Good morning. Here’s your Daily SITREP for Thursday, 12 October 2023.
- READ TIME:
- Inside the Beltway
- (1) Comer: House to Probe Biden’s “Secret Nuclear Deal”
- (2) Biden Admin Floating Plan to Take Back Iran Oil Revenue
- Domestic INTSUM
- (3) Bank of America: Anti-Obesity Drugs Making an Economic Impact
- (4) Another Wave of Inflation Building
- (5) UAW Strikes Spread to Defense Contractor
- (6) NRC: Nuclear in a “Now or Never” Moment
- Global SITREP
- (7) Western Oil Sanctions Push U.S. Adversaries Closer Together
- (8) Chinese Elite Promise to Enforce Their Laws Internationally
- (9) Hamas Leader Calls for International “Day of Rage”
- (10) Israel Says No Humanitarian Break in Siege
INSIDE THE BELTWAY
- (1) COMER: HOUSE TO PROBE BIDEN’S “SECRET NUCLEAR DEAL”: House Oversight Committee Chair James Comer (R-KY) announced an investigation into the Biden administration’s “efforts to conceal details about its ongoing secret nuclear negotiations with the Islamic Republic of Iran from Congress” and the possible compromising ties of Biden officials to Iran.
- Comer added that recent concessions to Iran made by the Biden administration may have violated the Iranian Nuclear Review Act.
- Why It Matters: The effort to conceal this “secret nuclear deal” includes what appears to be an attempt to sweep the investigation of Biden Iran envoy Robert Malley, amid allegations of mishandling classified materials, under the rug. Following Hamas’ attack on Israel over the weekend, the Biden administration is now stuck with what should be a major scandal that the U.S. government has been infiltrated by an Iranian spy ring while Biden’s own officials say that Iran “knew something was coming.” – R.C.
- (2) BIDEN ADMIN FLOATING PLAN TO TAKE BACK IRAN OIL REVENUE: Biden administration officials said they are leaving the door open to refreezing $6 billion in Iran oil revenue previously unfrozen as part of a prisoner swap deal in September after bipartisan calls to take the money back.
- An official said there was not yet evidence that Iran directed the attack on Israel by Hamas or knew detailed plans ahead of time. However, intelligence agencies believe Iran knew Hamas was plotting some action against Israel.
- Why It Matters: This plan to refreeze Iran’s oil revenue is an attempt to get out ahead of criticism that this money freed up Iran to spend $6 billion it would have spent on food and aid to further its own foreign policy in the region through proxies like Hamas. Biden officials are already scrambling to get ahead of this potential scandal, saying “not a single dollar” from this money has been spent and ignoring that money is fungible. – R.C.
- (3) BANK OF AMERICA: ANTI-OBESITY DRUGS MAKING AN ECONOMIC IMPACT: Anti-obesity pharmaceuticals – also known as GLP-1 drugs – are gaining popularity in the U.S., which prompted Bank of America analysts to forecast the economic impact across several industries.
- Anti-obesity drugs lower appetite and reduce food cravings, which will reduce total U.S. calorie consumption by 1-3% by 2030, according to Bank of America’s models.
- The highest risk industries from anti-obesity drugs are alcoholic beverages, non-alcoholic beverages, and pre-packaged foods.
- Restaurants won’t be as impacted since consumers will still prioritize convenience, taste, and the social connections of eating out, Bank of America analysts wrote.
- Why It Matters: Bank of America’s forecast is that 17% of the U.S. adult population will be on anti-obesity drugs by 2030, compared to about 0.4% today. This growth will have a deep impact on the U.S. economy. For Early Warning subscribers, tomorrow we’ll cover other industries that will be affected, including a surprising one, and we’ll reveal the names of publicly traded companies that may gain or lose revenue from wider use of these drugs. – H.B.
- (4) ANOTHER WAVE OF INFLATION BUILDING: The U.S. September Producer Price Index (PPI) – which measures costs for finished goods that producers pay – increased more than economists expected yesterday, raising the chances that a second wave of inflation is coming.
- Higher gasoline prices accounted for the surge in the PPI.
- The U.S. Labor Department will release the more closely watched Consumer Price Index (CPI) today.
- Why It Matters: Markets view the PPI as a leading indicator for inflation, and the Federal Reserve monitors both indices for their interest rate decisions. Unlike mainstream economists, we’ve long held that both inflation and interest rates will continue to rise since we’re dealing with commodity shortages and supply-side issues that are outside the Fed’s control. – H.B.
- (5) UAW STRIKES SPREAD TO DEFENSE CONTRACTOR: The United Auto Workers (UAW) Union said 1,100 members in three states who work for General Dynamics voted by a 97% margin to authorize a strike when their contract ends on 22 October.
- The UAW strike expanded to Ford’s most profitable truck plant in Kentucky after 8,700 UAW members walked off the job yesterday evening.
- Why It Matters: The fight between the UAW and automakers, and now General Dynamics, continues to be an endurance race. The UAW escalating the strike to now include Ford’s most profitable truck plant could be a sign that the union’s strike fund is running out faster than automaker inventories. – R.C.
