EP-108: Biden immigration bill, Trump speech at CPAC, Crude may go up by $10 in 12 months & more

While the immigration bill to normalize 11 million illegals may run into trouble, some good maybe there for H-1 visa holders. House has passed the $1.9T stimulus package - a critical look at this and more!

Sree Iyer: Namaskar, Hello and welcome to be gross Channel. This is Daily Global Insights. Edition number 108. Today is March 1st, 2021. And I am with Sridhar Chityalaji. Sridharji, welcome to PGurus Channel, as always it’s a pleasure to have you with us.

Sridhar Chityala: Namaskar and good morning to everybody and we are into as used to say March Madness when you know, the college basketball kind of kicks off and makes its way into the final. March is also a month when the markets begin to kind of show some positive signs after you know a little bit of a rest in January and February. So, we are hoping for some very positive news this month.

Sree Iyer: We have a lot of news to cover, the US news, also the CPAC we are going to summarize it for you. We’re going to talk about stimulus because there are a lot of developments there, on the global news, also on covid and on markets. Sridharji, let us start with the US News, so, Biden has toured Texas and come back and he’s also thinking that he can get this immigration bill across but, don’t you think that he’s going to face some headwinds in that in the Senate.

Sridhar Chityala: He is going to face tremendous headwinds both from the Democrats who are more borders like in terms of their elections coming up, you know in 2022. He is going to find problems are definitely from the Republicans. So, I don’t think this immigration bill that he has is going to pass as is. There are some very good components in it, which is the acceleration of the business migration program. The Agro workers who have been in the ecosystem who have contributed, you know, may kind of accelerate their path to residency and citizenship. Then, there are also kinds of immigrant workers who are H-1B type of people who have been paid you know, they may get acceleration. And there are people who have been sitting in 10-12 year queues for those who are green card holders, who haven’t got their citizenship. So he may begin to you know, those areas they would be accepted from within the immigration bill, but the other side is going to be a problem, especially this 12 million people. There’s also a word called dreamers, these are kids who came in and who have been here as part of the illegal aliens who have studied and made their way. Maybe they will also get a path because they’ve been in the system and this reckon about them. But the rest of the stuff I think is going to be a huge problem in terms of getting the bill through as this. And I think it is I would say it’s one of the most ill-conceived and hasty bills put together in terms of the passage. Also, we are hearing from the southern States the influx of these illegals those who are traffickers and you know people with other types of Druggies and Peddlers and so on. The rate of those people attempting to cross the border is increasing the number that I have heard ranges from 2,000 to 4,000 across the southern states. That’s a big number.

Sree Iyer: Is that a per day number, Sir?

Sridhar Chityala:   Yes, per day number,  a number 2,000 to 4,000 attempting to cross not who have crossed, attempting to cross you. Remember the Southern border is a huge border. It is not a small kind of a border. It goes all the way to your place which is kind of California. So, there are a fair amount of people attempting to cross. Anyway, so I think that the immigration bill that’s where that stands.

Sree Iyer:  Biden wants to reopen the schools by May and we are not going to make a call on that. In fact in the CPAC speech, Donald Trump wanted the schools to open today. So there is always going to be this thing where the opposition wants things done today. The ruling party wants to defer it. So we have to wait and see and Sridharji can add. So, I want to also make one more thing, sir, that is that the rioters in Portland are back or these rioters without a cause just anarchist case. What do you make of it? Maybe you can club the answers for both these things.

Sridhar Chityala: I think on the rioter’s side that the basically the story is that they seem to be dressed in black whether you call them BLM or whether you call them Antifa. I don’t know but the story is that they really think that this is being now witnessed. We have seen this, not in riots but Law and Order situation crimes in Manhattan. We have seen it in Chicago. We have seen it in Washington DC. Washington DC has also seen some of these guys come and disturb the evening diners because there is a restriction on where the Diners can sit, they all have to sit outside but Portland is becoming more like anarchy. It seems to be a very well-orchestrated moving between Portland not heard as yet, but you will see something similar in Seattle as well. So, between these two cities, there’s a real problem, which is far deeper in terms of malice. I just want to digress here for a minute before I come back. There have been hundreds of girls and women in Nigeria, Sudan and other places more specifically Nigeria, who have been taken away by Boko Haram and converted into sex slaves for this Jihadi groups and forcibly converted. So the question that’s being raised in the United States if BLM is a moment that is legitimate. Where would that be BLM be within the context at why some of them these African nations where there is a real problem doesn’t feature. So there is something deeper with regard to this Portland riots, which is far more than what we can kind of see and why the world is kind of asynchronous or discriminating in terms of not condemning one but condemning the other.

