Macro Digest: The art of a North Korean deal Macro Digest: The art of a North Korean deal Macro Digest: The art of a North Korean deal

Macro Digest: The art of a North Korean deal

Steen Jakobsen

Chief Investment Officer

So… the on/off Trump versus Kim meeting is on and it’s happening in Singapore, which means the open duel will be performed from 21:00 pm EST or 3:00 CET tonight/tomorrow morning.

Live coverage is available through Channel NewsAsia via YouTube.

President Trump needs this summit to work, probably more than does Chairman Kim, or as his official title reads: Respected Comrade Kim Jong Un, Chairman of the Workers’ Party of Korea, Chairman of the State Affairs Commission of the Democratic People’s Republic of Korea and Supreme Commander of the Korean People’s Army.

Trump entered the White House wanting to put his mark on history by creating peace in the Middle East . This concept/idea is now out of reach, and Trump’s focus has moved on to making the summit with North Korea his marker.

He also needs a victory in order to create and keep momentum on his dealmaker image as November's midterm elections nare drawing near.

Some investors I talk to go as far as to say that the president needs a deal on either North Korea or Iran to “live” beyond November. This is something I partly agree on (as incoming data clearly show).

The likely outcome

Failure: getting “in the room” with Chairman Kim leaves Trump uneasy and talks end inside two hours
Modest success: the bare minimum is an official US/North Korean truce (the 1950-53 war never officially ended).
Success: North Korea agrees to monitoring and a limited reduction in long-range missiles; the US slightly eases sanctions.
Big success: North Korea accepts full denuclearisation and monitoring in exchange for the US abolishing sanctions.

There are many problems in communicating progress on this front, one being the clear difference in how the US and North Korea define "denuclearisation". North Korea will only give up nuclear weapons if Washington meets certain conditions, which include removing American troops from South Korea.

In terms of the market's reaction to different scenarios, the biggest move is likely a risk-off swerve if the talks end in failure or if we see only modest success without hope for further talks. This could increase appetite for military intervention to penalise Chairman Kim, but for now somewhere neutral is the most likely outcome.

We will monitor the talks and don’t forget that after the “theatre” we have the European Central Bank and Federal Reserve meetings setting the agenda for monetary policy.

Some useful links explaining the US/North Korean summit

   • Surreal Trump-Kim summit defies diplomatic playbook (Politico)
   • Trump Kim summit: North Korea eyes 'new relationship' with US (BBC)
   • Trump's "great man" play on North Korea (Axios)
   • 'Denuclearisation' likely means different things to Trump and Kim Jong-un (NBC)
   • Trump needs a tough North Korea deal, but not because of Iran (Bloomberg)
   • Donald Trump’s demolition theory of foreign policy won’t work


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.