- (6) NRC: NUCLEAR IN A “NOW OR NEVER” MOMENT: Bradley Crowell, a Democrat on the Nuclear Regulatory Commission (NRC), said the nuclear power industry is facing a “now or never moment” because policies and political support are favorably aligned like never before for nuclear power to succeed.
- Crowell added that the nuclear industry is also confronting a wave of retirements, internal silos that limit knowledge sharing, and skeptical communities that could push back on advanced nuclear reactors.
- Why It Matters: A previous attempt by the NRC to support a “nuclear renaissance” in the early 2000s was undercut by cheap natural gas prices, renewables, and increased construction costs. With natural gas prices expected to rise and renewables unable to replace lost power generation capacity with coal-fired plants slated to be shut down in the next year, nuclear power has the potential to grow. – R.C.
- (7) WESTERN OIL SANCTIONS PUSH U.S. ADVERSARIES CLOSER TOGETHER: China has saved nearly $10 billion this year by purchasing oil from countries under Western sanctions, according to data from traders and ship trackers and reported by Reuters.
- China’s savings are a fraction of its overall oil import costs, but these savings matter for independent refiners that are “opportunistic buyers and actively look for bargains,” said the global head of demand research at S&P Global Commodity Insights.
- Discounted Russian, Iranian, and Venezuelan oil accounted for a quarter of China’s imports – up from 12% in 2020.
- Why It Matters: Western oil sanctions have not destroyed the oil revenue of Russia, Iran, and Venezuela as designed. China’s oil purchases, which were a lifeline for the sanctioned countries’ economies, reveal that U.S. policymakers did not understand the limits of their economic power and the geopolitical consequences. China has now forged closer alliances with oil exporters due to these Western sanctions. – H.B.
- (8) CHINESE ELITE PROMISE TO ENFORCE THEIR LAWS INTERNATIONALLY: Chinese media is touting Chinese authorities subjugating an Australian national to Chinese laws. The Chinese Vice President’s alma mater promises to enforce Chinese laws outside of their borders.
- Cheng Lei, a Chinese-born Australian citizen arrested for espionage, just finished her prison sentence in China and has been deported to Australia.
- The Director of Australian Studies at East China Normal University, one of China’s top universities, said that “anyone who violates Chinese laws will be dealt with accordingly, whatever his or her nationality is,” and that this should not concern Western media.
- Why It Matters: While it is unnerving to see a budding empire enforce laws outside its borders, this move is also likely to drive China’s neighbors away from them and into its rivals’ spheres of influence. China’s neighboring nations have large Chinese diaspora that serve as potential targets of the laws but also law enforcement if the Chinese Communist Party decides that other nations must be subject to their laws as well. – J.V.
- (9) HAMAS LEADER CALLS FOR INTERNATIONAL “DAY OF RAGE”: Head of the Hamas Diaspora Office and founding member Khaled Mashal called for Muslims across the globe to “be martyrs for al-Aqsa” in “the Friday of al-Aqsa Flood” on 20 October.
- Mashal also called for donations from the Muslim diaspora for Hamas fighters in Gaza in what he called “financial Jihad.”
- Senior Hamas official Ali Baraka said Hamas had planned the attack on Israel for the last two years, and any future prisoner exchange would include Hamas members imprisoned in the U.S. and Europe.
- Why It Matters: Hamas, Hezbollah, and Iranian intelligence services have a presence in the U.S., and more “illegals” have very likely crossed the southern border into the U.S. with the potential to act as sleeper cells. Hezbollah is involved in the narcotics trade in Latin America, ranging from the tri-border area between Argentina, Brazil, and Paraguay to Mexico. If Hamas and Hezbollah seek to draw the U.S. into war in the Levant, they could conduct an attack against U.S. personnel and American tourists in Europe or the Middle East. Amid already high domestic tensions between pro-Palestinian and pro-Israel political factions, Hamas militants could potentially conduct attacks within the United States. – R.C.
- (10) ISRAEL SAYS NO HUMANITARIAN BREAK IN SIEGE: Israeli officials refused calls from international aid organizations for a humanitarian break in the current siege of Gaza.
- Officials said humanitarian assistance could resume only after Hamas released all hostages.
- The Israeli death toll climbed past 1300 on Wednesday – mostly civilians killed in their homes or cars by Hamas terrorists.
- Why It Matters: The Biden admin on Wednesday said there were 20 Americans unaccounted for and that some or all were being held as hostages by Hamas. A hostage rescue operation by U.S. forces into Gaza would be extremely difficult. If the Israeli government can withhold humanitarian aid in exchange for hostages, it could keep the U.S. from having to commit military forces to the conflict. – 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
The greatest risk is not preparing for the future, but the next greatest risk is preparing for the wrong things.
Join the Forward Observer Intelligence team as they discuss the latest threats and early warning indicators concerning agriculture and the food supply, oil and energy, the power grid, economics and finance, the supply chain, and geostrategic shocks.
Get our Early Warning report every Friday here: https://forwardobserver.com/subscribe