Sree Iyer: Hello and welcome to episode number 110 of Daily Global Insights. Today is the 3rd of March 20 21. I’m joined by Sridhar Chityalaji. Sridharji, welcome to PGurus Channel as always it’s a pleasure having you here sir, namaskar.
Sridhar Chityala: Namaskar and good morning to all.
Sree Iyer: Viewers in the main points for today’s news. How Florida got the covid response, right. The US imposes sanctions on Russia over Navalny poisoning. The US House lawmakers introduced a bill to end the adoption of the one-china policy. 82 billion dollars will be invested in port projects according to Prime Minister Modi. And India and Iran are in talks to build a rail link between Chabahar Port to Zahedan. This is going to have a lot of implications. Let’s first start with the US News, Florida got it right the other lockdown states got it wrong. Why do you say so?
Sridhar Chityala: Well, I think Rick Sanchez gave a wonderful explanation as to why he got it, right? He got it, right because you can see that he has been able to coordinate and control the vaccines. It has got the lowest unemployment rate. It has got more in-person education going on in the state. He has opened the businesses. Florida is back to business. There are lots of companies moving including Banks moving to Florida. He has made the state very business conducive rather than more socialistic in terms of the principles. Vaccination programs, he has more people vaccinated in who are older than 65, which is currently the target around the country. So he is, you know, quite the lowest mortality rate, low unemployment, high per capita relative to many of the states. So he says, you know, I got this right. He has now, also come up with the introduction of the principal to deal with this undue influence that CCP exerts in many of the states. You know, we saw it in Texas. We have seen it in California. We have seen it in many of the large very critical states and Florida is a critical state. So it’s come up with the law which says that any CCP type influence will be dealt with appropriately at the state level.
Sree Iyer: Now, you made a fairly significant observation that the Chinese Communist party is indulging or interfering in the affairs of various states of the United States. Is this something that is a recent phenomenon or is it mean happening for a long time?
Sridhar Chityala: I think this is going on since the great Biden-Obama years. It didn’t stop. The Trump administration only began to pick it up during almost the fag end of their term and they began to realize it. On three fronts one, they saw a profound influence through endowments in education a number between 4.5 to 8 billion dollars was invested by the CCP into the top colleges like Harvard, MIT, Yale and so on. They also found that there was a close collaboration on the research front going on between some of the schools and universities in China. They also found that many government officials were compromised, you know, the names of the Georgia Governor came up, you know, obviously, California and some of the other important influential members came up as potentially compromised. Of course, needless to say, you know, some of the democratic leaders in the elections, so these both on the covid side on the education side influencing through capital injection into some of the states through setting up Industries, which were directly feeding into Chinese aspirations and one after the other during the fag end of the term, you know, Trump was trying to you know, impose sanctions on many of these companies.
Sree Iyer: Congress is trying to pass a new bill called the HR1 bill and the first read indicates setting off some alarm Bells. Can you explain a little bit about what this bill is all about? And what seems to be the ultimate aim of this bill, sir?
Sridhar Chityala: Yes, House resolution 1, if you want to be very sarcastic or hypocritical then you can say it is a way by which the Democrats want to control the conduct of the elections winning away from the agreed principle of the state legislators in each of the state’s owning and managing the process and the conduct of the elections. The HR1 one act would give the federal government right over the election process, mandates on what can happen within the states, also around the eligibility of the people who can vote and that type of meetings and the type of campaigns that is permitted within those States and who can participate in those campaigns. Also, on the whole notion of the voter registration, voter ID as well as this most controversial absentee ballots. So, effectively they are saying we at the centre will determine how exactly we will face and change the rules and conduct the elections in each of the state’s taking the law away from the state legislatures. This is one way to say we control the agenda. We saw that in many of the states what we witnessed around the absentee ballots, what we witnessed around the postal ballots and what we also witnessed around the Twitter’s the tech platforms exerting their overt control over blocking including the president of the country. Blocking their views and blocking their campaigns saying that’s political interference. So, they have experimented with this quite well and they feel that this is the time to introduce it so they can control effectively the whole process. Now, when you look at the immigration process currently at play, the illegal aliens are at a harmonization process, then we are going to have zero tolerance to complete tolerance and decriminalization of the borders. So you could have a whole stack of people coming in who are compassionate because they’ve been allowed to come in and become part of the community and this process may even legitimize those guys voting in the elections and which is why the Republicans are calling foul. And they have come up with their own alternate model, which is more around preserving election integrity allowing the process to be constitutionally within the state legislatures and you know consistency and tightens control over this whole, you know mail ballot reform.
Sree Iyer: Sir, regarding the January 6th riots the FBI appears to be sending some confusing messages on the one side they are saying that the footprint of Antifa and other such similar organizations is not there and on the other side they are saying something else. It’s a little confusing when I read all the messages together. What do you make of it? Christopher Wray statements about the FBI.
Sridhar Chityala: Exactly the same as you. It’s like a politician FBI director is acting like a politician. Well, the January 6 riots were a result of domestic terrorist groups, by the way, no group, which is potentially the target is a terrorist group including KKK. I won’t call them as you know terrorist group. So, therefore, who is a terrorist group? To be determined. Do we know the cause of the death of Brian Sicknick? No, we don’t. We know that he was beaten up with a fire extinguisher and he kind of succumb, but we don’t know what it is. The investigation is still on. So, in summary, the FBI director is behaving like a true politician there was an intense debate between him and Lindsey Graham today in the Senate on the whole January 6, Capitol Hill riots as well as what were the causes etc. So, they say that individual people may have acted and in fact, he went on to say, you know, it may be an Antifa pretender or it may be a fake Trump supporter who calls himself. So he remained neutral across all sides of the fence. So we actually don’t know what the truth is.
Sree Iyer: In stimulus news, the Democrats are pushing Biden to have a periodic stimulus like more than one automatically happen. The first one the house is already passed the bill and it looks like $1400 checks per person in a family are headed down to the United States citizen. But, what is these recurring payments and how realistic is that now?
Sridhar Chityala: Now, we’ll touch on this when we get a little bit down the track into the markets, but let me give you a direct answer. What we were witnessing are three specific programs. We touched on this immigration or the open border policy that the Biden Administration has adopted with such a frenzy through an executive order. What is going on in this particular phase is that they have already done this for the children you remember you have a 3000, you have 3600 child tax credits. So this is going to be a recurring payment going into each of the families. Imagine if you have six kids or four kids what the pay-outs would look like.
The second is what they’re saying is this covid situation could be, you know prevalent for a long period of time so we will enact a bill whereby this $600 are 1400 dollars or $2,000 becomes a recurring payment. We implement it and at will, we can take it out. The whole target for them is this 9 billion whom they believe or you know below the poverty line. The 12 million illegal aliens who don’t have a formal mechanism of receiving unemployment benefits? And then you have these new incumbents who are going to be coming into mainstream America and you need a funding model. What we are witnessing is the socialization of the US economy which is almost are surreptitious social security benefits program pre-retirement for every member of the family who thinks that they require this money, that’s the second.
Third, we already covered this yesterday, which is when we will have a 2% tax for those who have a household wealth of 50 million to 1 billion. And then those who are about 1 billion will have three per cent. Oh, by the way, Miss Warren says and Miss Jayapal says, oh this is fair. It’s fair to have this. So, therefore it only means that those other people can be funded through these particular receipts that we get out of this. So, these three points Point out they are surreptitiously creeping into socializing the economy and the distribution of wealth without any kind of earnings.
Sree Iyer: In global news, Nigeria’s hybrid threat of terrorist alloyed with bandits is composing new problems and a new type of threat that stares at nations in the African continent. Myanmar’s police fires tear gas and rubber bullets at protestants. So, the protesters are still out on the streets in Myanmar and we have to see how that plays out.
The United States imposes sanctions on Russia over now Navalny poisoning and the US House lawmakers introduced Bill to end the adoption of the one-China policy. This is a significant thing. This has been talked about for a long time but looks like now the United States is getting serious about this. Sir, I’d like you to comment together about all these four things.
