Fulcrum Perspectives
An interactive blog sharing the Fulcrum team's policy updates and analysis.
A Site That Never Fails To Inspire…
I took this photo driving home from the class I teach at the Catholic University School of Business last night. As I sat there at the traffic light, it got me thinking about where America is today.
It seems these days that for so many Americans - too many - there is a sense of growing darkness and gloom about the state of our nation now and for the future. But looking at the Capitol tonight and thinking of our history and how we have been through so much in only 246 years as a nation, I’m immediately struck by the fact there is nothing we cannot overcome. We have packed a lot of challenges to our democracy into these two and half centuries. History shows us this (see my review on James Monroe - read that book - those were intensely challenging times, much more than today).
Therefore, I believe despite the heightened - indeed, at times, irrational and hysterical - political tensions, the loud and emotional debates about the very fabric and future of our country, we need to remember there stands this majestic building - a place, when created, was unlike any other in the world. A place where we send someone from our community to represent us, to speak for us, to argue and debate our collective future guided by our inspired Constitution, our mutual commitment to the Rule of Law, and our passionate common love for and defense of freedom and democracy. This building is that unique institution that has inspired so many other countries to try to replicate what we have - and it is a place where deadly despots and dictators around the world for 246 years have loathed, feared, and hated.
This is still the greatest nation in the world because we have the freedoms we have every day - and respect the freedoms of everyone else around the world. We will work through all the challenges. It is what we do in America and has always done. And that leaves me believing our greatest years are ahead of us, not behind us, and we will, as Ronald Reagan would remind us, remain that Shining City on a Hill. What a blessing to be able to be reaffirmed in all these beliefs on a cold winter night in February driving home.
Read Around the World in a Weekend: February 11, 2022
Please find our recommended weekend reads covering key issues and events around the world. We hope you find these informative, useful, and perhaps even fun. Please let us know if you want us to add anyone to our mailing list.
Russia/China
> Atlantic Council “The world’s top two authoritarians have teamed up. The US should be on alert”
The two leading authoritarians of our time have declared unprecedented common cause—perhaps even a de facto security alliance—with aspirations of shaping a new world order to replace the one fashioned by the United States and its partners after World War II. Putin and Xi put those aspirations to paper (see next post below).
> Office of the President of Russia “Joint Statement of the Russian Federation and the People’s Republic of China on the International Relations Entering a New Era and the Global Sustainable Development”
Following their meeting in Beijing last week, Russian President Putin and Chinese President Xi released a 5,300-word joint statement outlining their vision for the world.
> Foreign Policy “China Can’t Carry the Russian Economy”
Putin’s courting of Beijing has paid more diplomatic than economic dividends. If the world – and the EU in particular – do implement severe sanctions as the result of an invasion of Ukraine, China cannot pick up the economic difference.
Ukraine
> Center for Strategic and International Studies “Hunger on the Heels of a Possible Ukraine Invasion”
Both Russia and Ukraine are suppliers of, and markets for, major agricultural commodities. If diplomacy fails, how could sanctions and conflict affect food security—for these countries, the region, and the United States? Of note: 70 percent of Ukraine is dedicated to agriculture and 95 percent of Ukraine’s wheat production is winter wheat.
United States
> The White House “Indo-Pacific Strategy of the United States”
Late this afternoon, the White House released its long-awaited Indo-Pacific strategy blueprint. The report is the first regional strategy of the Biden Administration and is seen as the plan for dealing with an increasingly aggressive China. Alongside the report, the White House released an executive summary/fact sheet which you can read here.
> FiveThirtyEight “What Redistricting Looks Like in Every State”
Although Republicans went into the redistricting cycle with control over drawing more districts, it is actually Democrats who have gained ground from the process at this point. So far, redistricting has created 11 more Democratic-leaning seats nationally, three fewer Republican-leaning seats and eight fewer highly competitive seats. This is due to aggressive map-drawing by Democrats in states such as New York as well as court decisions overturning Republican gerrymanders in Ohio and North Carolina.
China
> The Atlantic “One by One, My Friends Were Sent to the Camps”
If you took an Uber in Washington, D.C., a couple of years ago, there was a chance your driver was one of the greatest living Uyghur poets. Tahir Hamut Izgil arrived with his family in the United States in 2017, fleeing the Chinese government’s merciless persecution of his people. Tahir’s escape not only spared him near-certain internment in the camps that have swallowed more than 1 million Uyghurs; it also allowed him to share with the world his experience of the calamity engulfing his homeland. Here is what he witnessed.
> China File “A Vast Network of ‘New Era Civilization Practice Centers’ Is Beijing’s Latest Bid to Reclaim Hearts and Minds”
Since 2018, the Chinese Communist Party has opened thousands of centers across the country aimed at bringing party ideology and governance down to the neighborhood level. "By intertwining practical services with Party theory,” the planning documents show, the CCP seeks to reassert itself as a source of well-being and meaning in individual and collective life, restoring an intimacy between 'the masses' and their rulers that decades of economic liberalization have worn thin.
> Science Magazine “A Beijing think tank offered a frank review of China’s technological weaknesses. Then the report disappeared”
The study, written and published by Peking University’s Institute of International and Strategic Studies and overseen by the Institute’s President, was quickly removed from its website after being published. However, copies of the report were downloaded and are being widely circulated. Specifically, the report says scientific “decoupling” would harm more than the United States. It acknowledges that China still lags the United States in key technologies—particularly high-end semiconductors, operating systems and software, and aerospace.
