North Korea celebrates the Fourth of July

It seems that Mr Bush’s attention on Iran and its nuclear ambitions has annoyed Kim Jong II, the petulant Democratic People’s Republic of Korea. Long used to attention from the USA, North Korea has recently been put on the back burner by Mr. Bush.

Perhaps the USA thought that the Korea would just go away if ignored for some time. Well Kim Jong II obviously had other ideas when he decided to join in with the USA’s annual Fourth of July firework celebrations.

Of course both the Americans and the Japanese were not impressed by this show of strength and have sought solace in going to the UN to firmly reprimand the Democratic People’s Republic of Korea.

The markets have reacted with the expected response and driven downwards across the globe. We have been waiting for something like this for the past few weeks, often though, the saber rattling by the Democratic People’s Republic of Korea results in some form of compromise [ed- usually South Korea or the USA giving more ‘aid’].

The effect on the Japanese market has been strongest, especially as the Democratic People’s Republic of Korea is only a stones throw away from Japanese territory.

From a market perspective, Japan is particularly open to volatility at the moment. We expect interest rates to increase at some point, but we expect that this feeling of uncertainty with regard to it’s neighbor will delay the much needed raise as the markets would react too strongly in a downward direction for the governments desire at this juncture.