North Korea Test-Fires 7th Ballistic Missile Of 2017, Projectile Flew 700Km, Landed In Sea Of Japan

Update: Japanese Chief Cabinet Secretary Yoshihide Suga said on Sunday that North Korea"s firing of a ballistic missile was a violation of U.N. resolutions and that Japan strongly protested the action. Additionally:

• *MISSILE MAY BE NEW TYPE: KYODO CITES JAPAN DEFENSE MINISTER


• *MISSILE EST ALTITUDE 2,000KM, KYODO NEWS REPORT


• *S. KOREA WILL DEAL STERNLY WITH N. KOREA PROVOCATIONS: YOON


• *S. KOREA PRESIDENT STILL OPEN TO DIALOGUE WITH N. KOREA: YOON

*  *  *

As we detailed earlier, on the eve of a summit in Beijing, and just hours after Pyongyang"s chief nuclear negotiator said North Korea is ready to hold talks with the United States "if the conditions are mature", South Korea"s Yonhap reports that North Korea has fired a projectile believed to be a ballistic missile, from a region named Kusong located northwest of Pyongyang, where the North previously test-launched its intermediate-range missile.

The nature of the projectile was not immediately clear, a South Korean military official told Reuters.

The ballistic missile firing is North Korea’s seventh this year.

The launch comes just hours after The South China Morning Post reports Choe Son-hui, head of the North Korea"s Foreign Ministry"s North America bureau, offered the assurance in the Chinese capital after an informal meeting in Norway with Thomas Pickering, a former US ambassador to the United Nations.

"If conditions are mature, we will hold dialogue with the Donald Trump administration," she said.

Choe made the remarks just days after Trump said he would be willing to meet North Korean leader Kim Jong-un "under the right circumstances".

But the comments also came as the US embassy in Beijing told China"s foreign ministry that North Korea"s attendance at the top-level gathering for the "Belt and Road Initiative" could send the wrong message as the world was trying to pressure Pyongyang over its ­repeated missile and nuclear tests. The foreign ministry said Beijing welcomed the participation of all countries in the summit.

South Korea"s Yonhap News confirms North Korea has fired what appears to be a ballistic missile from its west coast, the South Korean military reported early Sunday. The launch would be the first in two weeks since the last attempt to fire a missile ended in a failure just minutes into flight. It would also be the first launch since a new, liberal president took office in South Korea on Wednesday saying dialogue as well as pressure must be used to ease tensions on the Korean peninsula and stop the North"s weapons pursuit. The new president Moon has said he is willing to engage in dialogue with his northern neighbor.

Weapons experts and government officials, cited by Reuters, "believe the North has accomplished some technical progress with those tests."

South Korean Military has now confirmed it was a ballistic missile that flew 700 km.

The Japanese government confirms the missile flew 30 minutes and landed in The Sea of Japan.

Kim claimed in January to be in the final stages of preparations to test-fire an intercontinental ballistic missile, and has since launched several intermediate-range projectiles with varying degrees of success.

The action provides an early test for South Korean President Moon Jae-in, who came to office on May 10 saying he would visit Pyongyang under the “right circumstances” to bring peace to the peninsula. Moon convened a meeting of the national security council Sunday morning, according to the Presidential Blue House.

*  *  *

Today"s launch should not be a total surprise: In a interview earlier in the week with by Sky News, in response to a question "is a sixth nuclear test now imminent", the answer of the North Korean Ambassador to the UK, Choe Il was "In regards to the sixth nuclear test, I do not know the scheduled time for it, as I am here in the UK, not in my home country. However, I can say that the nuclear test will be conducted at the place and time as decided by our supreme leader, Kim Jong-Un."

Asked if he is afraid of a possible US military response, the ambassador answers that "we are developing our nuclear strength to respond to that kind of attack by the US. If the US attacks us, our military and people are fully ready to respond to any kind of attack. I do not think the US are considering a military attack against us." 

Asked what would North Korea"s response be to a preemptive strike, he answer that: "The US cannot attack us first. If the US moves an inch, then we are ready to turn to ashes any available strategic assets of the US."

South Korea Says Missile Launch "Threatens The Whole World" As Pence Arrives In Seoul

In its first official comments on Sunday morning"s failed missile launch, South Korea said the latest North Korean provocation threatens the entire world, and warned of a punitive action if it leads to further actions such as a nuclear test or a long-range missile launch.

"North Korea showing a variety of offensive missiles at yesterday"s military parade and daring to fire a ballistic missile today is a show of force that threatens the whole world," South Korea"s Foreign Ministry said in a statement. “We have to warn again that if this leads to a strategic provocation of a nuclear or ICBM test, the North will face strong punitive measures that it will find hard to endure.”

Shortly after the failed test, U.S. Vice President Mike Pence touched down in South Korea Sunday for his first visit in a five-leg trip to the Asia-Pacific region, being the highest-level official from the Donald Trump administration yet to arrive here amid escalating tensions with the North. The arrival marked Pence’s first-ever visit to the South, and was nine hours after North Korea conducted its fifth ballistic missile test this year earlier in the morning, though it ended in failure.

