US Deficit Timeline Update, More Arrests in Tunisia and a New Prime Minister in Moldova
Daily SITREP for Friday, February 17, 2023
Monday is President's Day so there's no SITREP and then you'll see a difference in the content and frequency of the free emails as the PRO plans kick in. So, starting Tuesday:
PRO subscribers get the daily updates and customized risk metrics.
General subscribers get the Friday round up only.
You can try the PRO plan for free here. (And if you have any questions on what you get in the PRO plan, and how the customization works, please just hit reply and I'll send you more information.)
Otherwise, I'll see you again on Friday.
On with the updates.
X-Date, the day the US is no longer able to service its debts, is likely to fall between July and September, according to the Congressional Budget Office (CBO). The CBO estimate is slightly later than Treasury Secretary Yellen’s initial estimate of June but the exact date will depend upon the tax income received by the Treasury. Tax day in the US is April 15 so a clearer estimate of X-Date should be available then.
Meanwhile, there’s been little movement on negotiations over the debt ceiling, although both Congressional leaders and the White House are publicly committed to a deal. The CBO date of July may make some feel that this isuse is not urgent but the experience of 2011 should be a reminder that even a fear of a US default is enough to hurt America’s economy significantly.
Arrests of Opposition Figures in Tunisia Increase
Arrests of opposition figures, trade union leaders and journalists in Tunisia continue to increase as President Kais Saied increasingly tightens control. There are no signs of any resolution to the inconclusive elections in January and February and, instead, Saied seems to be consolidating even more control while cracking down on any kind of opposition. Tunisia remains in an economically fragile state and is also isolated diplomatically from her neighbors and other influential regional powers, particularly the gulf states.
It’s hard to see how this situation can be resolved without some dramatic turn of events and it seems likely that Tunisia will become more unstable before there’s any chance of resolution. Read more in Reuters.
Moldova’s New PM
Moldova’s new Prime Minister, Dorin Recean, was installed on Thursday following the abrupt resignation of the previous government last Friday. Moldova is beset with economic difficulties and is particularly vulnerable to the war in neighboring Ukraine due to its dependency on Ukraine for some economic and energy needs plus an influx of refugees after the Russian invasion last year. Adding additional complication is the significant presence of Russian troops in the eastern province of Transdniestria, which claimed its independence from Moldova and sought protection from Moscow in the early 1990s. (Read more from the Carnegie Endowment here.)
Prime Minister, Dorin Recean, Reuters / Vladislav Culiomza
Prime Minister Recean is strongly pro-European and has committed to improve the economy and accelerate the country’s accession to the EU. However, it is important to remember that the previous government ended amidst concerns that Moscow was planning a coup or destabilizing operation in Moldova, a threat that won’t diminish with an even more pro-European government in place.
On to the numbers
Relative Values (90-Days)
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Potentially impacting: Fuel prices | Gound shipping costs. | Plastic prices | Changes to fuel subsidies (potentially leading to unrest) | Cost of living (especially transport and heating) | Changes to traffic volume/transportation choices | Demand for automotive products | Theft and smuggling.
Brent Crude is high for this 90-day interval. Prices decreased moderately over the last 21 days after moderate fluctuation.
Iron and Steel
Potentially impacting: Cost of construction projects | Construction project timelines | Cost/availability of raw materials | Infrastructure project timelines/costs | Cost and availability of finished metal goods | Value of scrap | Value of 2nd hand equipment/vehicles.
Iron and Steel is very high for this 90-day interval. Prices ended relatively flat over the last 21 days after slight fluctuation.
Market Volatility (VIX-US)
Potentially impacting: Availability of capital for investment | Interest rates| Share prices | Consumer confidence | House prices/rent | Financial certainty/uncertainty | Financial models | Stock-based compensation values.
Market Volatility (VIX) is very low for this 90-day interval. The index decreased moderately over the last 21 days after moderate fluctuation.
Potentially impacting: Bread, pasta, couscous & noodle prices | Changes to food subsidies (potentially leading to unrest) | Cost of living | Movement from low-income to food insecure to undernourished | Increased theft or graft in loosely governed areas | Demand on charities.
Wheat is very high for this 90-day interval. Prices ended relatively flat over the last 21 days with little fluctuation.
Ocean Freight (FBX)
Potentially impacting: Supply chain costs (direct and indirect) | Supply chain delays | Port capacity/throughput speed | Customs clearance | Availability of goods and materials | Consumer demand/hoarding.
Shipping (FBX) is very low for this 90-day interval. Prices decreased moderately over the last 21 days after significant fluctuation.
February 25: Nigeria, President, House of Representatives and Senate
March 5: Estonia, Parliament
Here’s a cat working very hard on a tiny laptop
And an explanation of how ChatGTP works from Stephan Wolfram
‘It’s just adding one word at a time’. Aren't we all, Stephen? Aren’t we all….
That's it for the week. See you on Friday (unless you go PRO, in which case I will see you on Tuesday).