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The Real Reason for N. Korea’s Second Thoughts on Trump Summit

by Mark Galasiewski
Updated: May 21, 2018

KLZ Radio: Our next guest is Chief Strategist for Asia and emerging markets at Elliott Wave International, we're gonna talk about North Korea and their missile testing. Mark, welcome to Rush to Reason.

Mark: Thank you very much.

KLZ Radio: You bet. So, talk to us about North Korea.

Mark: Well, when we last spoke in February, it was late February in fact,

KLZ Radio: Yes.

Mark: I was explaining that the coming together of North and South Korea over the Olympics had everything to do with the social mood in Asia, in fact globally, for that matter, rising very strongly over the prior two years. And we measure social mood by the stock market. A nation's stock market is the best measure of the social mood and so, from a low in January 2016 to the high in January 2018, South Korean stocks in particular rolls about 80% in US Dollar terms and so it was right toward the end of that advance in January 1st this year that North Korea offered its olive branch to South Korea. Saying, "We'd like to participate in your Winter Olympics," and so, from our perspective,

KLZ Radio: Ok.

Mark: that made complete sense, and we've seen how ever since that time, we, the whole world, has been in a corrective period in stocks and that represents a sort of stagnation in the mood, you know, in the society in Asia in particular. So, and that's what Kim is responding to, and so we're seeing his break down now and maybe having second thoughts. I was actually anticipating that this might happen as the correction goes sideways, and so, two weeks ago in my newsletter, I wrote that the current correction may challenge the burgeoning detente.

KLZ Radio: They offer this olive branch, South Korea, North Korea, the Olympics, all this goes on, Trump then kind of gets involved and we've now got this, sort of this pull-back if you would, from North Korea. There's also been talk, okay, how's China involved in this, how do they fit in, yeah, how do they fit into all of this, how do they come into play, if at all. So I guess, I'll ask you the question as well: Where does China fit into all of this, and is that, are they a factor?

Mark: Well, politics is definitely a role, we have to acknowledge that in how, you know, large decisions like these are made, but our perspective here at Elliott Wave International and our cultural research division, the Socionomics Institute, is to look at the major trends and the developments, whether they go positively or they go negatively. And so all we can say at this point is that there was a positive move in global mood prior to the, you know, Korea's willingness to cooperate in January and the follow-through, but as the correction has gone on, for now five months, we're seeing a, you know, possible breakdown but again, the question is whether it will continue to break down or whether, you know, we'll go back and swing back up in the other direction. And personally, my view is that based on the patterns in South Korea's stock market is that, and in Asian, emerging Asian stocks overall, is that the positivity should continue over the long-term, once we get over the short-term corrective period.

KLZ Radio: There's some folks out there saying, "Oh, this is just a big ploy by Kim Jung-un," "he has no idea of what he's doing," or, "he has no intention of following through with these particular agreements," and so on. What are your thoughts on that?

Mark: I think he's a very shrewd actor and he's preserving his regime as best as he knows how and if he, I think he will be very reluctant to give up nuclear weapons. We've certainly seen this, a new interpretation of the word, "denuclearization". In his mind and in North Korean's mind, that means that over a long period, perhaps even decades, as North Korea begins to grow rich and develop, then we will be willing to surrender our defenses.

KLZ Radio: Ok.

Mark: But I think, and personally, if I were running North Korea, I wouldn't want to give up my missiles either, because he's completely correct to be concerned about what happened to Libya and Iraq once their weapons were neutralized.

KLZ Radio: Okay, alright, good point, alright. Mark, appreciate it very much, thank you for joining us. Let's take a quick time-out, we'll come right back.

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