Early Warning for 12 February 2019

Good morning. Here’s your Early Warning for Tuesday, 12 February 2019.

 

White House

The President is scheduled to hold a Cabinet meeting and then meet with New York Governor Andrew Cuomo.

3: The number of days remaining for Democrats and Republicans to make a government funding deal. Both sides came out of a closed door meeting last night and announced that they had a tentative agreement to end the gridlock. That agreement includes $1.38 billion for fencing and other barriers along the southern border, far from President Trump’s $5.7 billion ask. The agreement still has to be finalized and passed by the House and Senate — and then signed by President Trump.


 

State Department

Secretary Pompeo is on travel this week to Hungary, Slovakia, Poland, Belgium, and Iceland. Secretary Pompeo will be in Slovakia and Poland today, where he will speak with foreign leaders on regional issues. Tomorrow Secretary Pompeo will be in Belgium before wrapping up his trip on the 15th in Iceland.


 

Defense Department

Acting Defense Secretary Patrick Shanahan made a surprise visit to Afghanistan and was in Baghdad, Iraq this morning.

 

These are the last publicly reported locations of deployed carrier groups. Conflict requiring an aircraft carrier/carrier strike group does not appear imminent.

The Abraham Lincoln (CVN-72) is off the coast of Virginia for pre-deployment training. The Lincoln will rejoin the Indo-Pacific Command once it re-bases to San Diego, CA.

The John Stennis (CVN-74) was last reported as in the Java Sea.

The Ronald Reagan (CVN-76) is forward deployed to Yokosuka, Japan.


 

Congress

Significant House Activity:

  • Defending Our Democracy: Building Partnerships to Protect America’s Elections (Cmte on Homeland Security)

Significant Senate Activity:

  • Indo-Pacific Command and U.S. Forces Korea (Armed Services Cmte)

* Only events pertinent to national security are listed. Significant reporting will appear in this week’s Strategic and National Intelligence reports


 

Economy/Finance

There’s growing concern about a corporate earnings recession, which is an early warning indicator of overall economic recession. Technically, we had a corporate earnings recession a couple years ago when the oil and gas sector was hard hit by falling prices on decreased demand. Recently, Bloomberg analysts lowered their corporate profits forecast to 5.4 percent, down from 7.7 percent. And Morgan Stanley’s Mike Wilson says, “Our earnings recession call is playing out even faster than we expected…Earnings recession is here.” Wilson, the chief U.S. equity strategist, recently cut his growth expectation to one percent — not by one percent, but to one percent. “This earnings slowdown could have real knock-on effects to corporate behavior like spending and hiring which then put further pressure on growth,” Wilson said. [source] And that’s how recessions start.

I don’t mean to ‘recession’ you every morning. There are lots of indicators that point to a strong economy, and the economy will continue to grow for the foreseeable future. But 2019 is increasingly looking like a year of slowing growth. In China, two large bond holders just missed their repayment date, and they contribute to a growing debt default trend in China. The number of missed bond repayments quadrupled in China from 2017 to 2018, and Chinese analysts expect 2019 to keep pace. The Chinese central bank is easing monetary conditions to stabilize their own slowdown, but a Chinese financial crisis or recession could start a global one. Point is, it’s not just the United States we have to worry about.

As an ‘odds and ends,’ a Birmingham, Alabama-based U.S. Steel plant is restarting a furnace expected to add 150 jobs. Executives cite improved market conditions resulting from President Trump’s steel tariffs on China as the reason for continuing the project it started in 2015 but shut down after being undercut by Chinese steel.


 

Far Left Daily

“By the time we get to 2020, Donald Trump may not even be president. In fact, he may not even be a free person… If we go down that path, we’re going to need to help pull this country together and have as many people as possible understand it was a legitimate process based on facts.” – Sen. Elizabeth Warren

“Democratic Party chair Tom Perez is seriously considering holding one of its 2020 presidential debates on Fox News. This is a terrible idea, and must be stopped.” – Daily Kos petition

“The advocacy of … nationalism … drove some of the greatest crimes in history. And so the concept became taboo in polite society, in hopes that it might become taboo in practice, as well. Yet now it has come back with a vengeance.” – Foreign Affairs editor Gideon Rose


 

What I’m Looking at this Morning

F-35Bs exercise in the East China Sea

Poland to purchase U.S. HIMARS rockets


 

Notable Quotable

“[Trump’s tax law] has redistributed wealth in this nation from Democratic states, from so-called blue states, to red states. It has created two different tax structures in this country and it has created a preferential tax structure in Republican states.” – NY Gov. Andrew Cuomo, who’s scheduled to meet with President Trump today

Samuel Culper is a former military intelligence NCO and contract Intelligence analyst. He spent three years in Iraq and Afghanistan and is now the intelligence and warfare researcher at Forward Observer.

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