Daily SITREP: Druckenmiller: The Worst Geopolitical Situation of My Lifetime (Tue, 14 November 23) – Forward Observer

Daily SITREP: Druckenmiller: The Worst Geopolitical Situation of My Lifetime (Tue, 14 November 23)


Good morning. Here’s your Daily SITREP for Tuesday, 14 November 2023.


  • READ TIME: 6 Minutes, 23 Seconds
  • Inside the Beltway
    • (1) D.C. Deploys National Guard Ahead of Major Rally
    • (2) Johnson Pulls for Dem Support on CR Today
    • (3) House Votes Down Mayorkas Impeachment
  • Domestic INTSUM
    • (4) Gundlach: Recession Likely by Mid-2024
    • (5) Druckenmiller: The Worst Geopolitical Situation of My Lifetime
    • (6) Haley Bolstering Donor Rolls as DeSantis Falls Behind
    • (7) Stacey Abrams’ NGO Accused of Financial Irregularities
  • Global SITREP
    • (8) Minesweeping Force at the Strait of Hormuz
    • (9) India, Russia Agree to Boost Defense Cooperation
    • (10) U.S., Indonesia Sign Defense Cooperation Pact


  • (1) D.C. DEPLOYS NATIONAL GUARD AHEAD OF MAJOR RALLY: The D.C. National Guard is mobilizing in support of police as the city braces for disruption between pro-Israel and pro-Hamas factions.
    • The “March for Israel,” backed by the Jewish Federations of North America, has requested a permit for up to 60,000 attendees, but some groups expect 100,000 to show up.
    • The Department of Homeland Security (DHS) has classified the rally as “Level 1”, which is the agency’s highest risk designation. While there are no specific threats, officials are urging vigilance.
    • Why It Matters: We’ve not seen any major effort to organize a counter-protest, but judging by previous large-scale pro-Palestinian rallies in D.C., counter-protestors could make a sizable appearance. – M.S.
  • (2) JOHNSON PULLS FOR DEM SUPPORT ON CR TODAY: The House is expected to vote on Speaker Mike Johnson’s (R-LA) “laddered” continuing resolution (CR) today under a suspension of the rules procedure, requiring a two-thirds majority of the House to approve.
    • House Minority Leader Hakeem Jeffries (D-NY) said he has not decided if the Democratic caucus will vote for or against the CR and that they would discuss a path forward ahead of the vote today.
    • Why It Matters: Johnson is leaning on Democrat support to pass his stopgap by using the Suspension of the Rules procedure and could be setting up his own ouster from the Speakership in a repeat of McCarthy’s removal in October. House Democrats have remained neutral so far, and the White House said last night it will now “wait and see” instead of threatening a veto. – R.C.
  • (3) HOUSE VOTES DOWN MAYORKAS IMPEACHMENT: The House voted 209-201, including five Republicans, yesterday to refer Rep. Marjorie Taylor Greene’s (R-GA) articles of impeachment against Homeland Security Secretary Alejandro Mayorkas to the Homeland Security Committee.
    • Greene said Mayorkas has failed to maintain operational control of the border and said voters would “hold accountable” Republicans who voted to refer the impeachment to committee.
    • Why It Matters: The House is focused on the approaching shutdown deadline on 17 November, this Friday, and Republican leadership likely wants to avoid scuttling a potential deal with Democrats on the continuing resolution hitting the floor today. Similar to the Biden impeachment, the political expediency to move forward with removing Mayorkas may be gone as calls for Biden to step down increase, and a Republican White House would replace Mayorkas in 2025. The impeachment effort against Mayorkas could return in early 2024 when Republicans are expected to make a decision on the impeachment of President Biden. – R.C.


