Early Warning for 14 December 2018

Good morning. Here’s your Early Warning for Friday, 14 December 2018.

 

On my radar: “Chinese retail sales grew at the slowest pace in 15 years,” begins a report in the Financial Times this morning. One Chinese financial analyst says, “There may even be some corporate lay-offs. All this is causing a decline in [Chinese] consumer confidence.” [source] Regardless of what political pundits are saying, China is feeling the pressure of Trump tariffs. And this is causing the Chinese Communist Party to question the viability of their ‘president for life’ Xi Jinping, and pushing their military to be more aggressive about the presence of the U.S. military in the South China Sea area. (One Chinese colonel recently suggested that one of their boats ram the next American ship that enters the South China Sea.) After the 2016 election, I mentioned in a Strategic Intelligence report that the U.S. could be doing more to destabilize China’s economy in light of their aggressive economic and industrial espionage, which I described as being essentially an act of war. President Trump is serious — he actually seems vindictive — about throwing cold water on China’s economic war against America, and I’m concerned because it does look like it’s escalating the likelihood of conflict. The risk isn’t immediate, but if President Trump forces Xi to make some concessions, however temporary or significant they end up being, Chinese embarrassment will be etched into national memory. I read this week that China is beginning to consider a delay to their ‘Made in China 2025’ agenda, in which China aims to be self-sufficient with regard to technological development (which is to say, they no longer rely on stolen technology from the United States because they’ll be ‘caught up’). As we pointed out in yesterday’s Strategic Intelligence, that’s when the risk of war significantly increases, pending any black swan event in the South China Sea.

Also: Both President Trump and Democrats are playing political hardball over a partial government shutdown. Earlier this week, President Trump said he’d take the blame for the shutdown if he doesn’t get funding for his border wall. Schumer is willing to give $1.6 billion for border security, but not the $5 billion the president is requesting for a border wall. “Border security is national security,” goes the refrain from the White House. Why the border wall didn’t get built in the past two years is not included in any explanation of the president’s reasoning, but its ‘dire necessity’ going into 2019 has become a cause of some instability and the usual ‘shutdown’ hand wringing as in previous years.

 

White House

The President is scheduled to receive his intelligence brief and then attends two Christmas parties this evening.


 

State Department

Secretary Pompeo is scheduled to host the U.S.-Canada 2+2 ministerial along with Secretary Mattis and their Canadian counterparts.


 

Defense Department

Defense Secretary Mattis is scheduled to host the U.S.-Canada 2+2 ministerial along with Secretary Pompeo and their Canadian counterparts.

 

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

The Carl Vinson (CVN-70) was last reported as conducting carrier qualifications off the coast of California.

The Abraham Lincoln (CVN-72) was last reported as being off the coast of Virginia.

The John Stennis (CVN-74) was last reported as conducting joint operations in the Arabian Sea.

The Harry Truman (CVN-75) was last reported as returned to home port, but currently in the Atlantic Ocean.

The Ronald Reagan (CVN-76) was last reported as having returned to home port in Yokosuka, Japan.

The George H. W. Bush (CVN-77) was last reported as conducting carrier qualifications off the coast of Florida.

 

Bold indicates significant changes to last reported location or other amplifying information.


 

Congress

Significant House Activity:

  • The Financial Services Committee has postponed for a second time a hearing entitled, “The National Debt: Washington, We Have a Problem”.

Significant Senate Activity:

  • Nothing significant to report.

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


 

Economy/Finance

According to new data out this morning, the federal deficit is on track to remain the worst since 2012. Annual deficit spending is nearing $900 billion, and is scheduled to be over a trillion dollars for at least the next four years, according to the Congressional Budget Office.

The latest edition of Blackrock GPS, the investor report from the world’s largest asset management firm, says that G7 economic growth has likely peaked. The G7 represents the world’s seven largest advanced economies: U.S., Japan, Germany, the United Kingdom, France, Canada, and Italy. “The G7 indicator has been on a more accented downtrend in recent weeks and the regional contributions are less uniform than in 2017. The US has been 2018’s engine of global growth while Japan and Europe have moved sideways,” reads the report; which is to say that when the U.S. economy slows down, the rest of G7 won’t be far behind (if they’re behind, at all). [source] (Analyst Comment: This is another indicator that global economic growth is feeling negative pressure, putting the risk of a global economic slowdown on the horizon.)


 

What I’m Looking at this Morning

Yoo: Russia probe could lead to constitutional dilemma

European Central Bank cuts growth forecasts

Iranian hackers hunt nuke workers, U.S. officials


 

Notable Quotable

“The only gatekeeping that goes on in radical [Leftist] communities is that of language and passion—if you can rail against capitalism in woke language, you’re in.” – Conor Barnes, Quillette [source]

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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