Goldman: Financial markets counting on 'diplomatic outcome' to North Korea threat

When it comes to rising tensions around North Korea, Goldman Sachs said markets eventually expect talks rather than militaristic conflict.

“Markets have been pricing a diplomatic outcome,” Charles P. Himmelberg, head of global credit strategy at Goldman Sachs, said in a Wednesday report with two other analysts.

“For decades, complacency has been the ‘right trade’ when it comes to North Korea,” the report said. “Our sense is that investors have grown comfortable with the view that geopolitical tensions invariably result in diplomatic talks, in which case the right trade is to buy any dips. The result is a market psychology that is relatively resistant to the…

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