India
> Foreign Policy “Modi’s Foreign-Policy Juggling Act”
Prime Minister Modi put India on the map as a great power. But strategy problems are piling up and not getting any easier with the growing Russia/Ukraine tensions and China’s economic and political growth in the region.
Latin America
> The National Interest “Will Russia Send Missiles to Cuba?”
Russia-watchers have been quick to invoke the Cuban Missile Crisis precedent, which implies that Russia would station nuclear-tipped ballistic missiles of some type in the Caribbean. But history may not repeat itself.
> FIU Digital Commons “The Return of Geopolitics: Latin America and the Caribbean in an Era of Strategic Competition”
It has become clear that the idea of focusing U.S. foreign policy on strategic competition enjoys widespread bipartisan support. U.S. statecraft is increasingly directed at the threats posed by powerful state rivals—especially China—as opposed to Salafi-Jihadist extremists and other non-state actors. Yet geopolitical rivalry is not simply something that happens “over there” in the Indo-Pacific, Europe, and the Middle East. It also happens “over here,” within the Western Hemisphere.
> Americas Quarterly “What to Maker of Peru’s Latest Crisis”
In his first six months in office, Peruvian President Pedro Castillo has sworn in three different cabinets. And his newest Prime Minister resigned only four days after being sworn into office. What to make of the political chaos and the looming risk of Peruvian Congress moving to impeach Castillo?
Africa
> Brookings Institute “Addressing Africa’s Duel Challenges: Climate Change and Electricity Access”
Africa is working to address a number of sustainability challenges including preserving the forests of the Congo Basin – second only to the Amazon to absorbing CO2 emissions. But there is another challenge: Nearly 600 million Africans lack access to electric power.
> Carnegie Endowment for International Affairs “Latest Milestone for the Africa Continental Free Trade Area: The Pan-African Payment and Settlement System”
The Pan-African Payment and Settlement System (PAPSS) was launched January 13th and is seen likely to substantially reduce dependence on external currencies, and the associated financial volatilities. Moreover, cross-border transactions such as remittance transfer by migrants within Africa and exchanges among small businesses should be easier, quicker, and cheaper.
Technology
> Fortune Magazine “Is the metaverse takeover inevitable?”
Will most virtual meetings move from 2D camera image grids to the metaverse – a 3D space with digital avatars?
> The Atlantic “Beware the FOMO Bullies of Technology”
Are we living through a replay of the `90’s when most people just didn’t get “this internet thing” as we move to the Web3?
> AtlasVPN “TikTok Tracks Your Data the Most Out of Social Media Apps”
The Virtual Private Network (VPN) secure service conducted a survey of all the leading social apps and reports TikTok does the most tracking of users followed by YouTube.
Sustainability/Alternative Energy
> Fast Company “Inside the fight over electrifying the Postal Service’s cute new trucks”
Despite a Biden administration to electrify the entire federal fleet by 2027, the USPS is about to make a large purchase of new, gas-powered trucks. And even the electric version the post office is planning is arousing suspicion.
> Yale Environment 360 “It’s Not Just Climate: Are We Ignoring Other Causes of Disasters?”
Climate change is increasingly seen as the cause of natural catastrophes, from floods to famines. But a growing number of scientists are cautioning that blaming disasters solely on climate overlooks the poor policy and planning decisions that make these events much worse.
> Fast Company “These 12-mile-deep holes could convert power plants from fossil fuel to geothermal”
Using a new technology that employs energy waves to melt rock, the wells can do deeper than standard geothermal, potentially making the renewable energy work anywhere on earth.
Global Events This Week: February 13 -22, 2022:
This is Fulcrum Macro Advisors’ weekly calendar of key political and economic events we are watching in the coming week. We hope this is helpful. Please let us know if you have any questions.
✦ = Events of particular focus/note
Sunday, February 13:
Political Events -
o EU trade ministers hold informal meetings (Sunday and Monday)
o 55th Session of the Intergovernmental Panel on Climate Change
Economic Events -
o No reports/events of note
Monday, February 14:
Political Events -
✦ German Chancellor Scholz meets with Ukraine President Zelensky in Kyiv
✦ Russia-Belarus “Union Resolve” military drills in Belarus close to Ukraine’s border continue until February 20th (they began February 10th)
o Brazilian President Bolsonaro meets with Russian President Putin (14th – 17th)
o India’s Punjab, Goa, and Uttrakhand states hold assembly elections.
