Good morning. Here’s your Daily SITREP for Wednesday, 30 August 2023.
TODAY’S BRIEFING:
- READ TIME: 5 Minutes, 7 Seconds
- Inside the Beltway
- (1) GOP Study Committee Releases Shutdown Strategy Memo
- (2) Biden Sends More Crisis Money to NYC Than Border States
- Domestic INTSUM
- (3) Druckenmiller: Recession is Still Ahead
- (4) U.S. Consumer Confidence Falls to Recession Levels
- (5) Yellen, Harris Promote Unions on Joint Call
- Global SITREP
- (6) Gabon Military Seizes Power During Coup
- (7) India: U.S. Dollar Dominance Not Going Anywhere
- (8) U.K. Foreign Secretary Heads to Beijing
- (9) Foxconn Founder Enters Taiwan Presidential Race
INSIDE THE BELTWAY
- (1) GOP STUDY COMMITTEE RELEASES SHUTDOWN STRATEGY MEMO: In a strategy memo released yesterday, the Republican Study Committee said House Republicans should push for a Continuing Resolution (CR) that does not put rank and file members under pressure from the threat of a holiday shutdown and the CR should be packaged with individual appropriations bills already passed in the House.
- The Republican Study Committee added that House Republicans could use a CR to reverse “Biden’s disastrous policies” on energy, the border crisis, and social issues.
- Why It Matters: This strategy document outlines the path to a shutdown. House Republicans do not have leverage over the Democrat-controlled Senate or the White House to get policy priorities passed, and getting cuts while increasing defense spending is likely a non-starter for Democrats. House Freedom Caucus Republicans have not released a new statement on a possible shutdown since their initial memo saying they would oppose any CR or spending bills passed without cuts and that didn’t address the border crisis, so expect Freedom Caucus members to fight any CR that is likely to appeal to Democrats. – R.C.
- (2) BIDEN SENDS MORE CRISIS MONEY TO NYC THAN BORDER STATES: Republican and Democrat lawmakers in border states said their states have been “deprioritized” by the Biden administration, which sent $104 million to the New York City government to care for newly arrived migrants – more than the money sent to Arizona and Texas combined.
- Rep. Juan Ciscomani (R-AZ) said this was “just another example of the Biden administration abandoning” border communities.
- Why It Matters: Interior Democrat-run states and local governments, many of which declared themselves immigration sanctuaries, are panicking over experiencing a fraction of the impact of the border crisis that states on the southwestern border have felt. New York is a political patronage center for Democrats, which explains why more than one-third of emergency funding from DHS for the border crisis flowed to the NYC government alone. – R.C.
DOMESTIC INTSUM
- (3) DRUCKENMILLER: RECESSION IS STILL AHEAD: Billionaire investor Stanley Druckenmiller, who has averaged a 30% annual return for three decades without a losing year, is convinced that a recession is on the way.
- “To me, the [recession] probabilities haven’t changed,” Druckenmiller said in a recent interview.
- Despite a coming recession, Druckenmiller remains heavily invested in pockets of the stock market, including tech, healthcare, and consumer staples.
- Why It Matters: Druckenmiller is probably right about the economy and his investment strategy: A recession will likely hit the United States in 2024. But some sectors – Druckenmiller’s healthcare and consumer staples stocks – should still perform well through the recession. – H.B.
- (4) U.S. CONSUMER CONFIDENCE FALLS TO RECESSION LEVELS: U.S. consumer confidence dropped to near-recession levels in August, far worse than the modest drop expected by analysts.
- The biggest drops in consumer confidence were among households making $100,000 or more per year and households earning less than $50,000.
- Discount furniture retailer Big Lots reported on yesterday’s earnings call that “the lower income customer is under significant pressure,” forcing these customers to delay or cut spending.
- Why It Matters: Many U.S. consumers struggle with credit card debt and higher prices, especially for groceries and gasoline. But they won’t get any relief, as interest rates will remain high, and another round of inflation is starting. This will mean lower consumer confidence and spending, likely leading to a 2024 recession. – H.B.
