How North Korea Could Launch a Devastating Blow to the Stock Market – TheStreet.com

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From a markets point of view, North Korea worries haven’t rattled the stock market beyond a few minor selloffs.

But there is a scenario where North Korea could pose a big shock to the markets, according to Mohamed El-Erian, chief economic adviser at Allianz.

“For North Korea – or any geopolitical [issue], you need it to go from brazen provocation as I call it, to actual action,” he said. “A major policy mistake would do it.”

The one shock he worries about most is an endogenous shock. “That people are giving up liquidity, that people have become very comfortable to quickly buy the dip and at some point people will get over exposed in terms of their overall liquidity stance,” he said.

As for the unwinding of the Federal Reserve’s balance sheet, which many expect the central bank to announce a start date for this process next week, El-Erian likens the process to watching paint dry.

On Another Note…

Not everyone is cautious on stocks. 

Kiss legend and well-known businessman Gene Simmons is on a hot streak predicting the stock market.

It was only back in January just after the election of Donald Trump as president that Simmons predicted the Dow would rocket higher.

“My belief is that as soon as Donald Trump takes power, and as soon as he lowers the amount of taxes that people on the street are going to have to pay, watch the 20,000 ceiling on the Dow break,” Simmons told TheStreet in a Jan. 7 interview.

With the Dow now hovering over 22,000, Simmons has unleashed his next call.

“We will be at 23,000,” Simmons told Thestreet in a new interview (see video below). Simmons thinks the Dow will ultimately eclipse 23,000.

“What’s happening now is that with the president — whether you agree or disagree with him — he will make moves that will lower taxes and make it easier for businesses.”

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