20 April 2020

  • FOREX markets are moving on an unofficial report that the North Korean leader might be seriously ill.
  • CNN reported late on Tuesday, citing what the news outlet called “a US official with direct knowledge.”
  • This news follows earlier unconfirmed reports that the North Korean leader had undergone surgery.
  • North Korea is a tightly held police state that is notorious for controlling information flow into and out of the country.  Accurate information about its leader is perhaps most difficult to ascertain.

Conclusions:

It is highly plausible that the North Korean leader required serious surgery for health issues.  Given the unpredictability of the internal response to COVID-19 within North Korea, all bets are off as to how widespread the outbreak might be within that country.  The Prime Minister of the United Kingdom, Boris Johnson, became seriously ill with the novel coronavirus so it is obviously a threat to world leaders.

An unexpected transition of power within North Korea would be another grey swan event that would fascinatingly occur in the midst of what I’ve called America’s “end of the beginning” moment in the COVID-19 pandemic (Reopening America).

However, over the years there have been similar rumors that ultimately proved to be less serious.

Given the potential impact of this event in the midst of already highly-volatile markets, here are some thoughts on how this event could unfold:

In the best case, instability is relatively controlled and does not lead to conflict with other nations – perhaps even leading to improved relations with the world.

The worst case is a nightmare scenario that could potentially make COVID-19 look like a long spring break.

Since we are flying blind, I look to history and from that lens the third scenario is perhaps most likely – a figure in the regime is able to gather a critical mass of support within the senior parts of the police state and become the de facto heir to the dictatorship.

Follow me on Twitter for news as it breaks.

Steve Yen is Founder of Dux Advisors, he has career experience in Finance, Consulting and as a former Army Captain. He was educated at Georgetown Preparatory School then as a BBA (Finance) with graduate-level coursework at business schools in the United States, England and Germany. Follow him on Twitter @DuxAdvisors.

Disclosure:  This is an opinion article not intended as investment advice – making investment decisions without your own evaluation of ideas is not investing; always do your own research and speak with an investment advisor, if you have one, before making any investment decisions.  Any opinions expressed are as of the date of publication.