o Turkish President Erdogan visits Abu Dhabi
o EU trade ministers hold informal meetings
o APEC senior officials hold meeting through February 24th
o EU ministers for work, employment, and social affairs hold informal meetings
Economic Events -
o Japan GDP numbers, industrial production numbers
o China FDI
o Australian Central Bank minutes
o Singapore balance of trade numbers
o South Korea import/export numbers
o India CPI, manufacturing, balance of trade
o ECB President Lagarde speaks
Tuesday, February 15:
Political Events –
✦ German Chancellor Scholtz meets with Russian President Putin in Moscow
o German President Steinmeier meetings with Latvian President Levits in Riga
o Polish Foreign Minister and OSCE Chair Zbigniew Rau scheduled to meet with Russian Foreign Minister Sergei Lavrov in Moscow
o Mexico’s legislature finishes its session of debate on controversial electricity sector reform
Economic Events -
o UK December unemployment numbers
o Spain inflation rate figures
o Euro Area balance of trade; Q4 GDP growth rate
o Germany February ZEW survey economic sentiment index
o US New York Empire State Manufacturing Index, PPI numbers
o Argentina inflation rate
o China inflation rate and PPI
o Indonesia imports, exports, trade balance
Wednesday, February 16:
Political Events –
o NATO Defense Ministers meeting in Brussels
o Brazilian and Russian Foreign and Defense Ministers meet in Russia
o Informal meeting of EU ministers responsible for space
o South Africa’s High Court decides on former President Zuma’s appeal to remove lead state prosecutor from his long-standing corruption trial (to be confirmed)
o ASEAN Foreign Minister hold a retreat
Economic Events –
o China January CPI, PPI figures
o ECB non-monetary policy meeting
o UK CPI figures
o South Korea unemployment
o South Africa inflation rate
o EU industrial production figures
o Canada CPI, manufacturing and wholesale sales figures
o US retail sales (ex-autos), import/export prices, manufacturing, and industrial figures; NAHB housing market index, FOMC minutes
o Russia PPI numbers
o Japan balance of trade, machinery orders
o Australia employment figures
o US Federal Reserve releases minutes from January meeting
Thursday, February 17:
Political Events –
o The European Union and African Union host a joint summit in Brussels
o Brazilian President Bolsonaro in Hungary for meetings
Economic Events –
o Turkey’s Central Bank holds monetary policy meeting
o G-20 Finance Ministers and Central Bank Governors meet today and Friday
o Italy balance of trade figures
o US housing starts, building permits, weekly initial jobless claims
o Japan CPI
o Indonesia current account numbers
o ECB publishes Economic Bulletin
o Singapore exports, imports, NODX, trade balance
Friday, February 18:
Political Events –
o Munich Security Conference beings (goes until February 20th)
o. Greek Foreign Minister Dendias meets with Russian Foreign Minister Lavrov in Moscow
Economic Events –
o US January existing home sales, Conference Board leading index
o France unemployment rate
o UK January retail sales
o France inflation rate
o Germany Markit Composite PMI
o China current account
o EU current account, consumer confidence flash
o Italy current account
o Canada retail sales, ADP employment
o Russia full-year GDP 2021
Saturday, February 19:
Political Events –
o No events of note
Economic Events –
o No reports/events of note
Sunday, February 20:
Political Events –
o NATO holds “Dynamic Manta” submarine and anti-warfare exercises in the Mediterranean
o German President Steinmeier meets with Senegal President Sall
Economic Events –
o Australia Markit manufacturing, services, composite flash reports
Washington Week Ahead: February 7, 2022
Both the House of Representatives and Senate are in session this week. President Biden meets with German Chancellor Olaf Scholz today (Monday) to discuss strategy on dealing with Russia and the imminent threat of invasion of Ukraine.
Last week, the Senate failed to finalize draft Russian sanctions legislation. Democrats and Republicans are essentially in agreement on most of the provisions. Still, they cannot agree on whether to include sanctions on the Nord Stream II pipeline (Senate Republicans want to sanction the pipeline, Democrats are resisting to support President Biden’s decision last year not to sanction the pipeline – but a lot has obviously changed since then). We believe the meeting between President Biden and Chancellor Scholz today may offer a chance for a solution if Scholz agrees to shut off the gas pipeline if Russia invades.
Meanwhile, Congressional appropriations negotiations broke down – again – with the Federal Government facing a shutdown on February 18th. Last week, House and Senate Congressional appropriation leaders had hoped to reach a breakthrough and get to critical mass on the 2022 budget. That all fell apart by the end of the week, and it turns out they are somehow now further apart than where they were this time last week. The sparring is over Democrats who want to expand social spending, which Republicans oppose, and Republicans wanting “parity” for defense spending with an increase in social spending.
Timing now gets dicey as the House is out of session next week, so our expectation is the House will once again pass a temporary stop-gap measure to keep the government running until the end of March (and the Senate voting for it shortly after it comes over from the House).
Last Friday, the House passed the mammoth America COMPETES Act, a bill aimed to help the US better compete with China on all things tech, including offering $52 billion in semiconductor development subsidies. The bill now is over with the Senate, which passed a similar bill - the United States Innovation and Competition Act - last June only to see it languish and effectively die in the House for various political reasons. From a global perspective, China has been racing ahead in its state-sponsored spending for technology research and development. The most recent data available is from 2018 and, as the nearby chart shows, China is rapidly closing the gap the US. With Supply chain disruption and shortages in semiconductors, the situation has become more urgent for US competitiveness. From a domestic/political perspective, this is now a critical “must-do” for the White House and Democrats who desperately need a major legislative victory since the Build Back Better bill was (temporarily, we believe) shelved in December.
Investors should note that, like the Infrastructure bill passed last year, states are already aggressively stepping up to offer sizeable financial sweeteners to induce tech investment – something that will be quite formidable when Congress finally passes the COMPETES Act. We have been pointing to the recent announcement by Intel to build $20 billion in new chip manufacturing facilities in Ohio which offered $2 billion to assist Intel in construction costs. We see this as the “new intra-American Chip Race,” as virtually every state is already offering significant incentives to lure well-paying tech jobs.
