One day after Rex Tillerson warned that the US is contemplating a pre-emptive military attack on North Korea, the isolated nation announced it has conducted a ground test of a new type of high-thrust rocket engine that leader Kim Jong Un is calling a “revolutionary breakthrough” for the country’s space program, the North’s state media said Sunday. Kim attended Saturday’s test at the Sohae launch site, according to the Korean Central News Agency, which said the test was intended to confirm the “new type” of engine’s thrust power and gauge the reliability of its control system and structural safety.

A previous demonstration of a “new rocket engine” in this undated photo released
by North Korea’s KCNA in Pyongyang September 20, 2016

Kim called the test “a great event of historic significance” for the country’s indigenous rocket industry, the KCNA report said. He also said the “whole world will soon witness what eventful significance the great victory won today carries” and claimed the test marks what will be known as the “March 18 revolution” in the development of the country’s rocket industry. The report indicated that the engine is to be used for North Korea’s space and satellite-launching program.

The claim of a successful test of the high-thrust rocket engine would put North Korea a step closer to being able to launch an intercontinental ballistic missile, as Mr. Kim said the country would do this year in his new-year address, the WSJ reported.

North Korea is banned by the United Nations from conducting long-range missile tests, but it claims its satellite program is for peaceful use, a claim many in the U.S. and elsewhere believe is questionable.

As AP further reports, North Korean officials have said that under a five-year plan, they intend to launch more Earth observation satellites and what would be the country’s first geostationary communications satellite — which would be a major technological advance. Getting that kind of satellite into place would likely require a more powerful engine than its previous ones. The North also claims it is trying to build a viable space program that would include a moon launch within the next 10 years.

Saturday’s engine test, at North Korea’s Sohae Satellite Launching Station, near its border with China, came as U.S. Secretary of State Rex Tillerson was en route to Beijing for a series of meetings with Chinese leadership that were to include discussions about how to rein in Pyongyang’s nuclear threat. On Friday, Tillerson told reporters in Seoul that the U.S. wasn’t interested in conducting direct talks with North Korea to halt its weapons program, saying instead that tighter sanctions enforcement and the possibility of a military strike were being considered as part of a continuing North Korea policy review by the White House.

“All options are on the table,” Tillerson said.

It’s unclear whether this test was deliberately timed to coincide with Tillerson’s visit, but Pyongyang has been highly critical of ongoing U.S.-South Korea wargames just south of the Demilitarized Zone and often conducts some sort of high-profile operation of its own in protest. Earlier this month, it fired off four ballistic missiles into the Sea of Japan, reportedly reaching within 200 kilometers (120 miles) of Japan’s shoreline.

Japan, which was Tillerson’s first stop before traveling to South Korea and China, recently held its first civilian missile evacuation drill over concerns of an unexpected North Korean attack.

While building ever better long-range missiles and smaller nuclear warheads to pair with them, North Korea has marked a number of successes in its space program. It launched its latest satellite — the Kwangmyongsong 4, or Brilliant Star 4 — into orbit on Feb. 7 last year, just one month after conducting what it claims was its first hydrogen-bomb test. It put its first satellite in orbit in 2012, a feat few other countries have achieved. In 2013, rival South Korea launched a satellite into space from its own soil for the first time, though it needed Russian help to build the rocket’s first stage.

In a controversial attempt to contain the threat from a potential North Korean missile attack, last week, the US military also began the deployment of its THAAD anti-missile system in S. Korea, despite Russia and China objecting to the move as being “counter-productive.” Beijing said THAAD’s deployment was harming the “regional strategic balance,” since it might damage China’s nuclear deterrent capabilities and potentially fuel US first-strike ideas. Moscow said Washington was “instigating an arms race in the subregion.”

“We do not oppose South Korean taking necessary measures to protect its security, but these measures cannot be based upon harming the security interests of South Korea’s friendly neighbor, China,” Chinese Foreign Ministry spokeswoman Hua Chunying said on Friday, as quoted by Reuters. Washington and Seoul however continue to maintain that the deployment of THAAD is a “defensive” measure against Pyongyang, and countries “other than North Korea” have nothing to worry about, according to US Defense Secretary James Mattis

Given the collapse of European VIX to record lows, one could be forgiven for thinking that there’s nothing to worry about. However, a one point jump in first-round support for French far-right presidential candidate Marine Le Pen has sparked a notable drop in EURUSD this morning.

European FX investors look anything but comfortable…

Overall however, according to the polls, Le Pen is unlikely to win…

But then again – Brexit and Trump proved that mea

The tension over the disputed territory in the South China Sea is about to escalate to another level: according to a Reuters report, Japan is preparing to to dispatch its largest warship on a three-month tour through the South China Sea beginning in May, in “its biggest show of naval force in the region since World War Two.”

Japan Maritime Self Defense Force’s helicopter carrier Izumo

The 249 meter-long (816.93 ft) Izumo is as large as Japan’s World War Two-era carriers and can operate up to nine helicopters. It resembles the amphibious assault carriers used by U.S. Marines, but lacks their well deck for launching landing craft and other vessels.

