While probably not a huge surprise following the recent escalation in US and North Korean diplomatic outbursts, which last night culminated with a top North Korean official calling Mike Pence a "political dummy", and warning that if the upcoming summit between the US and North Korea is called off, the U.S. could instead face off with North Korea in a "nuclear-to-nuclear showdown", moments ago Trump stunned the world when he sent a letter to Kim Jong Un, calling off the June 12 Singapore meeting, stating that "based on the tremendous anger and open hostility displayed in your most recent statement, I feel it is inappropriate, at this time, to have this long-planned meeting."

Sadly, I was forced to cancel the Summit Meeting in Singapore with Kim Jung Un. pic.twitter.com/qEoi9ymUEz — Donald J. Trump (@realDonaldTrump) May 24, 2018

The letter also contained the usual terms of endearment such as:

The warning: " You talk about your nuclear capabilities, but ours are so massive and powerful that I pray to God they will never have to be used. "

" The trolling: "Some day, I look very much forward to meeting you. In the meantime, I want to thank you for the release of the hostages who are now home with their families. That was a beautiful gesture and was very much appreciated. "

" The loss (yours, not ours): The world, and North Korea in particular, has lost a great opportunity for lasting peace and great prosperity and wealth . This missed opportunity is a truly sad moment in history.

. This missed opportunity is a truly sad moment in history. And of course, don't forget to write... sometime: "If you change your mind having to do with this most important summit, please do not hesitate to call me or write."

Whether this is simply another diplomatic gambit on behalf of the White House, hoping to force China to get Kim to "play nice", with the prodding of South Korea which has everything to lose and nothing to gain from a collapse in the summit, remains unclear, and will depend on the response from North Korea, which earlier today just "demolished" its already destroyed nuclear research center.

Speaking at the White House at a bill signing ceremony hours after sending the letter, Trump said that “while many things can happen and a great opportunity lies ahead, potentially, I believe this is a tremendous setback for North Korea and indeed a setback for the world."

Trump also said he had spoken with Defense Secretary Jim Mattis and the leaders of South Korea and Japan. The U.S. military is “ready if necessary,” he said, and the two Asian allies “are not only ready should foolish or reckless acts be taken by North Korea, but they are willing to shoulder much of the financial cost or burden” of a conflict.

Still, suggesting that today's surprise announcement is just a negotiating tactic, Trump also "held out hope" that the June 12 summit in Singapore could get back on track, or that he and Kim could meet in the future. “Nobody should be anxious. We have to get it right."

Trump sounded a positive note as he left a bill signing event, telling reporters “the dialogue was good until recently” with Kim. And "Kim Jong Un wants to do what’s right,” adding, “I really believe that. It’s only recently that this has been taking place and I think I understand why it’s been taking place,” he said. He declined to explain further, but Trump said earlier this week that planning for the summit had been proceeding well until Kim met May 8 with his closest ally, Chinese President Xi Jinping, who is negotiating a trade dispute with Trump.

Oh, and a Chinese official told Bloomberg that Beijing is not surprised by the collapse of the summit given the recent signals that had come from Trump.

Full letter below:

Dear Mr. Chairman: We greatly appreciate your time, patience, and effort with respect to our recent negotiations and discussions relative to a summit long sought by both parties, which was scheduled to take place on June 12 in Singapore. We were informed that the meeting was requested by North Korea, but that to us is totally irrelevant. I was very much looking forward to being there with you. Sadly, based on the tremendous anger and open hostility displayed in your most recent statement, I feel it is inappropriate, at this time, to have this long-planned meeting. Therefore, please let this letter serve to represent that the Singapore summit, for the good of both parties, but to the detriment of the world, will not take place. You talk about your nuclear capabilities, but ours are so massive and powerful that I pray to God they will never have to be used. I felt a wonderful dialogue was building up between you and me, and ultimately, it is only that dialogue that matters. Some day, I look very much forward to meeting you. In the meantime, I want to thank you for the release of the hostages who are now home with their families. That was a beautiful gesture and was very much appreciated. If you change your mind having to do with this most important summit, please do not hesitate to call me or write. The world, and North Korea in particular, has lost a great opportunity for lasting peace and great prosperity and wealth. This missed opportunity is a truly sad moment in history.

The original:

To all those who bought the commemorative Trump-Kim meeting coin, our condolences:

And as we await North Korea's response, now that diplomacy has once again failed, the "Libya scenario" appears to be official in play.

Judging by the market's response, the worst case scenario is back front and center.