Turning to the Federal Reserve, last week Board Chair Jay Powell’s official tenure as chair expired last week. He was named “Chair pro-tempore” until he gets a confirmation vote by the Senate Banking Committee and then a final confirmation vote by the full Senate. For those Fed watchers wondering what the hold-up is, here is what is going on: Senate Banking Committee Chair Sherrod Brown (D-OH) has decided to hold Powell’s – and Lael Brainard’s Vice Chair for Monetary Affairs – confirmation together with the three other nominees (Sarah Bloom Raskin for Vice Chair for Supervision, and Lisa Cook and Phillip Jefferson for Fed Governorships. Exactly why he is waiting to do this is unclear. Still, those worried something is going on behind the scenes regarding Powell’s confirmation, rest assured: We continue to believe Powell and Brainard will be confirmed by wide margins. Cook and Jefferson will, we believe, too, be easily confirmed. Raskin, however, continues to face significant opposition as virtually every Republican Senator is likely to oppose her due to her past views on how the Fed could pressure banks to “de-bank” the oil and gas sector.
This leads us to our final point: Democrats currently do not have 50 votes in the Senate, at least temporarily. Early last week, news broke that Senator Ray Lujan (D-NM) had a stroke. Only 49 years old, Lujan is expected to recover but will be recovering at least four to six weeks until he can return to the Senate. That means Democrats only have 49 votes to the Republican 50, forcing Senate Majority Leader Chuck Schumer (D-NY) to carefully reconsider the timing and vote count for a significant number of pending pieces of legislation and presidential nominations.
Please let us know if you have any questions.
Global Events This Week: February 6 - 12, 2022
This is Fulcrum Macro Advisors LLC's weekly calendar of key political and economic events we are watching in the coming week. We hope this is helpful. Please let us know if you have any questions.
Sunday, February 6:
> Political Events -
Costa Rica holds general elections
North Korea’s State People’s Assembly meets
Argentine President Alberto Fernandez meets with Chinese President Xi Jinping where is expected to request a $3 billion swap extension to strengthen Argentina’s reserves
Iranian Minister of Industry Reza Rahmani visits the United Arab Emirates
Sri Lankan Foreign Minister G.L. Peiris to begin a three-day visit to India
> Economic Events -
No reports/events of note
Monday, February 7:
> Political Events -
Chancellor Scholz meets President Biden in Washington D.C.
French President Emmanuel Macron meets Russian President Vladimir Putin in Moscow, Russia
US Secretary of State Anthony Blinken visits Australia for Quad Foreign Ministers Meeting, then on to Fiji, and then Hawaii for meetings with Japanese Foreign Minister Hayashi Yoshimasa and South Korean Foreign Minister Chung Eui-yong through February 13th.
German Foreign Minister Annalena Baerbock to meet with Ukraine Foreign Minister Dmytro Kuleba
French Foreign Minister Jean-Yves Le Drian and German Foreign Minister Baerbock meet with Ukraine Foreign Minister Kuleba in Kyiv
Austrian Foreign Minister Schallenberg, Czech Republic Foreign Minister Lipavsky, and Slovakian Foreign Minister Korcok meet with Ukraine Foreign Minister Kulebain in Kyiv
Poland’s President Andrzej Duda meets with European Commission President Ursula von der Leyen to discuss Russia/Ukraine tensions in Brussels
World Health Organization (WHO) Director-General Ghebreyesus and Commonwealth of Nations Secretary-General Patricia Scotland sign MoU on seven new areas of collaboration
Argentine President Fernandez meets Barbados Prime Minister Mottley in Bridgetown
U.S.-EU Energy Council to take place in Washington to discuss mutual clean energy transition issues as well as natural gas supply and pricing issues
30th anniversary of the signing of the Maastricht Treaty which laid the foundation for EU and monetary union.
> Economic Events -
China January services and composite PMI
Japan preliminary December leading index
Germany December industrial production
US December consumer credit
Indonesia GDP
Singapore Markit PMI Composite
European Central Bank President Christine LaGarde speaks at EU Parliament Committee on Economic and Monetary Affairs hearing
Tuesday, February 8:
> Political Events -
French President Emmanuel Macron to meet Ukrainian President Volodymyr Zelensky in Kyiv, Ukraine
Thailand to host and chair first round of 2022 meetings for Asia-Pacific Economic Cooperation forum through Feb. 27
European Commission to unveil proposal for Chips Act
Libya's House of Representatives to vote on new prime minister
> Economic Events -
Italy December retail sales
France December trade balance figures
US December trade balance
Japan Household Survey, January Economy Watchers Report
Hong Kong Market PMI Composite
Malaysia Industrial Production and Manufacturing Sales
National Bank of Poland monetary policy committee meets
Wednesday, February 9:
> Political Events -
Zbigniew Rau, Polish Foreign Minister and Organization for Security and Co-operation in Europe Chairman-in-Office, to arrive in Ukraine for a working visit through Feb. 11.
Treason trial against Kem Sokha, leader of Cambodia's former main opposition party, resumes
EU Health Ministers hold informal meeting to discuss initiatives related to various topics
> Economic Events –
US wholesale inventories report
Japan preliminary January machine tool orders, January PPI
Germany December trade balance
Italy December industrial production
Russia CPI figures
Reserve Bank of India monetary policy decision
Bank of Thailand monetary policy decision
Thursday, February 10:
> Political Events -
Russia and Belarus military conduct joint drills “Union Resolve” for 10 days
India’s Uttar Pradesh – India’s most populous state - holds legislative elections until March 7th
The Philippines to allow fully vaccinated international tourists to enter without quarantine
Spain to lift requirement to wear face masks outdoors
> Economic Events -
US January CPI weekly initial jobless claims, monthly budget statement
OPEC monthly oil market report
Japan domestic corporate goods index for January
Monetary policy decisions from Bank Indonesia
Monetary policy decisions from Bank of Mexico
European Commission publishes economic forecasts
South Korean Current Account Balance
Bank of Indonesia monetary policy decision
Friday, February 11:
> Political Events –
Myanmar leader Aung San Suu Kyi's hearings on corruption charges to resume.