With regard to the schools. I think it’s a union issue seems to be a lot of conditions being put by the teachers and mostly this seems to be liberal states. Texas is working. I think Florida is working. I don’t know whether it is basically the collision between the Unions of the teachers union within the states or local Administration. When you actually look at the stimulus 170 billion dollars, this particular stimulus set aside for schools 170, that’s an astronomical number. Leaving alone the number that was set, which is close to a hundred billion in the first two stimulus. Beyond the I don’t want to comment.

Sree Iyer: And on the final day of the CPAC conference, a three-day conference Donald Trump made some telling points and spoiler alert. You may not be surprised to know that a lot of things that we have been covering in the days leading up to this were actually mentioned by Donald Trump. Sir, maybe you can share some of the main points of his speech.

Sridhar Chityala: I think if you have listened to the DJI for the past two weeks or so. I think you have heard President Trump, which is effectively we’re going from making America great again to making America last. He touched on the policies of immigration, how immigration has become a big issue. He touched on the policy of energy from being energy-efficient and energy Surplus and being one of the global leading exporters to now today energy deficient and being reliant and maybe energy importers to meet the demand and that has its own energy Security on the pricing side. Then, he talked about the whole policy around, what is it that we’re getting out of WHO? What is it that we getting out of the Paris Accord? Are we willing to spend 450 million dollars on Paris Accord? What is it that you’re getting out of it in the green? By the way, if I was not there they wouldn’t have been any vaccine. They told me that there is no vaccine, the vaccine will not be possible in less than one year. I got it done in eight months the vaccine that you are seeing now, be it J&J, be it this and be it Moderna. This was a program that was launched by me and the world is benefiting. And we have not only used it for ourselves, but we are also giving it to others as well. So, he went on and on on on on the policy issues ranging from foreign policy to energy to immigration to stimulus to the mismanagement of the economy and as well as most important the immigration and the Porus borders, especially around The wall, he said, you know the wall the stopping of the wall. We stopped people coming in the stopping of this wall is a monumental kind of a disaster in the policy of these whole illegal aliens coming into the United States. We will have all these types of people living amongst us in the society traffickers, Peddlers, Crooks and criminals. So he kind of ratcheted of in terms of saying what exactly are the consequences I think some very powerful speech. Finally, he did not spare, he touched on the elections, he said that we have more people who voting than people who actually registered perhaps we have more people who have voted then, we almost eligible population of this country and you know, we had dead voting. We had people voting twice. We had no signature verification and he did not spare the SCOTUS, he said SCOTUS stood by the side. They showed no courage. They allowed this sham to occur and they used procedure and they’re benign silence as a tool rather than interpreting the Constitution and allowing proper conduct and audit. So, the truth can come out. So that election Integrity can be preserved. It doesn’t matter whether President Trump is President Trump or not, but people must have confidence in the election integrity.

So, to me you people tomorrow, Hey, you know come in and say, courts kind of passed judgments. Well, courts can pass legal and illegal judgments. In my view, the definition of legal is when you have a Constitution and the rules of the Constitution are very clear and you slip from those rules, then you have a problem. All you need to do is you have to read the dissent written by in the Pennsylvania judgment. You should see the dissent written by Clarence Thomas, Sam Alito, and I forget the name of the third judge. There are three Supreme Court judges who wrote the dissent, especially Clarence Thomas wrote, he said it is the job of the Supreme Court and it’s the responsibility of the Supreme Court to set the Constitution right and to interpret the Constitution correctly when the state legislatures are mandated to set the election process. You had the executive branch and you have the local judicial branch colluding and altering the roles and it was our job to have clearly interpreted and given an opinion and we chose not to do. This was his dissent; you can go and read the dissent in fully because Sam Alito was responsible as the district court judge for Pennsylvania. The five judges were appointed for the five battleground States and Sam Alito was responsible for Pennsylvania. So, I think that all these things were highlighted by him and in my view, I think it’s a very powerful speech. Of course, you can call me a Trump supporter because I have laid down all these things. There is nothing that I see in Biden policy. I’m sorry to say nothing. We are not talking Bill Clinton here. We’re talking about Joe Biden in terms of the policies and everything that he has done so far is detrimental to the interest of the United States. We already got 28-29 trillion dollars debt piling up and he wants to add more debt. We’ll touch on that in a minute.

