President’s Remarks Bring Panic, Price Drops
President Trump responded to reports of North Korea’s nuclear missile threats with strong language. As the world anticipates kinetic conflict, market volatility spiked.
$1 U.S. markets are down sharply as the world digests the conflict between America and North Korea. President Trump promised “fire and fury like the world has never seen” over threats from Kim Jong Un. The NASDAQ 100 and S&P 500 are both down 2% and 1%, respectively. The volatility indexes hit recent highs, a potential boost for traders and banks that thrive on arbitrage. However, today banks are plunging along with the rest of the market.
$2 The Volatility index ($VIX) for the S&P 500 rose over 40% today, a reversal of prolonged record lows. Developed markets around the world also observed persistent, historic lows in volatility, hurting banks this year. These lows are also a sign of market complacency, a historic precursor to recession. Be prepared.
$3 The brave find buying opportunities in pullbacks such as these. If you perceive this threat of war is overblown, consider purchases at newfound lower prices or buy further into existing positions. Do not take these decisions lightly; they require careful consideration. Be sure to consult your investing gameplan to ensure any new positions fit within your investing thesis.