The Latest on the North Korea Nuclear Saga

We've talked a great deal about the flinty risks that a nuclear-equipped North Korea would pose. Remember, this is a country that's sold so many missiles to Iran, Syria, Pakistan, and others that intelligence analysts nicknamed it "Missiles 'R' Us."

Against that backdrop, the Catch 22-style standoff that emerged at the regional forum of the Association of Southeast Asian Nations (ASEAN) earlier this week would've been comical if the stakes weren't so high.

As it was, the scenario almost sounded like it had been scripted by "Catch 22" author Joseph Heller himself.

Here's what I mean.

Because the forum – held in Brunei on Monday and Tuesday – focused extensively on regional security, North Korea's nuclear weapons program was a central topic of discussion.

On Monday, U.S. Secretary of State John Kerry said that the United States, South Korea, Japan and even China were "absolutely united" in their insistence on a de-nuclearized North Korea. In other words, Washington made it clear that for Pyongyang to get the aid that it seeks, and for talks to ensue that would lead to better relations on the long-divided Korean Peninsula, the North had to first renounce its nuclear ambitions.

And North Korea was having none of that.

On Tuesday, Pyongyang's top diplomat said that if Washington truly wants to ease tensions between North and South Korea, then the United States must accept the North's offer for talks – but without any nuclear-related pre-conditions.

In other words, with no strings attached …

"The U.S. must positively respond to our sincere and courageous decision [to offer talks] without preconditions if it is truly interested in ending the vicious circle of intensifying tension on the Korean Peninsula and safeguarding peace and stability," North Korean Foreign Minister Pak Ui Chun said through delegation official Choe Myong Nam.

Pak went on to insist that the United States must sign an actual peace treaty to bring about a formal end to the Korean War (which lasted from 1950-53) – and lift the sanctions it has in place against North Korea. And it must do all this without any reciprocal promises from Pyongyang.

(Just to be clear here … it's not like South Korea is a "silent partner" in all this. Not long after Choe spoke for North Korea, South Korean Foreign Minister Yun Byung-se told summit journalists that diplomats at the forum presented a "very strong message" to the North Korean delegation that Pyongyang must shutter its nuclear program and stop the draining cycle of provocations and escalations.)

So, just to recap this standoff that was bred at Brunei, both sides claim they want to end two generations' worth of tension and strife.

The United States is willing to talk about aid and improved relations – if North Korea first promises to put a halt to its nuclear agenda (and makes some moves to show that it's serious).

And North Korea is willing to talk about improved relations – if the United States changes its militant tone and drops demands that Pyongyang end its own nuclear aspirations.

In short, this is going nowhere fast.

The ASEAN Regional Forum was attended by 27 nations. It's the Southeast Asia region's most-prominent security forum. The South and East China Seas territorial disputes – another highly worrisome hot-spot issue we've been briefing you about for more than a year – was also a major discussion topic.

But the Catch-22 rhetoric transformed the North Korea nuclear dispute into the main point of debate in Brunei.

In the decades that have passed since the Korean War ended with a cease-fire – and not a formal peace treaty – there have been periodic flare-ups on the Korean peninsula.

The most recent – which we detailed in the Private Briefing report "If This Stock Doubles, You Can Thank North Korea" – was in February, following a nuclear test. That led to a major escalation in rhetoric from Pyongyang and Washington, and some stepped-up military maneuvers.

So it really wasn't much of a surprise when North Korea last month offered to join the stalled disarmament talks; Pyongyang has a longstanding pattern of dialing down its militant rhetoric and calling for "talks" in the months after an episode. The hermitlike country wants to position itself as the victim and Washington as the heavy in a bid to win concessions and to curry favor among countries where anti-U.S. sentiment runs deep.

According to the analyst reports I've been following, the U.S. hasn't taken the bait this time around. And if you take a close look, you can quickly see why.

It's not just that we've seen this before – which we have. But even though North Korea has dialed down the tough talk we saw in the early part of the New Year, it's still promising to build nuclear muscle.

And, at the conference, it even followed its superficial message of peace and offers to collaborate with a nasty little rabbit punch reminder that things can get ugly very, very quickly.

Speaking through Choe, reports say that North Korea's Foreign Minister Pak said that the lack of a formal peace treaty, and the United States' intrusions and aggressive tone, mean the Korean Peninsula nuclear standoff won't be resolved anytime soon.

In fact, in an especially alarming comment, Pak reportedly said that "a touch-and-go situation in which a war can break out anytime is fostered" on the Korean Peninsula. And that's all the fault of the openly hostile United States, Choe told journalists.

In the February Private Briefing special report, we said that the need for anti-missile defense systems created by North Korea's nuclear program would bode well for GenCorp Inc. (NYSE: GY), a rocket-engine maker that's involved in several significant "anti-missile" development programs.

GenCorp shares are already up 48.5% since we recommended them back on Feb. 22, and Wall Streeters are creating a hefty bandwagon for the stock. The current consensus is $20 a share – which is 20% above where GenCorp is trading. But the ultimate upside could be even higher: Don't forget that billionaire investor Mario Gabelli – a prototypical value guy and a Graham & Dodd disciple – said during a February CNBC interview that GenCorp could double.

And I've always liked Gabelli.

Anti-missile-defense systems are one weapons package that will find demand in the years to come – especially as countries like North Korea and Iran continue their nuclear programs.

So expect more gains in GenCorp – courtesy of "Missiles 'R' Us."

[Editor's Note: Unless otherwise specified, we recommend investors maintain a 25% "trailing stop" on all holdings. For each of the stocks mentioned in this report, we recommend you go back and peruse the original recommendation to see what risk measures we outlined.]

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