September 26, 2022: Hurricanes, CR’s, & *ssholes
by Joe Noser, Research Analyst
Last week I made fun of Congress' propensity for procrastination and previewed its upcoming budget fight, ignoring the fact that the budget is, of course, due this week. Naturally, Congress kept to its reputation and did very little to stave off the government shutdown that will be triggered if no appropriations bill is passed by Friday at midnight. So make sure to look for a possible deal on the child tax credit this week, too.
Here's what else is Coming Down the Pike this week.
1. Ian will rear his ugly head: Tropical Storm Ian formed in the Caribbean Sea on Friday night and is expected to become a hurricane when it hits western Cuba sometime tomorrow. The storm is expected to reach "major hurricane" status as a Category 4 because the current conditions in the Gulf of Mexico are ripe for a storm. Not good. Gov. DeSantis ("in his infinite wisdom") has declared a state of emergency for the whole state, as although the storm's path is uncertain, it is still likely to impact Florida's entire west coast. Tampa has somehow dodged the direct-impact bullet from hurricanes over the last century, but it could find itself in Ian's crosshairs between Wednesday and Thursday. Major rain systems are expected to impact as far north as southern Virginia by Thursday or Friday. We've had a slow start to hurricane season, which ends Nov. 30, but the NOAA is still expecting a busy one this year, and Ian looks like it will be the opening salvo.
While the storm's trajectory is uncertain, some of its impacts are not. First, DeSantis will say something smart about not getting federal aid fast enough (President Biden has already declared a federal disaster for 24 Florida counties). Second, the rain the storm generates will cause significant flooding everywhere from Jamaica to (possibly) Atlanta. Third, domestic gas prices will go up, because Gulf of Mexico hurricanes affect suppliers' ability to drill. Fourth, NASA will probably further delay Artemis I because it looks like the storm is going to force the agency to take the rocket off the launch pad at Cape Kennedy. Major bummers all around.
2. The markets will have another ugly week: The Dow reached its lowest point in 2022 on Friday, as concerns about inflation, rising interest rates and foreign turmoil generated a significant sell-off. Some of these concerns are pretty ridiculous – the Fed telegraphed its move to raise rates by .75 points so clearly that the only explanation for a trader missing it is him/her being on drugs – but concerns of foreign turmoil are pretty legitimate. Liz Truss, the UK's new prime minister, revealed a financial plan to boost the British economy that centers largely on tax breaks, which, er, didn't exactly help the Pound recover any value (it's at 30-year lows against the dollar right now, so if you always wanted to go to London, now is your chance). No one has any idea what the hell is going on in the Middle and Far East right now (more on that later). And at home, Hurricane Ian will most certainly create some supply-chain challenges, which the markets never enjoy. Don't look at your retirement accounts, folks! They won't get better this week.
3. We (probably) will not have a government shutdown: This close to the midterms, neither party wants to be in a position to be blamed for a government shutdown. With a hurricane bearing down on America's third most-populous state – and the need for federal aid for the people the storm impacts to be as prompt as possible – it is even less likely that someone tries to hold up the budget negotiation process and shut down the government out of spite. My guess is we'll have some kind of continuing resolution to fund the government through mid-to-late December by Thursday at the latest, which should calm down the markets a bit.
4. Anxiety will abound, well, everywhere: My world's on fire, how about yours?/That's the way I like it and I never get bored. That's the song lyric that came to me when reading about the various calamities the world's all-star lineup of assholes found themselves in last week.
In Iran, the largest anti-government protests seen in the years have continued on for about a week, as the country's young people (and, as Ashley pointed out in a newsletter this week, there's a lot of them) are tired of government thugs beating women to death for having the audacity to braid their hair.
In Russia, significant protests in St. Petersburg and Moscow followed Putin's Wednesday announcement of a "partial mobilization" of 300,000 men to fight the war in Ukraine. Since then, lots of information has come out about how the mobilization is partial in name only. Western analysts initially said the authoritarian effort would bring troops to the front lines months from now, as it takes a while to train and outfit men to fight a modern conflict. But Russia doesn't give a shit about its men, so it now looks like lots of those conscripts – most of whom are ethnic minorities from outside of the major cities – will be hitting the line with little to no training and rusty AKs in the next two weeks or so. What could go wrong?
China had its own political instability scare last week. Videos of military vehicles speeding toward Beijing and evidence that the country had canceled 60% of its flights, including many over its capital city, led some predominantly right-wing analysts to suggest a military coup against Xi had taken place. However, no hard evidence has emerged to corroborate that claim yet. It's China, so anything could happen, but I highly doubt something crazy has occurred.
I have no idea if any of these protest movements or indicators of instability will lead to regime change, and frankly, neither does our government. By its own admission, the intelligence community is and always has been total garbage at predicting whether or not a protest movement will lead to good, bad, or any change in an authoritarian nation. So I urge caution, and if you see any white guy with "retired general" next to his name talking about a new wave of democracy in Iran, Russia, and/or China, ignore him. He has no idea what he's talking about.
*sshole(s) of the week: The first winner of this distinguished award goes to the voters of Italy, who on Sunday threw their support behind a right-wing coalition that's poised to make Giorgia Meloni, the head of the Brothers of Italy party, the nation's next Prime Minister. The party is directly descended from what remained of Italy's fascist party post-World War II. You elect a fascist, I call you an asshole. Plain and simple.
If you're the praying kind, say a kind word for our friends in Florida. They're gonna need it.
All the best,
Joe
P.S. A hearty Shanah Tova to any of our Jewish friends out there celebrating Rosh Hashanah, which started at sundown on Sunday.