Good morning. Here’s your Early Warning for Monday, 25 February 2019.
ADMIN NOTE: After reviewing last month’s survey results, I’ll be making some minor changes to this daily Early Warning report. You may have noticed that EW is hitting inboxes between 0730 and 0800 Central most mornings, Monday through Friday. Waking up early and writing this report is the absolute highlight of my day, so that’s not going to change. But I’ll be minimizing some sections that are less popular and including a new section that was widely requested. You can expect those changes next week. Thank you for all the support. – S.C.
Early Warning: Venezuela’s upstart president Juan Guaido pressured Western governments to not rule out military options to remove Nicolas Maduro from power. He doesn’t favor military options, but suggested that all options be pursued. Vice President Pence is in Colombia today to meet with Guaido and other regional leaders. Over the weekend, a series of protests and government actions led to the deaths of four Venezuelans after Maduro shut down the borders to Colombia and Brazil to prevent humanitarian aid from entering the country.
The President is scheduled to participate in the 2019 White House Business Session, then depart to Hanoi, Vietnam to meet with North Korea’s Kim Jong-un on Wednesday and Thursday. (Analyst Comment: Kim is making a scheduled stop in China, again by train, to meet with China’s Xi Jinping. There is no deal except through China, unfortunately.)
Mueller: On Friday, the Mueller team reported that they wouldn’t be publishing their final report this week, as numerous outlets had reported. It appears Mueller will wait until after the Trump-Kim summit.
Secretary Pompeo will be in Vietnam and the Philippines from 24 February to 01 March. Secretary Pompeo will participate in the Trump-Kim summit in Vietnam, then travel to the Philippines to meet with President Rodrigo Duterte.
Acting Defense Secretary Patrick Shanahan has no publicly scheduled events.
These are the last publicly reported locations of deployed carrier groups. Those not listed were last reported in port.
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 South China Sea.
The Ronald Reagan (CVN-76) is forward deployed to Yokosuka, Japan.
Significant House Activity:
- Nothing significant to report.
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.
China’s Shanghai Index was up this morning (along with U.S. futures and pre-open trading) on news that President Trump is postponing the 01 March tariff increases. Last week, China reported they’d be increasing purchases of U.S. soybeans and other agricultural products. U.S. and Chinese negotiators have made “substantial progress” in trade talks, and President Trump likely still wants China’s help in solving the North Korea issue. There’s no deadline on a trade deal, but President Trump is inviting President Xi to Mar-a-Lago sometime in March, presumably to sign a trade deal. Now economists are asking if the deal will be big enough to stave off a global economic slowdown. Consensus so far: probably not.
Over the weekend, Warren Buffet published his annual letter to Berkshire Hathaway shareholders. Buffet is somewhere around the world’s fifth richest man, and because his investment prowess is legendary, people listen when he speaks (and writes). Here’s one part of his letter that stood out to me: “A few of our trees [companies] are diseased and unlikely to be around a decade from now.” Given that we’re on the tail end of the current economic cycle, this statement would portend a turbulent period for some companies, especially those with large amounts of debt. Buffet essentially describes these high-debt companies as playing Russian roulette: “usually win, occasionally die”. That aligns with what a lot of other conventional financial elites are saying, specifically that corporate debt will likely lead to the death of numerous companies during the next downturn.
Towards the end of the letter, Buffet discusses the current national debt. He writes, “Those who regularly preach doom because of the government budget deficits (as I regularly did myself for many years) might note that our country’s national debt has increased roughly 400-fold during the last of my 77-year periods.” Buffet goes on and seems to write off concerns of fiscal calamity. There’s no arguing against a fiscal reckoning eventually, but Warren does reinforce his investing strategy, which is generational. What I take from this is that Buffet is an optimist over the long term, despite what happens over the next decade.
Lastly, President Trump described the world economy as “fragile” in a tweet about oil prices this morning. “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!” [source]
Far Left Daily
“The two historical time periods that are comparable to where we are now in terms of polarization and division are the French Revolution before the revolution and the United States before the civil war… Now we’re about to do the same thing [automating] to millions of retail jobs, call center jobs, fast food jobs and, most destructively, trucking jobs in the coming years … When I talked to other mainstream political candidates, no one seemed to want to focus on the enormity of the reality that’s ahead for America.” – Andrew Yang, Democratic presidential candidate
“There’s scientific consensus that the lives of children are going to be very difficult. And it does lead young people to have a legitimate question: is it okay to still have children?” – Rep. Alexandria Ocasio-Cortez (D-NY)
What I’m Looking at this Morning
“The president sees this country [Venezuela] with extraordinary economic potential, which has been run into the ground. I think he believes some of these issues in the Middle East are intractable and just can’t be fixed. But he actually thinks Venezuela and the western hemisphere can [be fixed].” – Sen. Marco Rubio (R-FL)