Good morning. Here’s your Early Warning for Thursday, 28 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.
Trouble in Paradise: Canadian Prime Minister is under fire after his former attorney general testified that he pressured her to drop charges against a company led by a personal friend. Some are talking resignation.
Bye Bye Bibi? Israeli Prime Minister Benjamin Netanyahu could be facing criminal charges today as his attorney general wraps up a corruption investigation. Regardless of what happens, Netanyahu isn’t expected to resign — but today’s outcome could swing April elections and derail President Trump’s foreign policy in the Middle East.
A taste of what’s to come: House Democrats yesterday passed a universal background check bill. The Senate isn’t expected to pass it, but it does show exactly where Democrats’ priorities are once they take back the Senate.
The President ended the Kim summit earlier than expected after a deal was not reached. “Basically [Kim] wanted the sanctions lifted in their entirety, but we couldn’t do that. … Sometimes you have to walk.” President Trump is headed back to D.C. today.
The Five: Five House Committees — Financial Services, Intelligence, Judiciary, Oversight, and Ways and Means — are now looking into President Trump’s business dealings.
Secretary Pompeo will be in Vietnam and the Philippines from 24 February to 01 March. Secretary Pompeo is scheduled 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 John Stennis (CVN-74) was last reported as in the Gulf of Tonkin.
The Ronald Reagan (CVN-76) is forward deployed to Yokosuka, Japan.
Significant House Activity:
- Nothing significant to report.
Significant Senate Activity:
- Hearing to examine China’s impact on the U.S. education system (Homeland Security & Governmental Affairs Subcmte on Investigations)
* Only events pertinent to national security are listed. Significant reporting will appear in this week’s Strategic and National Intelligence reports.
URGENT: The Debt Ceiling is a major issue coming up. The Treasury is scheduled to run out of money this September unless Congress approves raising the debt ceiling by 02 March. Congress may vote to suspend the debt ceiling, altogether, which would remove bars to how large the national debt becomes. In 2011, Democrats and Republicans fought over the debt ceiling, which led Standard & Poor’s to downgrade the U.S. credit rating. Politics could again influence the upcoming debate.
Ray Dalio, who warned at the beginning of 2018 that he saw a recession on the horizon in 2020, recently scaled back his concern. Instead of a 50 percent chance of recession before the 2020 elections, he now sees a 35 percent chance. He continued: “In summary while the Fed probably doesn’t have enough firepower to offset a deep recession, the big sag that we expect is probably manageable.” (Analyst Comment: The Fed’s recent decision to delay further interest rate hikes has a big impact. There’s no longer widespread fear that a hawkish Fed will hike us into a recession.)
The Chinese economy continues to slow. The latest data shows China’s factories fell to teir lowest activity levels in three years and export orders slowed to the lowest level since 2011.
Far Left Daily
“There’s a real thirst to win [the Senate] in 2020, and I’m getting good vibes. There’s going to be a fervor I think for taking back the Senate this election the way there was taking back the House in the last one… [The chances are] better than last time. It’s not as good as two years from now. But it’s good.” – Sen. Chuck Schumer
“We’re working hard to make statehood a top-tier issue. Puerto Rico moving up the primary can only help highlight the issues that are important: the unequal treatment of citizens and the statehood issue.” – Manny Ortiz, advisor to Puerto Rico’s governor
“Respect for Puerto Rico means you have the right to determine your association with the United States, period. Puerto Rico deserves self-determination. And on this question, I will support the decision of the people of Puerto Rico.” – Sen. Elizabeth Warren
What I’m Looking at this Morning
“The program discourages saving, since unspent debit-card balances will be clawed back monthly. It also punishes people who decide to work more.” – Adam O’Neal, describing Italy’s new universal basic income scheme