Hearing in the criminal case against former Ukrainian President Petro Poroshenko begins in Kyiv
Iran Revolution Day celebrating the 1979 Islamic uprising
> Economic Events –
US Consumer Sentiment
Germany Final CPI data
UK Q4 and December GDP plus trade balance
Taiwan CPI, Exports, Imports, Trade Balance
Malaysia GDP, Current Account Balance
India Industrial Production
Saturday, February 12:
> Political Events –
Venezuela’s opposition plans widespread protests against President Maduro’s regime
Hungarian Prime Minister Viktor Orban gives annual state of the nation speech
> Economic Events –
No reports/events of note
Sunday, February 13:
> Political Events -
German Federal Convention (Nundesversammlung) holds special Presidential Elections where Frank-Walter Steinmeier is expected to be re-elected by the Bundestag for a second term
US 56th Super Bowl played in Inglewood, California
> Economic Events –
No reports/events of note
Russia/Ukraine Tensions Update: Did You Hear The One About How the Irish Fishermen Defeated the Russian Navy?
As the risk of a Russian invasion of Ukraine ramps up, there are a number of sub-stories that are largely being overlooked by the press – and some of them potentially have significant impact on markets. We take note of them because it is the little things during a tense time like this that can either ignite an actual conflict or result in massive negative impacts once an invasion begins.
A good example: News today that Ukrainian police broke up a ring of provocateurs (suspected of being directed by Russian intelligence) planning to launch riots in five Ukrainian cities using more than 5,000 paid protesters. This likely goes to warnings by the Biden Administration several weeks ago of possible subversive Russian activities inside Ukraine in advance of a possible invasion.
Another significant threat emerged several weeks ago when the Russian Navy announced their intention to hold large naval “training” exercises in the Atlantic Ocean which would include live-fire missile launches. There are agreements between NATO and Russia in place that each entity tell the other in advance when and where they intend to hold such exercises to ensure there are no misunderstandings of an actual military action being launched.
What raised the eyebrows and concerns of NATO officials was where th Russian Naval exercises were going to take place: In international waters off the coast of Ireland – a highly unusual location for the Russian Navy to choose. Of particular concern to NATO is what lies below the waters where the Russians declared they would hold the exercises – the largest concentration of submerged communications lines between Europe and the Western Hemisphere including all cables going directly to Washington DC or New York (see map). The risk, of course, is if an invasion did occur, Russian Naval Forces could damage or destroy these critical communications lines between the EU and the US – as well as disrupt communications lines from Ukraine to the US that would travel via these cables.
On January 23rd, the Irish Government issued strong warnings to all ships planning to sail through the area in the coming two weeks – including to the large Irish fishing industry. The Irish government strongly protested to the Russian government but were told by Russia’s Ambassador to Ireland “There is nothing to be disturbed, concerned, or anguished about and I have extensively explained that to our Irish colleagues.”
But the Irish fishing industry was having none of it, not willing to allow an intimidation tactic by Moscow to succeed, and also risk losing more than one million tons of fishery because of the exercises.
On January 25th, the collective Irish fishing industry announced they intended to make a coordinated effort to head off the Russian fleet. “Our boats will be going out to that area on the first of February to go fishing. When one boat needs to return to port, another will head out so there is a continuous presence on the water,” announced Patrick Murphy, Chief Executive Officer of the Irish South and West Fish Producers Organization.
Literally, Irish fishermen were prepared to risk their lives by sailing into the midst of a large, live-fire Russian Naval exercise it in hope of getting the Russians to leave.
The result? Victory for the Irish fisherman and a major risk to global communications systems averted. On January 29th, the Russian Defense Ministry announced they had decided “as a gesture of goodwill, to relocate the exercise by the Russian Navy elsewhere.”
“James Monroe: A Life”: Young America Was Much Like Today’s America. And That Should Give Us Hope
Jarring political fighting, frequently verging on becoming violent. All sorts of shady media outlets urging in explosive language that the two fragmented political parties take the most extreme of positions. Likely foreign interference in our federal political system and probably our elections, too. Incessant talk of civil war, of the United States breaking apart as states railed against the policies and elected politicians from rival states.
Yes, it is what we are facing today. True, we are a nation where many fear what our future will become. But, as a wise man once said, there is nothing new under the sun, nothing we have not seen before or dealt with as we are powerfully reminded in the superbly written “James Monroe: A Life” by Tim McGrath.
At first look, this is a thick, daunting book - 738 pages long. But once you begin reading, you will find yourself riveted to the wonderfully written prose chock full of fascinating details and references. McGrath takes us deep in the life and times of our fourth President but always masterly weaving in the contemporary history of the still young colonies.
He was born in rural Virginia in 1758. Educated at the College of William & Mary in Williamsburg, Virginia, and drawn to the challenges of the bar, he became a young lawyer. He quickly found a talent and affinity for politics. Associating with Patrick Henry, James Madison, George Mason, and his soon-to-be best friend, Thomas Jefferson, it was not long before young Madison was committed to the cause of independence from Great Britain.
Monroe’s life was a crowded one, seemingly putting him in the most important debates and, as I was surprised to learn, battles of the time.
