North Korean Rocket Man

In classic Trump style, the President of the United States has given the North Korean leader Kim Jong-Un a new nick-name.  “Rocket Man is on a suicide mission for himself and for his regime.”

In his first speech to the United Nations, using his strongest words yet, President Donald Trump delivered a warning to North Korea. He stated that the U.S.  would ”totally destroy North Korea” if forced to defend itself or its allies.

“No nation on Earth has an interest in seeing this band of criminals arm itself with nuclear weapons and missiles,” Trump said of North Korea, calling the North Korean leadership a “depraved regime.”

Trump also issued harsh words denouncing governments in Syria, Iran, and Venezuela when he said that they must all be confronted by a coalition of sovereign nations.

This speech, coupled with concerns about the FOMC meeting which got underway today, was supportive of gold prices which traded to a low of 1308 this morning.

FOMC Meeting Begins Today

It is not expected to result in an announcement of an interest rate hike tomorrow. However, when the FOMC meeting concludes and statements are made by Chairwoman Janet Yellen, market participants will listen closely for an announcement and information about its “quantitative normalization” timeline.

It is widely believed that the Federal Reserve will begin to liquidate part of its massive balance sheet which was acquired through the process of quantitative easing starting in 2008. This multi-trillion-dollar balance sheet containing bonds and mortgage-backed securities will begin to be sold in the open marketplace with monthly caps and a timetable which has been roughly laid out by the Federal Reserve in its previous minutes.

The uncertainty factor in this massive liquidation is the net effect the sales will have on current interest rates. Commonly referred to as a stealth rate hike, the Fed has maintained that their liquidation schedule will not adversely affect current rates.

Never in the history of the Federal Reserve have they accumulated such a massive portfolio. As such, it contains intrinsic unknowns as the process of normalization and liquidation begins.

Wishing you as always, good trading,