Trump-Kim meeting: good or bad?

11 May, 2018

All set. An event that was literally impossible to imagine just weeks ago has been settled. US President Trump and the North Korean leader Kim Jong-un will soon see meet face to face.

Trump tweeted on Thursday: “The highly anticipated meeting between Kim Jong Un and myself will take place in Singapore on June 12th.”

The Republican leader also expressed some of his expectations for the historic encounter: “We will both try to make it a very special moment for World Peace!”

The sit-down details were released hours after three American prisoners were released by Pyongyang and sent by home. Their released was sponsored by a visit of Secretary of State Mike Pompeo to coordinate Trump-Kim meeting details.

If higher geopolitical tensions tend to benefit safe-haven assets such as gold and the yen, lower geopolitical tensions boost risky assets demand? Mhmmm… Depends.

There is no doubt that geopolitical tensions are good for gold. But they are also positive for military-related stocks, pharmaceutical companies and food suppliers.

“We tend to think disruptive politics is bad – it turns out that disruptive politics can actually get different outcomes,” Mohamed El-Erian, chief economic adviser at Allianz said.

“I think what the markets have understood is that these steps are part of a process for what economists call multi-round games that can have good outcomes,” he added when emphasizing that long-term investors should not feel worried about volatility.

In other words, what he means is that politics (especially nowadays) is about a constant cycle, up and down, stability and volatility, but ultimately growth is outperforming corrections.

Yes. Denuclearization is certainly good for the entire world. But to be honest, the South Korean Kospi is the one that’s gonna get the big gift after all.

Of course, Wall Street’s top three are also going to improve their position once uncertainty is washed out and economic activity continues to pick up in a stable, healthy environment.


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