Early Warning for 13 August 2018

Good morning. Here’s your Early Warning for Monday, 13 August 2018. (All times Eastern.)

 

Early Warning: In a note published on Friday, J.P. Morgan Asset Management described Turkey’s economic as being “in the midst of a perfect storm”. A falling Lira, high deficits and debt, new tariffs from the U.S. (over a jailed American pastor), and mismanagement of its economy (16 percent inflation) leave analysts wondering about Turkey’s future. Says one analyst: “President Erdogan continues to prioritize growth and lower rates which will extend the current crisis, rather than allowing the economy to rebalance. He is here to stay, and markets don’t have confidence in him. That’s a dangerous mix.” [source] Analyst Comment: The main issue is that private banks in Europe have loaned significant amounts of money to Turkey, and those loans are in danger of default if the Turkish Lira continues to slide. Turkey owes Spain $83 billion, the French $38 billion, and the Italians $17 billion. Investors are worried about European contagion if a few defaulted loans put some banks underwater.


 

White House

The President is at Fort Drum today to sign the National Defense Authorization Act for Fiscal Year 2019. We’ll provide some highlights of the NDAA in this week’s Strategic Intelligence Summary.


 

State Department

Secretary of State Mike Pompeo is scheduled to attend meetings and briefings today at Foggy Bottom.

Of note: The Under Secretary of State for Arms Control and International Security is on travel from 12-26 August to Indonesia, Vietnam, and Australia. In Indonesia, U.S. officials will meet to discuss expanding defense trade and regional security issues. All three meetings are likely central to the U.S. Indo-Pacific security strategy to prevent China’s dominance of the entire region.


 

Defense Department

Defense Secretary Mattis and other senior DoD officials have no publicly scheduled events.

The Carl Vinson (CVN-70) was last reported in the eastern Pacific.

The John Stennis (CVN-74) was last reported back in port at San Diego.

The Harry S. Truman (CVN-75) was last reported in port at Norfolk.

The Ronald Reagan (CVN-76) departed port in Yokosuka, Japan to avoid a typhoon.

The George H.W. Bush (CVN-77) is undergoing carrier qualifications.

Conflict requiring a Carrier Strike Group does not appear imminent.


 

Congress

Significant House Activity:

  • Nothing significant to report.

Significant Senate Activity:

  • Nothing significant to report.

* Reporting will appear in the Strategic Intelligence Summary or National Intelligence Bulletin.


 

Economy/Finance

After new U.S. sanctions against Russia went into effect, the Russians responded by announcing plans to sell its holdings in U.S. securities. Russian prime minister Dmirty Medvedev warned that new sanctions about be considered “economic warfare” last week, and now Russia’s finance minister says, “We have lowered to the minimum level and will further decrease our investment in the U.S. economy, in the U.S. securities,” referring to U.S. Treasury bonds. [source]


 

Weather

The National Hurricane Center reports one low pressure disturbance 600 miles south-southwest of Newfoundland, and assesses a 10-20 percent chance of further development.

Drought conditions persist across much of the Southwest.

 


 

What I’m Looking at this Morning

Israel ‘closer than ever’ to toppling Hamas

U.S. responds to Chinese warning about aircraft near artificial islands

Hackers could target U.S. farmland by disrupting irrigation


 

Notable Quotable

“I don’t need that much help. I’ve played some video games before.” – Richard Russell, the 29-year-old man who stole a plane, said to air traffic controllers at Seattle-Tacoma Airport on Friday.

 

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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