Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. He operates the blog MISH'S Global Economic Trend Analysis and believes in the Austrian School of economics.
With the threat of nuclear war with North Korea looming, inquiring minds may be wondering what that threat is currently worth.
The above are charts from Investing.Com.
What’s the Threat of Nuclear War Worth?
If you assign today’s movement to a nuclear war threat here are some possible assignments:
Ho Hum. The market essentially discarded the threat of war.
More accurately, one might even wonder if the threat of war had anything at all to do with today’s action.
Dow Since May 17
Correction Hasn’t Begun to Begin!
About the only thing that budged substantially today is the VIX.
If nuclear war breaks out, we will likely something like 1,000 DOW point moves. Even then, all an initial 1,000 point move would do is take the DOW back to where it was in May.
If the stock market drops 15% from here, that’s likely just the beginning. It would take a 40% to 50% decline for valuations to get to normal. Overshoots are possible. So don’t blame North Korea no matter how deep the ultimate dive.
Heck, given the move in the VIX, it could have been Jeffery Gundlach triggering the action with his VIX Bet, not North Korea.
At this stage in the bubble, literally anything could provide a trigger.
For a discussion of valuations, please see:
Trends in Sentiment, Asset Bubble, Gold
Finally, please consider my 38 slide powerpoint Venture Alliance Presentation on trends in sentiment, asset bubbles, and gold.
Mike “Mish” Shedlock