While China claims almost all the disputed waters despite the regular complaints of other nations in the region, and its growing military presence has fueled concern in Japan and the West, with the United States holding regular air and naval patrols to ensure freedom of navigation, so far Japan’s territorial claims have involved the Senkaku island chain in the East China Sea; that however appears to be changing as Japan seeks to stake a military presence in the contested region.

The Izumo helicopter carrier, commissioned only two years ago, will make stops in Singapore, Indonesia, the Philippines and Sri Lanka before joining the Malabar joint naval exercise with Indian and U.S. naval vessels in the Indian Ocean in July, before returning to Japan in August.

Why create another point of Chinese antagonism over the region? “The aim is to test the capability of the Izumo by sending it out on an extended mission,” said one of the sources who have knowledge of the plan. “It will train with the U.S. Navy in the South China Sea,” he added, asking not to be identified because he is not authorized to talk to the media. A spokesman for Japan’s Maritime Self Defense Force declined to comment.

  Taiwan, Malaysia, Vietnam, the Philippines and Brunei also claim parts of the sea which has rich fishing grounds, oil and gas deposits and through which around $5 trillion of global sea-borne trade passes each year. Japan does not have any claim to the waters, but has a separate maritime dispute with China in the East China Sea.

 Japan wants to invite Philippine President Rodrigo Duterte, who has pushed ties with China in recent months as he has criticized the old alliance with the United States, to visit the Izumo when it visits Subic Bay, about 100 km (62 miles) west of Manila, another of the sources said. Asked during a news conference about his view on the warship visit, Duterte said, without elaborating, “I have invited all of them.”

He added: “It is international passage, the South China Sea is not our territory, but it is part of our entitlement.” On whether he would visit the warship at Subic Bay, Duterte said: “If I have time.”

Japan’s unexpected flag-flying operation comes as the United States is conflicted between taking a tougher line with China and making concessions ahead of Xi’s visit to Trump next month. Washington has criticized China’s construction of man-made islands and a build-up of military facilities that it worries could be used to restrict free movement. Beijing responded in January said it had “irrefutable” sovereignty over the disputed islands after the White House vowed to defend “international territories”.

As Reuters notes, Japan in recent years, particularly under Prime Minister Shinzo Abe, has been stretching the limits of its post-war, pacifist constitution and has been making aggressive pushes for a return to militarism. It has designated the Izumo as a destroyer because the constitution forbids the acquisition of offensive weapons. The vessel, nonetheless, allows Japan to project military power well beyond its territory. Based in Yokosuka, near to Tokyo, which is also home to the U.S. Seventh Fleet’s carrier, the Ronald Reagan, the Izumo’s primary mission is anti-submarine warfare.

Britain’s minister for leaving the European Union, David Davis, urged lawmakers not to hold back PM Theresa May’s ability to negotiate a Brexit deal in talks she could trigger as early as this week. Davis on Sunday called on lawmakers to vote to drop two amendments that were added to a bill authorizing the talks with the bloc’s other member states, saying May should be able to enter with no strings attached the WSJ reported.

On Monday the Brexit bill returns to the House of Commons, the U.K.’s lower house, for debate after the House of Lords said it wanted guarantees that EU citizens living in the U.K. could stay after Brexit and that Parliament could vote on the final terms. The final bill must be approved by both houses. Should the bill pass Monday, the government could invoke Article 50 as early as Tuesday according to weekend press reports, but negotiations in Parliament could last several days. The Brexit spokesman for the main opposition Labour Party, Keir Starmer, told Sky News he expects the government to trigger it on Wednesday or Thursday.

Even if the House of Commons votes in favor of the amendments, May is expected to keep her timetable of triggering by the end of the month. But it would underline how small her majority is in the lower house. Complicating matters is a tweet moments ago by BBG political editor Laura Kuenssberg, who reported that Scotland’s Nicola Sturgeon will give May an ultimatum: give Scotland a different Brexit deal or she’ll call for section 30, the indyref process.

On the topic of Brexit, Reuters reported on Sunday that David Davis is also drawing up “contingency plans” for Britain in the unlikely event it has to walk away from divorce talks with the European Union without a deal. Ahead of the start of Article 50 negotiations, which could be triggered as early as Tuesday, a committee of lawmakers warned it would be a serious dereliction of duty if the government failed to plan for the possibility of not reaching an exit deal. “I don’t think, firstly, that is remotely likely,” Davis told the BBC’s Andrew Marr Show, responding to the report. “It’s in absolutely everybody’s interest that we get a good outcome.”

Parliament’s Foreign Affairs committee warned that a breakdown in negotiations would be a “very destructive outcome,” causing economic harm to both sides as well as creating uncertainty and legal confusion for individuals and businesses.

Asked when May would trigger talks, Davis declined to name a specific date. “Each date has different implications in terms of when it could be responded to by the (European) council … I’m not going to get into the details why, but there’s politics in terms of achieving success.”

Finally, for a frank, “on the ground” take on the current state of Brexit, here is an excerpt from Bill Blain’s latest Morning Porridge edition: