Sree Iyer: Namaskar, Hello and welcome to episode 109 of Daily Global Insights. Today is the 2nd of March 2021. I have with me Sridhar Chityalaji. Sridhaji, please welcome to our daily broadcast and I hope it brings out a great morning in New York today, sir.
Sridhar Chityala: It is, good morning to you and good morning to everybody or good evening to those who are in the other side of the world. Yes. It is very bright sunny one of those days where we have probably touch 52 and then, you know, we’ll go backslide back into the 40s. Yes, looking forward to an exciting day.
Sree Iyer: Today’s main points are 21 IP addresses resolving to ten distinct Indian organizations in the power generation and transmission sector along with two in the maritime sector were targeted by the red hack, it is a well-known hacking unit from China. We give you more details in a moment.
The house in the United States Congress has passed and 1.9 trillion dollar bill, but fails to pass the $15 per hour minimum wage that is still encountering a lot of resistance.
The third one is should the US consider Latin America as the manufacturing option representation green suggesting this as an option instead of China.
And Senators Elizabeth Warren and representative Pramila Jayapal and Brendan Boyle are proposing a two per cent wealth tax on households with 50 million to 1 billion dollar net worth and a three per cent wealth tax on those who are making more than 1 billion dollars.
Now back to the United States news. The Supreme Court has rejected all the lawsuits of Sidney Powell challenging the election results in Arizona and Wisconsin, would you like to add a little bit more about these lawsuits? Have they run their course now?
Sridhar Chityala: I think so, the lawsuits have run their course, and we saw that even in the Pennsylvania situation, I think the court has taken there are no reasons given the SCOTUS are taken view. It’s over it’s done. Let’s move on.
Sree Iyer: Chicago schools are opening doors to thousands of more students now, it is hoped that this would become more and more prevalent across the country, so we have to wait and see if there is going to be again a rise in covid cases, will keep you informed on that.
Capital police Union Chief has said that many police officers wanted to quit or retire after the January 6th event. Katrina Pierson a former Trump aid is considering a bid for an open house seat in Texas. How do you rate her chances?
Sridhar Chityala: I think Texas is a very strong Republican. And I think that given all the things that are going on in Texas right now around the immigration, border control, the ban on the Keystone Pipeline, the ban on further leases for fracking, you know, all these points. Texas is the energy epicentre of the United States. So you can look at you know, three specific areas, which is namely this whole immigration stuff. The second is around the energy strategy and probably the third is this $15 minimum wage. I don’t think that’s going down well in many of the states.
Sree Iyer: The US is focused on reuniting migrant families. This is the Department of Homeland Security Mayorkas’s statement, and there are now signs that more tents are being built to house these immigrants, so, you can expect a rush to the United States border because of all this news who knows how much amplification happens as it percolates down south. So there is going to be a crisis coming up and it is now apparent because Biden has acknowledged that there is a border crisis ahead of his meeting with the Mexican president. Now, if he knows there is a crisis why do they keep making these statements?
Sridhar Chityala: They make these statements because it was their Progressive political agenda, which is around this to keep the borders open to decriminalizing the borders and as well as to ban any eviction programs for those who have illegally entered the country. So, therefore for those who have illegally entered the country, there is no question of ICE which is the Immigration Control and Enforcement and those who attempt to enter the model illegally, there’s no criminalization. So, therefore there is no question of holding them. Second, there’s no deportation, all the three things have gone. So, what has happened is that 69,000 people were sent back during President Trump time. They all preached their tents and they recognized that should Biden should win, that is going to be far more open. So, it looks like one tent has got cleared now, more tents are coming up.
And it’s interesting that Mr. Mayorkas has made a statement about the border issue as a result of Trump’s policies. Trump actually block people from coming to/ the wall has been stopped as well. So, I don’t know what makes him think that what they are doing is quite correct when it is opposed by a number of Southern States.
Sree Iyer: Sir, there is the fundamental fear about how the US is going to control the status of health of all these immigrants who might be coming in. After all the United States is still one of the countries with the largest number of people afflicted with covid. So, you have a global emergency. What is the rush now to allow more immigrants to come in? What are these people are afraid of? They have a four-year run and why is this rush? And isn’t it, also putting the rest of the country’s population in Jeopardy?
