Art Cashin: Kim Jong Un faces 'dire straits' without Chinese financial backing

  • Closely followed trader Art Cashin says that North Korean leader Kim Jong Un will be in "big trouble" without China's financial backing.
  • "There have been about four or five Chinese banks that have been carrying North Korea. And, if they stop, then (Kim) is going to be in really big trouble," he says.
  • Commerce Secretary Wilbur Ross on Friday echoed Cashin's read on China's banking directive regarding North Korea.

Closely followed trader Art Cashin told CNBC on Friday that North Korean leader Kim Jong Un will be in "big trouble" without China's financial backing.

On Thursday, Reuters reported that China's central bank has told banks to stop doing business with North Korea amid U.S. concerns that Beijing has not been tough enough about Pyongyang's repeated nuclear tests.

"If (China) follows through on what they did that could be a game changer," said Cashin, UBS director of floor operations at the New York Stock Exchange.

"There have been about four or five Chinese banks that have been carrying North Korea. And, if they stop, then (Kim) is going to be in really big trouble," Cashin added in an interview on "Squawk on the Street." "If Chinese banks stop helping them out, they're going to be in dire straits."

Commerce Secretary Wilbur Ross echoed Cashin's read on China's banking directive regarding North Korea.

Beijing "sent a message to North Korea that China is not being as supportive of them as it had been," Ross told CNBC on Friday, adding it's "a very welcome move" in conjunction with new U.S. efforts to halt funding for Pyongyang's missile program.

"A lot of the goods going into North Korea have been in support of the missile program and the nuclear program. If we can cut off their ability to import those things that would be very good," he said.

Before joining the Trump administration, Ross amassed a net worth of about $2.5 billion by investing in distressed assets.

Markets after North Korea threat

Stocks were lower Friday after North Korea's minister of Foreign Affairs said that the country may consider testing a hydrogen bomb in the Pacific Ocean.

Cashin said traders are putting tensions between the U.S. and North Korea "on hold" as long as it remains a "war of words." The high risk to the market remains a possible "accident" by North Korea, Cashin said.

"The North Koreans shoot off a missile and somehow it disintegrates over Japan or hits some [populated] area," Cashin said.

Traders will mostly be consumed with Apple on Friday as its iPhone 8 and iPhone 8 Plus go on sale, Cashin said.

"What will affect the market is how the initial sales seem to be going and people extrapolating from there what things look like," he said.

Watch: Wilbur Ross: Anything to 'smack down' North Korea's military spending is good