Until I read this book, I had no idea Monroe was one of the leading officers a the Battle of Trenton, crossing the frozen Delaware River in the dead of night and leading one of two contingents of soldiers in their brave and successful fight against the battled-hardened Prussians. Monroe was shot in the battle and, thanks to the blessing of a local doctor joining the battle at the last moment, he survived. But he carried that musket ball in him for the rest of his life.
Monroe finished the war as a Colonel. It was a source of great pride for Monroe and led to him being addressed as Colonel Monroe even after his presidency.”
But before he got to the White House, his stellar political and, notably, his diplomatic career paved the foundations of US foreign policy to this very day. A state delegate, a US Senator, and then US Ambassador to revolutionary France, Ambassador to Great Britain, and then-Secretary of State.
Of particular note was his service as Secretary of State during the War of 1812. Monroe understood the British were strategically going to march on Washington DC. Constantly put down by then-Secretary of War, Armstrong repeatedly that the British would never dare such a move, the City of Washington never prepared. When the British eventually emerged on the march toward the new capitol, President Monroe pushed aside Armstrong and made Monroe the Acting Secretary of War - while maintaining his role as Secretary of State.
Harkening back to his brave service at the Battle of Trenton, Monroe rode out to rally the troops in nearby Bladensburg - where US forces first met (and were routed) by British soldiers. He again rallied the troops and ensured the City did not surrender to the British after burning and looting it. The British withdrew but threatened to return for various reasons - including a disastrous explosion of gunpowder stores that killed and horribly maimed many British troops in Washington. Monroe made sure that did not happen.
McGrath deals clearly and poignantly with one essential and dark aspect of our history during this time that we must address: slavery. Monroe was a slave owner for much of his adult life. Washington, Jefferson, Madison, and many of our Founding Fathers bought and sold men and women. It is shocking to think about no matter how much you read history. Men, women, and children were bought and sold like talking field animals, frequently tearing families apart. I will forever be struck by one story McGrath relates of an enslaved man wanting to be sold to a plantation owner in the deep south, far from Monroe’s farm, just hoping to be closer to his wife, who had been sold off to another plantation the year before.
And, as McGrath points out time and again, men like Monroe knew there was something wrong with it. So very wrong with it. Yet, despite their misgivings, they never went the complete step of freeing them and putting a stop to this terrible evil.
One is struck throughout the book by the intense and devoted friendship, and near-constant communications Monroe had with Jefferson, seeking his advice and counsel as he forged a deep lifetime friendship and alliance with President James Madison. Where would our country be today without that friendship? This is a theme deeply explored throughout the book in tremendous and fascinating detail.
Monroe was now seen - again but in a much larger way - as a true American hero. And this made him a natural successor to Madison. It was a hard-fought election with the continued ugly battling between the Federalist Party versus Monroe’s Republican Party. As referred to above, the poisonous relationship between the two parties almost broke the nation apart innumerable times. Pouring fuel into the hostility was a constant flow of vicious, personal publications going after the leaders of both parties, their families, their business interests. Blackmail was not uncommon. Quite frankly, you come away thinking what the US is going through today is considerably less ugly compared to what was going on back then.
But Monroe’s election to the presidency proved to be the salve the young, vulnerable, and much-wounded nation needed. Monroe’s strong leadership and self-confidence allowed him to reach across the aisle and work with the Federalists. His vast experience and brilliance gave birth to a vision that created something of a golden age for America. John Quincy Adams remarked of Monroe’s Presidency, “There never has been a period of more tranquility at home and abroad, since our existence as a Nation, than that which now prevails.”
And it was during this remarkable period Monroe developed and implemented what we have come to know as the Monroe Doctrine, ensuring the freedom of the entire Western Hemisphere from European colonization and interference. The effect was not just hemispheric but global as the world’s leading powers came to understand the United States was now a great and mighty nation to be respectfully dealt with going forward.
McGrath has given us such a refreshing book. It leaves the reader knowing that no matter how bad things may get, there are leaders out there who will emerge thanks to the freedom and opportunities our great nation offers to lead us back to our roots, our collective vision, and hope. We wait today for a James Monroe to emerge. And after reading this book, I am confident he or she will soon enough.
Fulcrum Washington Update: New Fed Nominees Get a Confirmation Hearing Date but Raskin Facing Growing Opposition
The Senate Banking Committee is now expected to hold confirmation hearings for the three recent Federal Reserve nominations - Sarah Bloom Raskin for Vice Chair for Supervision and Lisa Cook and Philip Jefferson for Governor seats on - February 3rd.
We continue to believe that Cook and Jefferson will face little opposition and be approved by the Committee and ultimately confirmed by the full Senate.
However, we are hearing/seeing growing opposition from Republicans to the nomination of Raskin. The issue Republicans are pointing to is her views on Climate Change. In particular, they are questioning her past written views that climate change is a systemic risk to the US financial system and the Fed should play a significant role in mitigating that risk.
Additionally, a consortium of trade associations representing the oil and gas industry is opposing her confirmation for her advocacy for de-banking the sector to encourage climate goals and that the Federal Reserve should play a role in pressuring banks to cut off credit to the sector.
Beyond Republican opposition to Raskin, we will be watching closely two Senate Democrats on this vote: Senator Joe Manchin (D-WV) and Senator Jon Tester (D-MT) who represent states with significant oil/gas operations. Tester serves on the Senate Banking Committee.
