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The U.S. military is planning to intercept a flagged North Korean ship suspected of proliferating weapons material in violation of a U.N. Security Council resolution passed last Friday, FOX News has learned.

The USS John McCain, a navy destroyer, will intercept the ship Kang Nam as soon as it leaves the vicinity off the coast of China, according to a senior U.S. defense official.

The ship left a port in North Korea Wednesday and appears to be heading toward Singapore, according to a senior U.S. military source. The vessel, which the military has been tracking since its departure, could be carrying weaponry, missile parts or nuclear materials, a violation of U.N. Resolution 1874, which put sanctions in place against Pyongyang.¹⁰

North Korea has threatened any country that attempts to interfere with its ships with a significant retaliation. The stock market sold off quickly on news of the Navy’s plan. Pay careful attention to this developing situation.

North Korea may launch a long-range ballistic missile towards Hawaii on American Independence Day, according to Japanese intelligence officials. It was announced today that the U.S. has deployed anti-missile defenses around Hawaii in response to the threat.¹

The U.S. is moving ground-to-air missile defenses to Hawaii as tensions escalate between Washington and Pyongyang over North Korea's recent moves to restart its nuclear-weapon program and resume test-firing long-range missiles.

Mr. Gates told reporters that the U.S. is positioning a sophisticated floating radar array in the ocean around Hawaii to track an incoming missile. The U.S. is also deploying missile-defense weapons to Hawaii that would theoretically be capable of shooting down a North Korean missile, should such an order be given, he said.

"We do have some concerns if they were to launch a missile...in the direction of Hawaii," Mr. Gates said. "We are in a good position, should it become necessary, to protect American territory."²

Does it really matter what North Korea does? Couldn’t the United States and its allies quickly squash Pyongyang’s military? Did you know that North Korea maintains the fifth largest military in the world? Did you know that when you add their active military troops to their reserve military troops that they have nearly 6,000,000 troops?

Before you dismiss North Korea as an annoying mosquito, compare their military to those of the rest of the world here..

There is no doubt that the United States and its allies have far superior technology and weaponry…but I think we need to be careful about being complacent when sparring with the fifth largest military in the world.

Have you considered the economic fallout of North Korea declaring war on the United States? Do you think it would be good or bad for our economy? I think the markets could get spooked very easily and the gains recently seen could quickly evaporate if the United States were engaged in yet another war.

I am not trying to drum up fear…rather, I want our readers to consider the possibilities and prepare accordingly.

At the same time, we must keep a careful eye on Iran. If the election results hold up…we could face another four years of President Mahmoud Ahmadinejad and his anti-Israel/anti-America rants.

Iran's supreme leader said Friday there was "definitive victory" and no rigging in disputed presidential elections, offering no concession to protesters demanding the vote be canceled and held again.³

Israel is very concerned about the nuclear ambitions of the Iranian administration and may be forced to take pre-emptive measures (i.e. a military strike on the nuclear sites located within Iran). If this were to occur, the United States would no doubt be drawn in to the conflict.

We must pray that this does not happen and that the United States continues to vigorously support Israel. Although, a recent report in the Jerusalem post indicates that only 6% of Israelis consider President Obama as “pro-Israel.”⁴

Technical analyst Robert Prechter on Monday said he sees the United States losing its top AAA credit rating by the end of 2010, as he stuck by a deeply bearish outlook on the U.S. economy and stock market.

Prechter, known for predicting the 1987 stock market crash, joins a growing coterie of market heavyweights in forecasting the United States will lose its top credit rating as the government issues trillions of dollars in debt to fund efforts to bail out the economy.

Prechter, speaking at the Reuters Investment Outlook Summit in New York, said he sees investors' confidence in an economic rebound fading, a trend that will drag the S&P 500 stock index .SPX well below the March 6 intraday low of 666.79 by the end of this year or early next.

"There will be a leg down in stock prices, and it will affect all other areas," including corporate bonds and commodities, said Prechter, who is executive officer at research company Elliott Wave International, based in Gainesville, Georgia.⁵

Brazil, Russia, India and China are considering buying each other’s bonds and swapping currencies to lessen dependence on the U.S. dollar, Russian President Dmitry Medvedev’s top economic adviser said.

“In the long term, it is beneficial for all and all agree that the world needs a few strong currencies,” Dvorkovich said. “It cannot happen quickly.”⁶

President Barack Obama revealed plans on Wednesday for a new system of US financial regulation that expands the powers of the Federal Reserve so that it can assume primary responsibility for averting financial crises.⁷

Another way of saying this is: President Obama has continued his expansion of the scope and power of the government demonstrating once again his commitment to more government control of what is supposed to be a free market. Mark Warner, the Democratic senator for Virginia, who sits on the Senate banking committee said this week that,

“Too much economic power in one place puts our system of government at risk. Our founding fathers opposed concentrations of power, economic or otherwise, and favored a system of checks and balances.”⁸

Stocks pulled back this week on heavier volume than we've recently seen. The entire rally from the March lows has been on very light volume, which is not a sign of a strong market. This would be characteristic of a bear market or short covering rally as we have been saying all along.

