 hours.

Trump On North Korea Military Solutions: "What I Said Is What I Mean"

 

Zero Hedge,

11 August, 2017

Nothing too exciting here, just the 4th consecutive day of verbal escalations between the US and North Korea, this time from Donald Trump who as expected responded to this mornings statement from North Korea, that Pyongyang "can reduce the US to ashes at any moment", saying he meant what he said about the U.S. military being "locked and loaded" in response to threats from North Korea.

Responding to a question about his "military solutions", Trump said "we are looking at that very carefully, and I hope that they are going to fully understand the gravity of what I said," Trump told reporters at his Bedminster, N.J. golf club. "And what I said is what I mean."

Some other highlights:

TRUMP SAYS IF NORTH KOREA LEADER DOES ANYTHING WITH RESPECT TO GUAM OR OTHER AMERICAN TERRITORY HE WILL TRULY REGRET IT

TRUMP SAYS NKOREA ACTIONS TO U.S. OR ALLIES WILL BE REGRETTED

TRUMP SAIS KIM JONG-UN WILL NOT GET AWAY WITH WHAT HE'S DOING BELIEVE ME

TRUMP SAYS HE HOPES NORTH KOREA FULLY WHAT I SAID AND GRAVITY OF SITUATION

TRUMP SAYS MANY PEOPLE ARE HAPPY WITH COMMENTS HE IS MAKING ON NORTH KOREA

TRUMP SAYS HE DOESN'T WANT TO TALK ABOUT BACK CHANNEL TALKS WITH NORTH KOREA

There was also the token slam of his critics:

And since the verbal ping pong isn't going to end any time soon, sit back and await for North Korea's upcoming response in this seemingly endless pissing contest.

China Warns Trump: "We Will Prevent A North Korea Regime Change"

 

In a troubling repudiation of President Donald Trump’s demands that Beijing do more to rein in its bellicose neighbor, Beijing, through the state-owned media, cautioned the US president on Friday that it would intervene (militarily) on North Korea’s behalf if the US and South Korea launch a preemptive strike to “overthrow the North Korean regime,” according to a statement in the influential state-run newspaper Global Times.

"If the U.S. and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so," it said.

At the same time, the Chinese regime  made it clear that its preferred outcome would be a continuation of the status quo, warning Kim Jong Un that it would "remain neutral if North Korea were to strike first." The article, cited by Rueters,  reiterated calls for a diplomatic solution. However, the possibility of talks between the two sides was looking increasingly remote as both Trump and Kim continued to exchange threats of nuclear annihilation, with Trump clarifying Thursday that his earlier promise to respond with “fire and fury” should the North continue to threaten the US may not have gone far enough.

 China - North Korea's most important ally and trading partner -  has reiterated calls for calm during the current crisis. Beijing has expressed frustration with both Pyongyang's repeated nuclear and missile tests and with behavior from South Korea and the United States, such as military drills, that it sees as escalating tensions.

"China should also make clear that if North Korea launches missiles that threaten U.S. soil first and the U.S. retaliates, China will stay neutral," the Global Times, which is widely read but does not represent government policy, said in an editorial.

Meanwhile, as the North may be planning its next ICBM launch, the US is stepping up military exercises with Japan and South Korea.

“On Thursday, U.S. and Japanese troops began an 18-day live fire exercise on the northern Japanese island of Hokkaido, which was to include rocket artillery drills and involve 3,500 troops. The Northern Viper drills are one of the scheduled exercises that Japan's Self Defense Forces conducts regularly with their U.S. counterparts and are not a response to the latest tensions. South Korean and U.S. troops are also gearing up for an annual joint drill from Aug. 21, called the Ulchi Freedom Guardian, in which up to 30,000 U.S. troops will take part.”

US officials were also discussing coordinated contingency plans on Friday to formulate exactly how the allies would respond to an attack.

“South Korea's national security adviser Chung Eui-yong and his U.S. counterpart H.R. McMaster spoke on the phone for 40 minutes early on Friday, a spokesman for the presidential Blue House in Seoul said. The two discussed responses to North Korean provocations and the security situation on the Korean peninsula, he said.”

Not surprisingly, analysts have compared the standoff between the two nuclear powers (the North is a recent, if untested, member of this club) to a modern day Cuban Missile crisis.  "This situation is beginning to develop into this generation's Cuban Missile crisis moment," ING's chief Asia economist Robert Carnell said in a research note. "While the U.S. president insists on ramping up the war of words, there is a decreasing chance of any diplomatic solution."

Judging by the markets' reaction in the past 48 hours, this troubling reality has finally filtering through to risk assets.