Sree Iyer: Yes, indeed and other speakers at CPAC were very emphatic, Kevin McCarthy thinks that the Republicans will win back the House in 2022 and the South Dakota governor had some things to say. Would you like to kind of touch upon some of the highlights of the various speakers at CPAC, sir?

Sridhar Chityala: I think South Dakota Governor Kristi Noem stands tall. She could be the vice-presidential candidate not sure but, Trump has almost hinted he would be contesting 2024. Her view was very clear. It’s not covid, it is the policy of the government which is to shut down that basically cost the economy that was a kind of the first point. The second point was this is in many liberal states not in her State, Florida and South Dakota were you know doing quite well. Basically, Richard Grenell who is likely to be contesting for the governor says America First make America Great again is here to stay.

Mike Pompeo touted much of the work that they had done on the foreign policy and how you know, they were able to reign China, North Korea and so on and also the Abrahamic Accords that were signed and moving up the Israel Embassy to Jerusalem.

And then in terms of you rightly said Lindsey Graham and as well as Jim Jordan highlighted that if you’re going to be antagonistic to Trump you have no hope that you would be winning the 2022 elections. So there was widespread including Mitt Romney and Mitch McConnell the indicated that should Trump turn contest he would be the clear winner. The most important decision Trump made a point. I have no intention to divide the Republican Party. I want one Republican party and I am standing by the Republican Parrty, and we are not going to allow Democrats to breach and break our votes and therefore I’m here and I’ll be supporting every candidate and then he touted his record and say here 21-0 success in Senate and then if you remember the runoff came after November 3rd. It first came in January 6th in the House, they brought the majority down to about less than 5 seats. So he touted his performance even on the election side.

Sree Iyer: And in stimulus, this is the main point today that we are going to be talking about because the 1.9 billion stimulus bill has passed in the House and now he’s up at the Senate and it may find some resistance there. There may be some things that might get dropped and then there will have to be reconciliation. But, the main points on the stimulus bill is every individual is going to be getting $1,400 per head, So that is $1400, if you have a family of four, you’re getting $5600 right off the top, and unemployment benefits $400 a month. I think six more months from whenever it kicks in. The most important questions, sir, that I want you to answer because you are a numbers person is that there is one trillion in surplus that has been unused from the previous initiative that has been done for covid and on top of that we have unused money that has come back, I think that is $350 or $400 billion dollars. Now, you’re tagging on 1.9 trillion and Janet Yellen wants to add another 2 trillion. So if I look at this whole thing, that is 5.3 trillion, that is about four months of America’s GDP and it stands today. Is this too much money? Do you think it is being directed at the right places? One of the things that one of the speakers at CPAC said was those stimulus monies actually slush fund for Democrats. Now you also mentioned this, in that many cities are losing money hand over fist because of covid and those are the cities that the Democratic leadership wants to top up to make it look like San Francisco or Portland or Seattle, all these are democratic run cities. So just make some sense out of the numbers here sir, and this is really the core program today because nobody else does numbers as well as Sridharji. Please take it away, sir.

Sridhar Chityala: Thank you so much for that. Let me kind of touch on two points. One is, we have one trillion dollars unspent and then we have 400 – 500 for small business. So this means 350 billion dollars in this stimulus which is set aside for local, state, and tribal are all going to fix the balance sheet of the mismanaged democratic administrations in various States. So it has nothing to do with covid. So you are taking good money to solve a bad problem and allow the bad problem to continue because you’re cleaning up the balance sheet for the next drawdown for them to happen. So there is no accountability for the culpability of some of these states. So that’s number one.

