The Donald Trump-Kim Jong Un summit in Singapore ended earlier this week. It shouldn’t really be called a summit. It was more of an introduction meeting between the POTUS and the brutal dictator of North Korea.
It ended with very little accomplished, other than a somewhat surprising move by Trump: the U.S. will end military exercises with South Korea as a gesture of goodwill to the North Koreans.
We still can take away some good insights from this meeting to see how it could affect our investments from a macro point of view.
First, let’s look at the results of this historic meeting:
- Kim got two huge wins out of this meeting without giving up anything. He was able to get a huge propaganda triumph by having the leader of the free world fly halfway around the world to meet him and give him an unusually large amount of lavish praise. Kim also got Trump to suspend military exercises with South Korea.
- Trump didn’t get anything in return except for a vague agreement to “denuclearize”. I’m not sure if the president was aware, but this promise has already been in effect for decades through various documents and decrees from past summits.
- Trump did get a nod for ratcheting down the escalation of war by attending this meeting. Remember, just six months ago, he was threatening Kim with his bigger nuclear button!
With regards to your investment portfolio, the outcomes from this meeting should be considered a positive influence. Odds of a war on the Korean peninsula has gone down substantially. This reduces uncertainty in the stock market, which is good, because the stock market does not like uncertainty. Also, I would hope it could open up trade between the Koreas and us but it is way too early to speculate on that. Plus, North Korea is a pretty small country so even if they did open up and started buying our stuff, they’re such a small country that any increased trade wouldn’t really help our economy.
Only time will tell if Kim will keep his promise but at least this summit was a good start. Now, I feel South Korea should take the lead and work with North Korea to get some peace on their peninsula.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