The press keeps telling us about the green shoots sprouting up everywhere … consider the following points from Matterhorn Asset Management:

“Take the following ingredients:

• A banking system that is on the verge of collapse.

• Add a few trillion $ of government liquidity & guarantees.

• Keep all of the bank management that caused the crisis.

• Change the method for valuing the bank’s toxic and worthless assets so that they can publish hocus pocus increases in profits.

• Construct a stress test that all banks can pass, some with minor capital injection.

• Let some of the banks repay the government money to make the markets believe that the banking system has been saved and is sound.

And what do you get? A banking system which:

• Is still on the verge of collapse.

• Is leveraged 25-50 times.

• Will go under with a 2-4% write-off of total assets.

• Has loan books that are deteriorating at an alarming rate.

• Has a high percentage of prime residential mortgages in negative equity.

• Has not provided for commercial property loan defaults with property values falling 40-50%.

• Has a high level of personal loans and credit card loans which will never be repaid.

• Has worthless paper assets which are valued at fantasy prices with the blessing of the government.

• Has $100’s of trillions of derivatives for which there is no market, & no reserves for losses.” End quote.

Western & derivative-laden economies are in serious trouble, & the “recovery bluff” will soon be called. Get your financial house in order now, as in just a few weeks it could be too late.

The treasury market had an early week rally only to sell of hard as it prepares to absorb yet another record of treasury auctions ($104 Billion) next week. The market is under severe stress to handle all the paper coming to market to finance our government deficit spending.

China has also been selling a few treasuries to get our attention that they want to see some fiscal discipline out of Washington. Hey, join the club!

Brazil, Russia, Indian, and China met this week to forge an alliance and come up with ideas on replacing the dollar as the reserve currency of the world. We've heard this so many times lately that it's like watching the same Seinfeld episode over and over again. This isn't idle chatter folks, they are implementing some action so be prepared now.

The dollar, like the treasury market, tried to rally early in the week but was met with selling. This market will have a hard time rallying as the world starts selling off assets denominated in dollars and dealing with other geopolitical risks directed at the United States. The lone support the dollar gets is when the world equity markets all sell of together. This forces the unwinding of short dollar positions. In other words, this is NOT fundamentally sound.

The gold and silver markets sold off hard on Monday and then spent the rest of the week consolidating. The fundamental outlook is very bright indeed for these metals for the long term (2-4 years). These markets are inverse to the U.S. dollar so they should perform very well as the dollar depreciates.

As we draw closer to the heart of hurricane season, make sure that you have developed your family disaster plan. According to the National Hurricane Center, you should:

• Discuss the type of hazards that could affect your family. Know your home's vulnerability to storm surge, flooding and wind.

• Locate a safe room or the safest areas in your home for each hurricane hazard. In certain circumstances the safest areas may not be your home but within your community.

• Determine escape routes from your home and places to meet.

• Have an out-of-state friend as a family contact, so all your family members have a single point of contact.

• Make a plan now for what to do with your pets if you need to evacuate.

• Post emergency telephone numbers by your phones and make sure your children know how and when to call 911.

• Check your insurance coverage - flood damage is not usually covered by homeowners insurance. National Flood Insurance Program

• Stock non-perishable emergency supplies and a Disaster Supply Kit.

• Use a NOAA weather radio. Remember to replace its battery every 6 months, as you do with your smoke detectors.⁹

²http://online.wsj.com/article/SB124535285705228571.html

³http://online.wsj.com/article/SB124540205628930963.html#mod=djemalertNEWS

⁴http://www.jpost.com/servlet/Satellite?cid=1245184872947&pagename=JPost%2FJPArticle%2FShowFull

⁵http://www.reuters.com/article/InvestmentOutlook09/idUSTRE55E6BM20090615

⁶http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWgZ7EeTvFbk

⁷http://www.ft.com/cms/s/0/36b5409e-5aaa-11de-8c14-00144feabdc0.html

⁸http://www.ft.com/cms/s/0/dc454a6c-5b5a-11de-be3f-00144feabdc0.html

⁹http://www.nhc.noaa.gov/HAW2/english/disaster_prevention.shtml

¹⁰http://www.foxnews.com/politics/2009/06/19/military-set-intercept-north-korean-ship-suspected-proliferatin-missiles-nukes/

¹¹ Market commentary is provided by Mr. Steve Meyers of Grainbelt Commodities, Marco Island, FL