Pence arrived at the Osan Air Base in Pyeongtaek, Gyeonggi, at 3:30 p.m. but has yet to make any public remarks. A joint statement between him and Prime Minister Hwang Kyo-ahn, who concurrently serves as acting president, is expected to come this afternoon after the two leaders discuss North Korean issues at Hwang’s office in central Seoul.

"This morning’s provocation from the North is just the latest reminder of the risks each one of you face every day,” Pence told a fellowship of U.S. soldiers and Koreans at a dinner in Seoul.

Commenting on the failed launch, Reuters cited a U.S. foreign policy adviser traveling with Pence on Air Force Two who said that the test was believed to be a medium-range missile and had come as no surprise. The unnamed adviser added that the missile’s flight lasted four or five seconds.

“It’s a failed test,” the official said under the condition of anonymity. “It follows another failed test. So really, no need to reinforce their failure. We don’t need to expend any resources against that.”

Earlier in the day, US Defense Secretary James Mattis said “the president and his military team are aware of North Korea’s most recent unsuccessful missile launch" and added that “the president has no further comment."

Bloomberg notes that the reaction helps deflate tensions that escalated in recent weeks as President Donald Trump sent warships to the region amid speculation that Kim Jong Un’s regime would conduct a nuclear or intercontinental ballistic missile test to mark the country’s biggest holiday. Still, the long-term risk remains: Trump has said military options are on the table and threatened to act unilaterally if China -- North Korea’s main ally and benefactor -- fails to do more to curb its neighbor’s activities.

China’s State Councilor Yang Jiechi and U.S. Secretary of State Rex Tillerson also exchanged views on the situation on the Korean Peninsula by phone on Sunday, China’s foreign ministry said, without giving more details.

Meanwhile, Pence, joined by his wife Karen and two daughters, began his three-day schedule Sunday with a visit to the Seoul National Cemetery in Dongjak District, southern Seoul. An official at South Korea’s Ministry of Foreign Affairs said the visit, which wasn’t mentioned in his initial schedule announced by the White House earlier this month, highlighted Washington’s commitment to the South Korea-U.S. alliance, a “bond that was made during the Korean War when the South fought alongside the U.S.”

Vice President Mike Pence burns incense at the Seoul National Cemetery
in Dongjak District, southern Seoul, Sunday

Pence’s father, Edward Pence, was a U.S. Army veteran in the 1950-53 Korean War who later earned the Bronze Star. After his visit to the cemetery, the vice president was planned to spend Easter Sunday with U.S. and South Korean troops and their families in the evening.

This morning, Pence will visit the demilitarized zone separating the two Koreas and drop by Camp Bonifas to meet with U.S. Army soldiers. Later, he will meet Prime Minister Hwang and Foreign Affairs Minister Yun Byung-se at the Seoul Central Government Complex.  Pence is also scheduled to meet National Assembly Speaker Chung Sye-kyun, apparently to learn more about South Korea’s political landscape and the ongoing presidential election campaign.

Tomorrow, Pence will meet business leaders at the American Chamber of Commerce and then leave for Japan. The White House said in a statement last Friday that Second Lady Karen Pence will “observe an art therapy program and participate in a roundtable discussion with art therapists.” Pence is the third senior government official from the Trump administration to visit South Korea, a month after Secretary of State Rex Tillerson came on March 17 and two months after Secretary of Defense James Mattis came on Feb. 2.

While the White House said Pence will mostly be dealing with business issues on a 10-day swing through Asia, administration officials said Thursday that he will also discuss economic sanctions and military options for North Korea if a provocation occurs. He will meet with Acting President Hwang Kyo-ahn, who is looking after the South Korean government before an election to choose a successor to the ousted Park Geun-hye. Candidates for the May 9 vote were quick to condemn the latest missile test. The frontrunner, Moon Jae-in of the left-leaning Democratic Party of Korea, called it “reckless,” according to a spokesman. A representative for his main rival, Ahn Cheol-soo of the centrist People’s Party, said there is no justification for North Korea to escalate tensions on the peninsula.

* * *

Kim’s regime has test-fired ballistic missiles five times this year in his quest to develop a device that can carry a nuclear warhead to North America. He has launched dozens of projectiles and conducted three nuclear tests since coming to power after his father’s death in 2011, and claimed in January to be almost ready to test-fire an ICBM. As tensions mounted last week, Chinese Foreign Minister Wang Yi on Friday urged all parties “to stop provoking and threatening each other and not to make the situation irretrievable."

Kim showed off a range of long-range missiles at an elaborate military parade on Saturday, including submarine-launched ballistic missiles for the first time and what appeared to be a new ICBM, South Korea’s Yonhap News reported. In 2012, North Korea unveiled long-range missiles that some arms analysts dismissed as fake.