However, we would point to the recent Senate Banking Committee confirmation hearing of Lael Brainard for Vice Chair of Monetary Affairs where she was asked by Republican senators about the idea of the Fed bringing pressure on banks over climate change. Brainard argued against the idea, saying, “we do not want to tell banks what sectors to lend to, or not to lend to.” She went on to say the Fed does not engage in “environmental policy,” but it does have a responsibility to evaluate possible climate risk to the financial sector. Brainard said: “We do have some sort of responsibility for understanding potential financial stability implications of a host of different kinds of things. We don’t have any expertise in disease and pandemics. But certainly, it turned out that the pandemic had enormous financial stability consequences.”
We continue to believe Raskin will, in all likelihood, get confirmed. It is likely to be a little tougher than first expected.
The Senate Banking Committee has not yet set a date for a vote on the re-nomination of Jay Powell for Fed Chair or Brainard for Vice Chair – which is surprising to us considering the importance of the upcoming March Fed meetings where it is expected the Fed will begin raising rates. Both are likely to be easily confirmed (although it is expected a number of Progressive Democrats are expected to vote against Powell - led by Senator Elizabeth Warren (D-MA) But we do not see nearly enough votes to block his confirmation).
We will update you as soon as we learn when that vote is scheduled in the Committee and when the full Senate will vote on final confirmation. Please let us know if you have any questions.
Read Around the World Over the Weekend: January 22, 2022
Please find our recommended weekend reads covering key issues and events around the world. We hope you find these informative, useful, and perhaps even fun. Please let us know if you want us to add anyone to our mailing list.
Russia
> Center for Strategic and International Studies “Russia’s Possible Invasion of Ukraine”
If peace talks ultimately fail, the Russian military has several options to advance into Ukraine through northern, central, and southern invasion routes. But a Russian attempt to seize and hold territory will not necessarily be easy and will likely be impacted by challenges from weather, urban combat, command and control, logistics, and the morale of Russian troops and the Ukrainian population.
> Adam Tooze Chartbook “Putin’s Challenge to Western Hegemony”
As NATO works to defuse the tensions on the Russian border to Ukraine, the economic historian looks at the framework analyzing the intersection of geopolitics and economics and the rise of Russia as a challenger.
> Atlantic Council “Russia’s Other European Invasion”
As Western policymakers focus on a possible Russian invasion of Ukraine, they are turning a blind eye to another invasion: the capture of European elites. From London to Athens and far beyond, bankers, lawyers, lobbyists, and former officials have all been snapped up by the Kremlin and its allies. While Russian tanks mass on the Ukrainian border, interests linked to Russian President Vladimir Putin’s predatory regime are amassing influence in capital cities across the continent.
> Carnegie Middle East Center “Moscow’s Mercenary Ways”
In an interview, Ruslan Trad, a journalist and expert on Syria, hybrid warfare, and mercenaries, describes how private military companies advance the Kremlin’s agenda in the Arab world.
Germany
> Der Spiegel “Germany Has a Russia Problem”
There is a clear and present danger of a war of aggression in Europe, but the German government doesn’t seem to have recognized it yet. What other explanation could there be for Berlin’s inexplicable paralysis in its approach to Russia? The problem is primarily a product of the party of Chancellor Olaf Scholz.
Sweden
> Defense One “’War is Coming’: Mysterious TikTok Videos are Scaring Sweden’s Children”
In Sweden, an unusual anxiety is afflicting children and young teenagers leading them to ask their parents if Russia is about to attack their country. Where did they get that idea? TikTok. “War is coming,” say some of the videos that the social-media platform is feeding to young Swedes.
Turkey
> Foreign Policy Research Institute “Turkey’s Response to the Russia-Ukraine Crisis”
As Russia increasingly looks poised to invade Ukraine, Turkey is becoming more and more nervous about the collateral damage. What does Turkey think of the tensions? What will they do? What can they do?
Africa
> Chatham House “What 2022 Has in Store for Africa”
2022 is already shaping up to be a year of mixed fortunes for Africa if the events of the first week are a harbinger. Will we see NATO more involved in the region as Russia attempts to increase its military engagement in the region?
> European Council on Foreign Relations “Gateway to Growth: How the European Green Deal can strengthen Africa’s and Europe’s economies”
In much of Africa, growth is being driven by “green energy innovation ecosystems” which combine telecoms, digital platforms, solar power, and the internet of things. European corporations risk losing out on business opportunities and political influence if they fail to integrate their services and infrastructure into these emerging ecosystems – and tremendous opportunities if they do engage in a larger way.
> Brookings Institute “Biodiversity conservation, zoonotic diseases, and human security in Africa two years into COVID-19”
the COVID-19 pandemic has revealed how vulnerable conservation and income for local communities and protected areas are to downturns in tourism. Brookings assembled a panel as part of their Africa Security Initiative to look at how COVID has affected conservation in Africa. They also looked at if there has been a genuine transformation toward “One Health” – looking at the link between biodiversity conservation and human security.
China
> Georgetown University Center for Security and Emerging Technology “Chinese Contributions to High-Impact AI Research”
In the past decade, Chinese researchers have become increasingly prolific authors of highly cited AI publications, approaching the global research share of their U.S. counterparts. However, some analysts question the impact of Chinese publications; are they well respected internationally, and do they cover important topics? In this data brief, the authors build on prior analyses of top AI publications to provide a richer understanding of the two countries’ contributions to high-impact AI research.
> Foreign Policy “China’s Continent-Spanning Trains are Running Half Empty”
Beijing is funding dozens of new rail routes as part of its global ambitions — and losing money on everyone. So what’s the long game?