Number two is, remember, there’s also another $120 billion buy-back of various assets to feed the balance sheet of the corporates and mid-corporates, that money is in the system which is close to about $1.4 trillion for 2021. Then, you’re talking about $2 trillion. They are saying there are no jobs when the unemployment numbers are dipping. Probably they are setting aside these 12 million illegals who are going to be normalized and trying to come up with a funding program to accommodate. They call it the infrastructure spend. They need to develop the infrastructure. So they want to set aside $1 trillion for infrastructure. The Jobs Act that came during Obama was an unmitigated disaster. It didn’t deliver any infrastructure but the money went into the system. The infrastructure remains as bad as across the United States as it was the case. For example, Biden used the Texas issue as an example and say, ‘now I’m coming up in $1 trillion dollars and states like Texas can benefit.’ Now, in the case of Texas, it’s not a pure lack of infrastructure, that’s a common problem that will be addressed but it is because in a short span of time you had cold and freeze-outs people couldn’t get access and they couldn’t complete the maintenance operations to restore because things happened very fast. So, therefore, to me, this number is astronomical. I think we covered this at length, this could push this over $32 – $33 trillion of debt. And today we are at a reasonably low-interest cost that we can fund.

Remember, people tell  America can print money, well it cannot, it has to give printed money to somebody at some rate so that they can take that money and borrow that money and basically the United States pays interest. It cannot just print money and not have the other side of the balance sheet managed. So, therefore, please don’t make an assumption that the US has the ability to print money but at the same time, there has to be a buyer for that money. To give an example, India today holds close to $218 billion of US debt and Brazil holds close to $250 billion of US debt. Remember these countries have come in more recently in terms of their horizon previously, it used to be Japan, China, Saudi Arabia, broadly the EU countries, and of course Mexico and some of the other Latin countries which held the debt. So what we’re seeing here is this huge amount of debt which is going to become a burden on the balance sheet as you look at the next 3-4 years. What will that do to social security which is defunct? What will that do to the healthcare system which is defunct, and we are expanding that as well remains a very big question mark? We will probably have a separate discussion on what we call ‘The 17 disasters of Mr Biden.’ We will have a session on that, there’s not enough time to cover here. But this stimulus bill especially this $5600 and $3,600, getting all the illegal people into their ledger is an unaffordable program that we are going to have. And these $2 trillion that Janet Yellen is talking about is not only the 1 trillion but they want to give money to the Paris Accord and Green Accord, something in the range of $100 – $450 billion dollars. Everybody is looking at the United States and saying welcome back because you are the bank that’s going to fund us while we do other things.

Sree Iyer: In global covid news, the new player in town is Johnson & Johnson. It has a single-shot vaccine. It’s got some stellar properties. One is that it is only 65% effective but the more important thing about Johnson & Johnson is it’s a single-shot vaccine, plus Johnson & Johnson claims that it is 100% effective against serious covid cases that might result in death. So something that is quite compelling about Johnson & Johnson and that is also different from the other two, Moderna and Pfizer is that Johnson and Johnson can be stored in a normal fridge and it doesn’t require any special storage facilities either. So this seems to be a really new compelling option. What are your thoughts, sir?

Sridhar Chityala: I think that if J&J take off, the world has solved a big problem because it almost halves in terms of the duration, in terms of treating and completing the process, in terms of the mass vaccination program. So to me, this is a game-changer in vaccination.

Sree Iyer: India’s vaccine diplomacy wins hearts in Latin American countries. Brazil is getting millions and so are Central American countries. So this is I think excellent move. I think India has probably first realized that you need to have this thing eradicated to the last person. Otherwise, there is always going to be a risk of a super spreader and the same thing coming all over again. So from that point of view, I think India is a hands-down runner against China, isn’t it sir?

Sridhar Chityala: It is. I think in three areas India has come out of covid turning adversity into an advantage. One is the development of mobile and mobile manufacturing and all the kind of adjacent electronics. As you probably are aware that Apple moved iPad manufacturing from China to part of the manufacturing into India. The pharmacy, it’s rightly called that India is the global Pharmacy. India will not only manufacture tablets, which can be consumed for various ailments like, the heart, the diabetics but with the vaccine for covid India is going to emerge as the second-largest producer of vaccines and it is going to cover a vast number of nations which are poor, which are needy, ranging from Africa to South Asia to some of the Latin American countries. I think the number that we have seen is close to 3.2 to 3.3 billion are the number of vaccines that are going to be produced in the near term. Of course, the United States is the leading with about 5.6 billion vaccines produced for not only domestic consumption but for exports as well.

