Daily SA: Food stamp increases signal rising inflation

Good morning. Here’s your Daily Situational Awareness briefing for Tuesday, 17 August 2021. You can receive this daily intel brief via email by signing up at https://forwardobserver.com/daily-sa
 
TODAY’S BRIEFING:

• Situational Awareness
• Food stamp expansion
• Copper’s social profitability
• OPEC refuses U.S. requests
• Crypto lobbyists in the House

 
SITUATIONAL AWARENESS
FOOD STAMPS: U.S. Department of Agriculture (USDA) Secretary Tom Vilsak announced a 21% increase in Supplemental Nutrition Assistance Program (SNAP) funding. Food stamp benefits for a family of four will rise to $835 per month. Vilsack said expanding month-long access to “healthier options” reflects the changes to the food pyramid and rising food prices. Congressional Republicans question the legitimacy of the USDA’s increased spending, without proper appropriations authority. (AC: Mike noted this is a key indicator of inflation not being transitory as the $20 billion increase is designed to extend until 2025. This marks another expansion of direct federal financial support to individuals, increasing dependence on subsistence programs. – D.M.)
COPPER: The election of a new socialist president in Peru sparked concerns in the commodities world over copper prices. The new government said they expect to reduce bureaucratic hurdles to mining and take on more “projects with social profitability.” The socialist administration seeks to lift taxes and access new deposits to compete with Chile and raise the standard of living for many Peruvians. (AC: President Castillo is seeking to nationalize Peru’s gas industry as well, signalling deeper concerns with the socialist nation. Nationalizing natural resources is exactly what Chavez did in Venezuela when he came to power. Meanwhile, copper analysts see an opportunity to expand as the metal’s use in “green tech” continues to increase. – D.M.)
OPEC: The Organization of Petroleum Exporting Countries (OPEC) and Russia say they will not increase oil production at the behest of President Biden. Last week, the U.S. asked OPEC to open reserves and expand production to reduce fuel prices at home. The International Energy Agency said they concurred with OPEC and global demand was not in jeopardy, so no expansion to exports is necessary. (AC: The Biden administration is being sued by American energy companies for stopping domestic production and pipeline construction. The rejection by OPEC+ further demonstrates the lack of negotiating strength the U.S. has with the international community. – D.M.)
CRYPTO: Cryptocurrency lobbyists are working with the House to soften new tax rules and regulations. Currently, any crypto transaction over $10,000 would require special notification to the IRS. The Blockchain Association’s executive director believes they have momentum on the House side as there is far more interest in cryptocurrencies there than in the Senate. (AC: The IRS believes they’re missing out on $1 trillion in general tax revenue, making digital taxation legislation a small percentage but high-profile. The brokerage rules would be used to reduce criminal use of digital exchanges – D.M.)
 
HAZARDS WARNING
HURRICANE SEASON: Tropical Storm Fred will continue moving through the Appalachians and mid-Atlantic states this week. Landslides are possible across the mountains of North Carolina and Blue Ridge Mountain slopes. The National Hurricane Center predicts Tropical Storms Grace and Henri will not impact the U.S. coast.

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