Calm Before The Storm.

Well, the “good” news beat on average hourly earnings was spoiled by Russians. Literally.

“[North Korea] is preparing to launch a new high range missile,” Russian lawmaker Anton Morozov told RIA Novosti on Friday, adding that “they even gave us calculations, showing that the missile was capable of reaching the western coast of the US.” Morozov was part of a Russian delegation making an “official” visit to Pyongyang this week.

So that’s a “great” setup for the weekend and it dented stocks as soon as it hit. But the important thing to note in the following chart is that futs were already under pressure from the AHE beat and I’m sure you know why (hint: “good” news is “bad” news for risk assets because it makes a rate hike more likely):

Of course the most unnerving thing about this latest North Korea headline is that it came just 14 hours (give or take) after Donald Trump said this:

TRUMP: "Maybe it's the calm before the storm."
…
REPORTER: "What storm Mr. President?"
TRUMP: "You'll find out." (via Satellite News) pic.twitter.com/bWMzGrDPNa

— Kyle Griffin (@kylegriffin1) October 5, 2017

Yes, “could be the calm before the storm,” although you’d be forgiven for asking where the “calm” was because apparently, we all missed that part.

Anyway, here’s a snapshot of U.S. equities on the week:

The North Korea “news” took the wind out of the sails for the dollar and provided a bid for Treasurys. Ultimately, the pop in yields and the broad dollar occasioned by the AHE beat was faded as markets are once again wary of heading into a weekend that could see more provocations from Pyongyang:

Have yields peaked? SocGen’s Kit Juckes thinks maybe:

Still, the dollar is riding a hot streak. This is four straight green weeks for the greenback:

Gold of course spiked on the missiles threat:

Post-crisis tights in credit:

You should buy anything that has “HY” or “EM” in front of it, because what could go wrong?..

European shares also took a hit on the North Korea headline in Friday trading, but the EuroStoxx has risen for six straight weeks:

Tough week for Spanish equities although given what’s going on, it certainly could have been worse (expect more Catalonia drama dead ahead):

Four week winning streak for the Nikkei and the best week for Hong Kong since early July (although let’s see what happens when the missiles start flying or when something unexpected happens on the political front in Japan):

Globally, stocks have never been more valuable:

Finally, just to send you off to the weekend on a “positive” note, here are the estimates for fatalities and injuries in the event North Korea nukes Seoul and Tokyo (via Michael J. Zagurek Jr. for 38north.org):