Sree Iyer: You know, one thing that I’m noticing is the Biden presidency is proving us right on just about everything. I’m going to share some news about markets. The first thing that strikes me is that some of the heavyweights of Wall Street now want to go back and start doing business in China and Huawei wants its restrictions lifted by the Biden Administration. I mean what Huawei was doing, what the Chinese technology was doing, snooping in on the US technology. That’s a proven fact. It’s got nothing to do with Trump and this is been a problem for a long time. Sir, perhaps you can give us a better idea of markets that I can because I’m still trying to understand it and you have been in there and sunk-in a lot of years of experience. What are your thoughts on all these moves as everything we predicted is beginning to come true?

Sridhar Chityala: Well, let me break it down into each one of these – one is what Wall Street banks are saying is, Goldman Sachs or JP Morgan, the two Banks which are going to continue to, Goldman Sachs is I think expanding and adding about 20 to 30 staff in their Chinese team either in Beijing or adjacent or in Shanghai. And JPM is expanding, what it’s saying is that look, we are Global and we are going agnostic to your government moves. We are not in the way in terms of security so we’ll continue to transact business. So there are no checks and parameters, that’s, unfortunately, the way we are with the Wall Street Banks. The second, in terms of Huawei, it just simply means that there is a tremendous amount of courage in the very weak leadership of Mr Biden. Basically, what they’re saying is ‘hey, you know we can deal with you, we have dealt with you before, you know us and so, therefore, we are coming back and asking you.’ Remember, Biden and Obama came up with this great verbiage which is ‘leading the world from behind’. So they recognize that there is no strength and they can dispense with what they think. So that’s Huawei. They are also, by the way, asking some of those rare metals and some of those items that we are meant for the United States to export, they going to stop exporting China. But on the contrary, the PLA is going to again reach out to the United States to see whether some of that equipment, if you recall something close to 16 companies were banned from exporting to China because those exports were going directly into supporting the PLAs for their different manufacturing capabilities. So besides Huawei, that’s another topic that’s on the table. Now, Kathleen Tai is going to be the trade and negotiating representative who has given very mixed opinions in terms of her briefings in the Senate hearings. And what she has stated is that she would be flexible, inclusive, and exclusionary in her approach.

Sree Iyer: As we wind down today’s program, I just want to dwell a little bit on the projections of the crude price for the next 12 months and it is expected that crude will be rising between $5 to $10. So there is going to be more pain at the pump especially for countries like India which is smarting from the cost of 1 litre of Petrol crossing 100 rupees. Guess what? This is going to take it to 125 very very fast. And unless some urgent measures are undertaken. Sridharji, why do you think that the forecast is saying it’s going to go up by $5 to $10 when the demand is still only slowly coming back up. The demand hasn’t really picked up, so is that a supply collapses I’m seeing here, sir?

Sridhar Chityala: Well, there are two types of demand. One is demand from retail consumption and manufacturing. The second demand is air traffic, global travellers travelling. In the near term, they don’t expect the demand from that specific sector, travel and tourism, to expand. So the demand is going to be a little bit tapered. Supply is going to be regulated because OPEC is leveraging this opportunity to manage the supply curve because they had already cut down the supply when the US was net surplus and an exporter. Remember, the US is pulling back because many of the programs, many of the leases, including the Keystone pipe is going to be stopped. So there is going to be slippage on the supply from the US side. So there is no buffer that’s available. Naturally, as a result, there is going to be an aberration and we’re going to see a price increase. This is JP Morgan prediction that you will see the price increase between $5 to $10 dollars, it is already $63 so we could be in the $65 to $75 dollar band for the near term.

Sree Iyer: And with that, we bring our today’s news segment to a close. We will be back tomorrow bright and early, same time, same channel. Thanks for joining, please subscribe to our Channel and also join our membership program as we bring you more details about it. Please stay tuned. Sridharji, namaskar, thank you, and we will see you tomorrow again.

Sridhar Chityala: Namaskar, have a wonderful day. Thank you so much.

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