  • (4) GUNDLACH: RECESSION LIKELY BY MID-2024: Jeffrey Gundlach, founder and CEO of DoubleLine Capital, predicts that the U.S. economy will be in a recession by the second quarter of 2024, and rising rates and deficits will further hurt the economy.
    • “We have a lot of major indicators that have been in recessionary signaling for a year-plus,” Gundlach said.
    • “About $17 trillion of them [bonds] come due over the next 36 months, so that means if we keep interest rates higher, that yield – the sort of 1-2% are going to be reissued at 300 basis points [3.00%] or more higher interest rates. And on $17 trillion, that’s another $500 billion [in interest expenses],” Gundlach added.
    • Annual deficits as a percentage of GDP could rise from 6-8% to easily 9%, according to Gundlach.
    • Why It Matters: Gundlach and other investors’ 2024 recession concerns are warranted, but Gundlach is betting on business as usual in Washington, D.C., regarding Congressional spending. New House Speaker Mike Johnson, the House Freedom Caucus, and other fiscal hawks have signaled that there’s a fiscal revolution brewing, and trillion-dollar deficits will not be the norm under this Congress. – H.B.
  • (5) DRUCKENMILLER: THE WORST GEOPOLITICAL SITUATION OF MY LIFETIME: Billionaire investor Stanley Druckenmiller, 70, said that investors face a difficult combination of fiscal recklessness, supply chain problems, and the “worst geopolitical situation I’ve seen in my lifetime.”
    • “For the first time, and it’s a very low probability, you’ve got to put the potential outcome of world war on the table. [It’s] not exactly the environment that excites me about paying 20-30% above the [price to earnings] multiple for equity prices,” Druckenmiller said.
    • “Something is going to break… oil, interest rates, and the dollar are up, [which] has never been good for the economy,” according to Druckenmiller.
    • Why It Matters: Fund managers must remain invested in this environment on behalf of their clients, as Druckenmiller stressed. For this reason, U.S. financial markets – still the world’s haven – could stay elevated and be further disconnected from the slowing American and global economy. – H.B.
  • (6) HALEY BOLSTERING DONOR ROLLS AS DESANTIS FALLS BEHIND: Presidential Candidate Nikki Haley poached 250 donors from other Republican primary candidates, including billionaire Harlan Crow, and jumped into second place in some early primary states, including New Hampshire.
    • Citadel’s Ken Griffin said, “Nikki Haley has the foreign policy experience we need right now” and that he is considering supporting Haley in the Republican primary.
    • Why It Matters: Nikki Haley is emerging as the front-runner-up as DeSantis’ campaign continues to fall apart. Haley has the “correct” foreign policy opinions that align with establishment Republican donors and will likely become the alternative primary candidate for “Never Trump” Republicans and donors. Republicans will have difficulty getting an alternative to Trump outside of the primary, as the Republican Party doesn’t have Superdelegates who can put their thumb on the scale at the Republican Convention and choose a presidential candidate favored by the party. – R.C.
  • (7) STACEY ABRAMS’ NGO ACCUSED OF FINANCIAL IRREGULARITIES: The voting rights non-government organization (NGO) the New Georgia Project, founded by Stacey Abrams, is under investigation for violating restrictions on political activity and poor financial record keeping and is in a dispute with the IRS over payroll taxes.
    • “We hire people who live on the margins, primarily because politics has failed them. And we have to deploy tactics that are not necessarily consistent to what POLITICO might have,” civil rights attorney and current board chair Francys Johnson said.
    • Why It Matters: The Democratic Party uses a vast network of non-profit NGOs like the New Georgia Project for “get out the vote” efforts, ballot harvesting, and to pay the legal fees and bail for leftwing demonstrators and rioters. Both parties also use these non-profit NGOs to fill campaign coffers without the same scrutiny and spending rules applied to direct campaign donations. – R.C.


  • (8) MINESWEEPING FORCE AT THE STRAIT OF HORMUZ: A U.S.-led international naval force has assembled in the Gulf of Oman (GOO) at the mouth of the Strait of Hormuz.
    • The Eisenhower Carrier Strike Group (Ike), with an Italian Frigate in tow, reached the GOO over the weekend.
    • The U.S. Coast Guard PATFORSWA, U.S. Navy Task Force 52 Minesweepers, and Royal Navy Operation Kipion all have at least some units with the Ike but may have all assigned units deployed.
    • Why It Matters: The United States is preparing to reopen the Strait of Hormuz if Iran shuts it down. This action can happen independently of war, as we saw with Operation Praying Mantis. However, all additional task forces joining the Ike Strike Group are stationed in Bahrain. If every unit they have has joined the Ike, this signals preparation for a much larger regional war that would leave these units vulnerable to destruction or capture. Both potential outcomes signal additional instability in the region. – J.V.
  • (9) INDIA, RUSSIA AGREE TO BOOST DEFENSE COOPERATION: Indian and Russian officials agreed this week to renew and boost cooperation along economic, defense, energy, and regional security lines.
    • Despite their growing ties with Russia, India signed a major defense cooperation pact with the United States earlier this year, which included joint development of munitions and military technology. 
    • In 2+2 meetings last week, U.S. Secretary of State Antony Blinken and Defense Secretary Lloyd Austin met with their Indian counterparts to reaffirm the U.S.-India Comprehensive Global Strategic Partnership framework.
    • Why It Matters: The U.S. is attempting to push the Indian military away from defense ties with Russia. Last week’s meeting with U.S. officials comes as India remains the world’s largest arms importer, and two-thirds of their military arms purchases over the past two decades have come from Russia. India is still awaiting delivery of two more Russian-made S-400 air defense batteries to increase security against China. India is remaining true to its India First policy, working with any country that can help it bolster security against a potential conflict with China. – M.S.
  • (10) U.S., INDONESIA SIGN DEFENSE COOPERATION PACT: U.S. President Joe Biden and Indonesian President Joko Widodo announced a new defense cooperation pact yesterday during Widodo’s visit to the White House.
    • Indonesia earlier this year also agreed to renew military exercises with China as Beijing pours investment money into the country’s economic and mining infrastructure.
    • Why It Matters: The U.S. and China are both in a foot race to secure defense cooperation and access to Indonesian materials like nickel, cobalt, and other materials critical to both countries’ defense industrial base. Like many other countries in the region, Indonesia remains split between their economic reality – China is their top trading partner – and their desire to avoid becoming mired in the U.S.-China Cold War. – M.S.


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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