Markets In 2016: Winners & Losers

As 2016 comes to a close, Reuters has compiled a list of the biggest winners and losers of the year from across the globe.  Of course, after global equities started out the year on a weak note, in the closing weeks of 2016 computer algos investing professionals have rarely seen a stock they didn"t want to buy more of.  That said, currency traders with exposure to the Egyptian pound or Nigerian naira didn"t make out quite so well.  And then there were the Dr. Jekyll and Mr. Hyde trades of 2016 that, after gyrating wildly throughout the year and giving a bunch of high-strung traders heart attacks, ended up the year, righly or wrongly, roughly where they started.

First, the WINNERS:

Glencore:  After losing 70% of it value in 2015, the outlook for Glencore at the start of this year couldn"t have been bleaker.  But those who had the intestinal fortitude to invest in the beginning of 2016 were handsomely rewarded for their efforts.  After initially shedding another 20% of it"s value in January 2016, Glencore bottomed-out along with oil and, after a successful $8 billion debt refinancing, rallied more than 200% this year, with a trough-to-peak rise closer to 300%.

Anglo American:  After posting a 2015 similar to Glencore (down ~80%), Anglo American , the world"s fifth-largest diversified mining company, took drastic action in the new year as the commodity rout deepened. In February, the company announced it would retain only 16 of its 45 core assets (dumping its coal, nickel and iron ore businesses, among others) and shed around 60% of its 128,000-strong workforce.  Those who lived through the restructuring efforts enjoyed a 290% rise in 2016, and a trough-to-peak rise closer to 500%.

Bitcoin:  The digital cryptocurrency is closing the year at a three-year peak. It has more than doubled in 2016, and the total value of all bitcoins in circulation is now at record high above $15 billion.  Of course, the exponential growth of Bitcoin in 2016 coincides with the steady depreciation of the Chinese yuan (the majority of bitcoin trading is done in China), the abolition of high-value banknotes in India and continued growing demand to move money across the globe quickly and anonymously.

Tencent:  Finally, the winners list was capped off with Tencent Holding Ltd, China"s largest social network and online entertainment firm.  With a market cap of $225 billion, Tencent is the most valuable emerging market company in the world and its shares were up 20% in 2016, far outperforming the broader Hang Seng index, which is down 0.7%.

Now for the LOSERS:

Egyptian Pound:  Egypt floated its currency in November in a move widely seen as a necessary step to help secure a $12 billion IMF loan. The initial devaluation from its peg of 8.8 per dollar was by around a third. But as 2017 draws closer, the currency is trading at more than 19 per dollar, and has lost around 60% of its value this year. It is the worst performing currency in the world in 2016.

Nigerian Naira:  Nigeria"s naira initially slumped by around 30% when the central bank removed its peg of 197 per dollar back in June. This was the central bank"s attempt to alleviate a chronic foreign currency shortage that was choking growth in Africa"s biggest economy. But the Naira soon fell through 300 per dollar, and its 37% fall since Dec. 31, 2015 makes it the second-worst performing currency of the year.

India Inc.:  Foreign investors" enthusiasm for Indian stocks and bonds dimmed in 2016. Net selling of stocks hit $2.6 billion in November, the heaviest outflow in eight years, as investors took fright at rising U.S. bond yields and what a Donald Trump administration could mean for emerging markets. The government"s recent move to ban the two most popular banknotes in circulation has raised concern over the potential impact on corporate profits.

The worry is if a rush for the exits turns into a stampede. India remains the strongest overweight among foreign investors in emerging markets. Allocations to Indian stocks by EM equity funds, managing more than $250 billion in assets on aggregate, were more than 250 basis points above their weight in the MSCI EM index, according to Goldman Sachs and EPFR.

And last, but not least, the UGLY:

Deutsche Bank:  It"s been a wild ride this year for shareholders in Germany"s biggest lender, a bank the IMF in June said probably posed the biggest single systemic risk to the global financial system. A host of legal cases costing billions and profit-sapping negative interest rates pushed its share price below 10 euros in September for the first time ever. Talk of a forced merger or even state-led rescue abounded (see ""It All Has A Very 2008 Feel To It" - For Deutsche Bank, The News Just Keeps Getting Worse").

As 2017 looms, DB shares are still down 23% for 2016, significantly underperforming the broader euro zone and European banking indices, but the recovery from the record low set back in September has been 75%.

United Kingdon:  On June 23, 2016 Britons voted to leave the European Union and the following day, pure panic ensued as UK stocks took a nosedive. The shock referendum result had an even more negative and longer-lasting impact on sterling, so much so that the 11% fall in dollar terms that day was the FTSE 100"s second biggest one-day fall ever.

Alas, six months later the FTSE 100 looks as if it will close at or near all times highs and is up 23% from its low on June 24.

Toshiba:  It"s been a rocky 2016 for Toshiba.  As of last week, shares in the Japanese tech-to-nuclear conglomerate were up 80% YTD and up around 200% from the record low struck in February. But all of that changed earlier this week when the company announced a potential multi-billion dollar writedown from cost overruns at a U.S. nuclear business it bought last year.  In a matter of days, Toshiba has lost half its market cap (~$9BN) leaving shares roughly at the same level they started the year.