Sridhar Chityala: Look this is a progressive agenda. You don’t take an outlier and make that into the mainstream. Remember, we also talked about Janet Yellen speaking about 10% tax on corporations that are incorporated overseas, and there is a 10% tax on the income earned by these companies overseas. So we already have another tax coming in, this has come in from the treasury secretary. The objective is a disincentive, but if there’s a 10% tax, now the question it pops up is well, you know, there’s no incentive for me to have more here, so I’ll try and do more and more outside because you can charge 10% but I might be getting a tax waiver from some of those countries for a period of time if I deploy x amount of capital. So this is a loose-loose situation that the Democratic party is moving towards. Now I’ve never seen such a wide and all-encompassing socialistic agenda in the first hundred days of a presidency of any of the prior democratic presidents. What we see here is a very widely encompassing and very lumpy stimulus and dole-out based budgets where the source of funds is unknown. The use of funds is known, the source of funds here is how do you pay back, not the sources, it is easy to print money and basically to lend it to people at concessional rates, the rates are very low, but then eventually you have to pay for, I’m not suggesting you payback I’m suggesting here how do you fund the interest cost which could Skyrocket as the debt goes up? So why is it coming from? So these guys are trying to figure out in a backhanded way on to go about doing it.
Sree Iyer: Now, in the 1.9 trillion stimulus package there appears to be a 100 million earmarked for something called a tunnel to nowhere and the Senate Republicans are taking aim at speaker Pelosi on that. Can you expand on this, sir? Where is this tunnel nowhere going?
Sridhar Chityala: Oh, it is in the heart of Silicon Valley which is one of the constituency districts of Nancy Pelosi. So she wants funds for constructing a Subway around that area and the overpass is the BART system, which is the Bay Area Rapid transport system. So they want to construct a tunnel. So the Republicans are asking what is this tunnel going to do? Is it going to the tech shops or is it going somewhere? So, therefore, Dianne apparently seems to have asked the question, when can I find some cuts? So, the Republicans said, well, we have a place for you to go first. And that’s a $100 million cut that you can do on this tunnel to Nowhere. Mr Schumer, that is what the Republicans are saying in the Senate.
Sree Iyer: Now the most important news item for today in global, China’s Cyberattack on India’s power grid amid the Ladakh standoff. We have more details. A Chinese State bank hacking group as in recent weeks has targeted the IT systems of vaccine makers also. So it is not just the power grid. As you can see on the screen now, we are showing you all the places where the attacks were taken. We now have details of all the IP addresses confirming where that the attack did indeed happen. As a matter of fact, in October 2020 they managed to hack into some systems bringing down the power supply for portions of Mumbai for a time of about 10 to 12 hours. So now, this thing is real. India needs to wake up to this reality and India needs to really figure out how to fortify its security. So that such attacks do not appear in the future. Now, these are not some things that are released by the Indian government. These are data that has been collected by an independent IT investigation agency. Sridharji, what can you tell us about this? And do you think it is going to stop or this is now the new warfare that China is going to carry?
Sridhar Chityala: Firstly, it’s not going to stop. Secondly, these practices have been in existence and the United States was a target, now India is a target. This is a subtle way by I call these types of actions nothing but sabotage and stealing. One is, this is sabotage that was done, which you referred to with regard to the two major vaccine labs. The Serum Institute and the BioNTech Lab in Hyderabad. So these two Labs were attacked especially around the vulnerabilities of the logistics as well as some of the capabilities and services that these labs provide. Now that is basically stealing. So in other words they call the attacks on the labs is around the extrapolation of exfiltrating. Intellectual property is one thing but the one that you mentioned around the power grids is sabotage. Now, I just want to add one other thing. The load dispatch centres, the substations, the grids and the ports, four points were attacked which means they were very very precise in terms of what they wanted to do, which is sabotage.
Sree Iyer: This is very sobering news for India and they need to really figure out how to overcome this. The next news item we have is Srilanka’s priority partner number one in defence, India will be sending 23 aircraft for its anniversary function. What is this, sir? Is this a new initiative by India to increase its engagement with its neighbour?
Sridhar Chityala: Indeed, Sri Lanka is being wooed both by China and India and Sri Lanka is a strategic partner for India right around the Bay of Bengal and the connectivity into the Indian Ocean. So, therefore, I think this is just one more facet which is to say we are close, we are neighbours and we are here to help you and this is a historical relationship etc. That seems to be the common thread here.
Sree Iyer: India and Brazil are going to cooperate in the areas of satellite, technology, and services. This is a new area that India is, in fact, quite strong in. Isn’t it?
Sridhar Chityala: Yes, India is slowly, but surely developing and offering its capabilities to a number of nations. I think the United States has a partnership. Some of the South Asian Nations have a partnership with India. Brazil has approached India and basically said that it wants to leverage India’s capabilities both for launch as well as for other incremental services by virtue of the huge capabilities that India has developed in this area. When I say other it could also be you know defence and other types of communication and surveillance.
Sree Iyer: In other news, foreign journalists in China are saying that there is a rapid deterioration in media freedom in China and the United States is developing a rare earth-mining strategy to mitigate Chinese dependency. The United States is going to deploy across the length and breadth of the Indo-Pacific to combat the Chinese challenge. So there is some tweaking of the Quad going on, isn’t it?