- (5) YELLEN, HARRIS PROMOTE UNIONS ON JOINT CALL: Vice President Kamala Harris and Treasury Secretary Janet Yellen promoted labor unions as a key economic benefit.
- According to a Treasury report released on Monday, labor unions raise wages by 10-15% over non-union wages.
- Meanwhile, union membership has fallen to a record low, according to the report.
- Why It Matters: Democrats are widely seen as trying to win back blue-collar voters from the Republican Party. In February, President Biden asked a Democrat audience if they’d ever expected blue-collar workers to switch voting preference to Republicans, as they did in the 2016 and 2020 elections. More importantly, Democrats see an expansion of labor unions as key to gaining more political muscle. Meanwhile, progressive and socialist groups have for years pushed a return to union militancy for the same reason. – M.S.
Global SITREP
- (6) GABON MILITARY SEIZES POWER DURING COUP: Military leaders in the central African country of Gabon are reporting they’ve taken control of the government following the re-election of President Ali Bongo.
- Gabonese military officers appeared on state television and said they ended the Bongo family’s 53-year rule due to fraudulent election results.
- Gabon’s borders are reportedly closed while the military junta dissolves government institutions.
- Why It Matters: Gabon is yet another former French colony experiencing a military coup. This story broke early this morning and is still developing. However, Russian officials said they were watching the situation closely. – M.S.
- (7) INDIA: U.S. DOLLAR DOMINANCE NOT GOING ANYWHERE: Indian oil and gas minister Hardeep Singh Puri expressed doubts about de-dollarization, adding that dollar dominance won’t end anytime soon.
- “I think the Indian rupee should be the lead currency in the world, but I’m also a realist. The dollar’s preeminence and the dollar’s current position, I don’t know what kind of change would be affected, but I don’t see it… It’s not so easy,” Puri said.
- Why It Matters: India is the main opponent of a BRICS common currency as they seek to internationalize the use of the rupee. While India has agreed to settle oil trade with Russia in the Chinese renminbi, senior officials continue to express doubts about de-dollarization. – M.S.
- (8) U.K. FOREIGN SECRETARY HEADS TO BEIJING: Britain’s Foreign Secretary James Cleverly is headed for Beijing on Wednesday to patch up relations between the two countries.
- The visit will be the first for a British foreign secretary in five years.
- Cleverly will meet his Chinese counterpart Wang Yi and Vice President Han Zheng.
- Why It Matters: Cleverly’s visit is another in a series by Western political leaders to plead with Beijing for continued access to its economy and industrial capacity. The near-weekly stream of Western officials, hat in hand, has had little effect on Beijing’s increasingly bellicose language towards the Western liberal rules-based order. Despite the Western entreaties to return to the days of globalism, Beijing has its own interests, which are primarily centered around toppling U.S. hegemony and its “rules-based order.” – M.M.
- (9) FOXCONN FOUNDER ENTERS TAIWAN PRESIDENTIAL RACE: Foxconn founder Terry Gou announced he will run for President in opposition to Taiwan’s ruling Democratic Progressive Party (DPP).
- The DPP candidate, Lai Ching-te, is currently up 26 points in polls.
- Gou previously bowed out of the race for the Kuomintang nomination but announced his run as an independent on Monday.
- Why It Matters: Gou, who is worth over $7 billion, is entering the race as a peace candidate opposed to the DPP’s pro-independence agenda. Gou has close ties with China and has considerable financial assets on the mainland – a potential conflict of interest that he dismissed during the announcement. It is likely that China will seek to exploit Gou’s candidacy in order to build an anti-DPP coalition to further its aim of a peaceful reunification of Taiwan. – M.M.
— END REPORT
M.S. indicates analyst commentary from Mike Shelby
M.M. indicates analyst commentary from Max Morton
J.V. indicates analyst commentary from Jared Vaughn
R.C. indicates analyst commentary from Robert Cook
H.B. indicates analyst commentary from Harrison Burge
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