> The New Yorker “How the Chinese Language Got Modernized”
Faced with technological and political upheaval, reformers decided that Chinese would need to change in order to survive.
> US State Department. “Limits in the Seas: People’s Republic of China’s Maritime Claims in the South China Seas”
The US laid out its most detailed case yet against what it calls Beijing's "unlawful" claims in the South China Sea, rejecting both the geographic and historic bases for Beijing’s claims. In a 47-page research paper, the State Department said China had no basis under international law for claims that have put Beijing on a collision course with the Philippines, Vietnam and other Southeast Asian nations.
Latin America
> Washington Post “Millennial politicians are shaking up Latin America. Here’s how they differ from the old guard”
Generational turnover is getting rid of ‘los mismos de siempre’ and making politics – and economics and markets - more unpredictable.
> Center for Strategic and International Studies “Preparing for Deterioration of the Latin American and Strategic Environment”
The report suggests Latin America and the Caribbean are currently on the precipice of a downward spiral into populist authoritarian governments, economic collapse, social unrest, and expanded presence and influence of China across the hemisphere. Although those dynamics are just now becoming clear, numerous reinforcing dynamics are driving the strategic environment of the region in a very troubling direction. For the moment, the skies of the region are still mostly clear, but the storm is coming.
Middle East
> Carnegie Middle East Center “Abu Dhabi’s Dilemma”
The drone and missile attacks by Houthi rebels on the United Arab Emirates January 17 will force the UAE to make one of two choices, neither of them desirable.
United States
> The War Room “Lost on the Next Battlefield: The Need to Replace GPS”
A revolution is needed with regard to the US military’s use of the Global Positioning System (GPS). US military planners needs to focus its efforts on modernizing the way it delivers position, navigation, and timing (PNT). Without a fundamental shift away from the Global Positioning System (GPS), the DoD will not be competitive in near-peer conflicts.
> Gallup “US Political Party Preferences Shifted Greatly During 2021”
On average, Americans' political party preferences in 2021 looked similar to prior years, with slightly more U.S. adults identifying as Democrats or leaning Democratic (46%) than identified as Republicans or leaned Republican (43%). However, the general stability for the full-year average obscures a dramatic shift over the course of 2021, from a nine-percentage-point Democratic advantage in the first quarter to a rare five-point Republican edge in the fourth quarter.
Climate Change/Energy
> Center for Strategic and International Studies “Safeguarding Critical Minerals for the Energy Transition”
The transition from fossil fuels to low-carbon energy sources will depend on critical minerals. The consumption of these minerals could increase sixfold by 2050, according to one scenario by the International Energy Agency. In that world, the trade in energy-related resources will consist largely of critical minerals rather than oil and natural gas. By value, this market could top $400 billion, exceeding the value of all the coal extracted in 2020.
Key Events We are Watching Around the World This Week: January 24 - 30, 2022
Sometime this week:
UK Government investigative report expected to be released on “Partygate” which could lead to the downfall of British Prime Minister Boris Johnson (Johnson reportedly held parties at 10 Downing Street flouting national COVID restrictions).
Monday, January 24th:
Italian Parliament to begin presidential electoral process.
EU and British officials to meet in Brussels to continue negotiations over Northern Ireland protocol.
EU foreign affairs ministers to discuss Indo-Pacific, Mali and Sudan. U.S. Secretary of State Antony Blinken to join virtually to discuss Ukraine.
Eurozone, France, Germany, Japan, UK, US all are reported on in IHS Markit flash composite purchasing managers’ index (PMI) data releases.
South Korea releases GDP figures.
Bank of England releases Asset Purchase Facility Quarterly Report.
SEC Chair Gary Gensler gives a Northwestern University School of Law’s Virtual Regulation Institute where he is likely to discuss ESG and Crypto regulation.
Tuesday, January 25th:
Federal Reserve Board Meetings (first of two days) in Washington DC.
Sixth meeting of EU-Serbia Stabilization and Association Council to be held.
Likely street demonstrations in Egypt in remembrance of the 11th anniversary of the Jan. 25, 2011, uprising against former Egyptian President Hosni Mubarak.
EU Foreign Ministers meet on Mali and ongoing issues in the country.
Germany’s Ifo Institute releases monthly business confidence index.
US Deputy Secretary of State Wendy Sherman speaks at the Yalta European Strategy Conference re: Ongoing tensions with Russia over Ukraine.
Wednesday, January 26th:
Federal Reserve Board Meetings in Washington DC and announcement on latest decisions on US interest rates.
Canada Central Bank interest rate decision.
Taiwanese Vice President William Lai to meet virtually with U.S. politicians during a stopover in Los Angeles, California, on his way to Honduras.
Australia Day celebrations take place.
India Day celebrating introduction of the Indian constitution.
Thursday January 27th:
Honduran President-elect Xiomara Castro to be inaugurated.
Defense ministers of Indonesia, the Philippines and Malaysia to discuss trilateral maritime cooperation.
First India-Central Asia summit to be held virtually.
US GP Q4 estimate released.
German Consumer Confidence Data released.
International Holocaust Remembrance Day on the 77th anniversary of the liberation of Auschwitz.
Friday, January 28th:
German Green Party hosts party congress in Berlin.
International Monetary Fund board to conduct sixth review of Pakistan’s bailout program.
France Q4 GDP released along with Producer Price Index.
Germany releases flash Q4 GDP.
Italy releases Producer Price Index.
US personal income and spending data released.
Sunday, January 30th:
§ Portugal holds general election.
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