Sridhar Chityala: I think there are two major concerns that India needs to be contemplating and thinking about. One is increasingly isolating, increasingly omitting India’s name in any of the major Indo-Pacific initiatives. So there was a major strategy meeting on Monday which was presided over by Lloyd Austin himself, and basically, a broad strategy was discussed. Japan was mentioned, Australia was mentioned, Korea was mentioned, effectively to state that they’re going to partner with all the South Asian, South China Nations and to have an end-to-end all-encompassing strategy from Africa on one side stretching all the way to Pacific into Japan and Australia on the other side. Historically, the way it has been done is, the Quad was developed where components of this whole Maritime Gateway would be divided into major portions and specific countries would take specific responsibilities. That’s why it was called a quadrilateral partnership. The quadrilateral here being Japan, Australia, the United States, and India. But we are seeing less and less mention of India. It is also one of the topics that were discussed, which will highlight on another day. The trade, that India would, it’s not a done deal. India has tariffs and trade restrictions. And so, therefore, the Biden Administration would revisit some of the most preferred nations as well as the trade statuses or the trade partnership. India doesn’t have those general systems, general services and preferred partnership status. India doesn’t have it. Trump didn’t sign with India as yet. So again in the trade side you find that India gets knocked out. This is during the phase the United States bypassed China as the largest trading partner. The bilateral trade between the two countries is close to $153 billion dollars as of 2020. The Investments, annual investments, we have foreign portfolio FBI and direct investments are around $50 billion out of the $73 – $74 billion that India generates by FDI which is a fundamental imperative need for developing and moving towards its 5 trillion economy. So it is important that India exercises great caution and seeing what is happening in this new administration.
Sree Iyer: In the Myanmar coup, ASEAN is going to meet and try and resolve this even as the US is warning of further costs and escalations. Is Bangladesh moving closer to normalizing relations with Israel? That could be the next partner that would be normalizing with Israel. We will have to wait and see. Sir, I’m going to rush into the covid part because we are running a little bit late today. The market gives thumbs up to J&J single-shot vaccine and it could be ready very shortly. The FDA clearance for that is going is predicted to be available as early as in May and that makes it a compelling option because you just have to do it once. The thing can be stored in the refrigerator instead of special storage places. We have to wait and see how quickly this starts acting up.
Sridhar Chityala: The J&J vaccine is going to be available now. Right now. In fact, in India, it would be available even within the next week or two weeks J&J should be available. Novavax, which is the new one that is undergoing FDA trials will be available in early May.
Sree Iyer: You are right, I stand corrected. You’re right. You’re right. So I think the J&J already has an emergency sanction from the FDA, isn’t it? So if you can be deployed right away. So about 9% of the United States is vaccinated and it is expected that the single-dose vaccine will be administered to 18% of the population. At this current rate of vaccination, about 70% of the United States would be vaccinated by the 20th of September and 90% by November 20th. So the all good news. We have to wait and see how this goes.
Quickly, the last point about covid. The WHO panel is strongly advising against the use of HCQ. What do they have against HCQ?
Sridhar Chityala: I think we should have a separate session on covid and HCQ. I really do not understand the rationale other than it can kill the whole Pharma and Biotech Industry. To make a sarcastic comment, the HCQ protocol was used in India. HCQ protocol was used even here, in the United States. HCQ protocol is used today for rheumatic arthritis and other types of problems. It is very effective as a deterrent or Immuno immobilizer.
Sree Iyer: In the markets, markets soar yesterday on the back of the stimulus bill and the bond rates are now stabilizing and in the vaccine front also, there’s some positivity. So everything looks good. So this year is going to be the year of the stock market from the looks of it, isn’t it, sir?
Sridhar Chityala: This is the year of the stock market. Jamie Dimon, this morning made a statement which is there’s only one issue that we need to be worried about is the excess stimulus and unwarranted stimulus. Otherwise, the market is here, it is going to go gangbusters this year. You know, we’re not too far from the target numbers, 3900 is the S&P. We also close to 32,000 on the Dow. So I think we are looking very very strong on the back of resurgent GDP growth in the United States and many parts of the world. I would say that the same for India. India’s GDP is projected to be, the third quarter saw a small increase, I think if I’m correct 0.4% increase in the third quarter and they will finish the year on a reduced contraction. But the next year is projected to be anything between 10% and 12%. And again, the markets are going to be buoyant. That is reinforced by a tremendous amount of capital that is flowing into the FBI from the United States.
Sree Iyer: That brings us to a close to today’s episode. We will be back tomorrow, same time same channels. Do subscribe to our Channel and also donate to our cause and there is a membership program that we have started and that could also be very useful for those of you who join. The numbers are not very big. I think you will find the benefits more than compensate for the membership fees. Thanks for joining once again Sridharji. We will see you tomorrow. Namaskar.
Sridhar Chityala: Namaskar. Thank you. How a wonderful day.