Sridhar Chityala: First on the Nigeria side, you know the Boko Haram is back in Action. They were silent during the Trump phase now, they’re back in Action. They abducted 300 school kids. It looks like quite a few of them are back, but they have been formally converted into the Islamic faith and historically the story is they become the slaves for these fighters and submit themselves that to that agenda and the cause. Now the point is that Nigeria is an oil-rich nation when I say use the word oil-rich. I mean it is an oil economy. So, there’s like there’s been lots of kidnappings and so on and so forth. There seems to be a seamless confluence and that is causing a problem. They don’t know whether it is actually Boko Haram are these bandits who are engaged in this process? So, this is a problem that Nigeria faces. By the way, Nigeria is not part of the black lives matter black lives do not matter seems to be the policy as far as Nigeria, Sudan and some of the African nations are concerned because these things don’t appear to be part of the agenda of normalizing the lives of people.
As far as the second question that you have raised is around the one-China policy. Well, we had a one-Tibet policy which is our Tibet Independence policy and Taiwan has now emerged, Hong Kong is gone, that’s the other independent region, Hong Kong is no longer in contention. Taiwan has become a red flag. So many of the Asian allies such as Korea, Vietnam, Japan even possibly ASEAN have made it very clear that Taiwan is a red flag if China makes an incursion into Taiwan. So the US has woken up to it while they lost the South China Sea and the Spratly Islands and all kinds of little areas around that nine dotted line. As far as Taiwan is concerned every nation has raised a red flag. In fact, there is a report from the US Army as part of the US Defense Forces and US Army that 2022 could be a very difficult year for Taiwan and China may make an attempt to forcibly take over Taiwan for two reasons. One, by then be 2021 Winter Olympics is over. Two, it coincides with this biannual Communist Party gathering or Congress and it may be rah-rah especially with Xi Jinping facing some internal challenges within the CCP party. So they’re raising the red flags whether the US is organized in gear, we don’t know.
Sree Iyer: There has been a surge of Chinese incursions into the area surrounding the Senkaku Islands which are a part of Japan and now the Japanese are scrambling to try and see how they can protect these. What is the significance of the Senkaku islands? Is there any energy deposits or what exactly is the significance of those tiny-tiny Islands there?
Sridhar Chityala: Well, I think that there are two important elements. One element is the Chinese attitude that is ‘Might is right. We have taken over a Japanese fishing island.’ It’s also a strategic location in terms of Taiwan Straits from observation and from a navigation point of view. It wants to have a clear path around the Taiwan Straits both on the maritime side as well as on the air. So Senkaku is an observation post in addition to being a fisheries island, in addition to being a strategic outpost for the Japanese. So, therefore, I think that is why it is important for them. Not only this island but also there is a small tip which is further ahead, which is in the Taiwanese Sovereign jurisdiction and that is also being targeted by the Chinese so that they have seamless maritime and air access.
Sree Iyer: Prime Minister Modi has said that India would be allotting about 82 billion dollars in Port-based projects and the power of ministry in India confirms that China-backed hackers targeted the power centres in India and all the attacks were thwarted. We had a detailed session on this on episode 109. Where all the attacks thwarted? I think not. There was an outage on October 13th 2020, I believe in Mumbai that lasted up to 10 hours. We could be wrong but we think that that was indeed a successful attempt on part of the Chinese attacking group to do this thing. So we have to wait and see why India is denying it. Perhaps accepting that would mean that they are vulnerable, so we can understand that. Do we have anything to add to that, sir?
Sridhar Chityala: Now, I think that what you said points out is at least the ministry has come out and acknowledged that there were attacks from the ‘Sugar Panda’ which is the code name for that specific group, which was targeting our infrastructure.
Sree Iyer: So you heard it here first, about all the details. We’ve been hearing about these in bits and pieces but in episode 109, we showed you a map of India, which were the different places where the attacks were done. We have even more information, but I think in the interest of confidentiality, we’re not going to reveal that part. Let’s move on to the next thing, sir. Pakistan and Turkey are planning to have a rail link that will join Istanbul with Islamabad through Zahedan in Iran. I’m going to try and put up the map here, sir. So you have the map up there now. So we have Istanbul all the way across Syria, Iraq, Iran, and all the way up to Zahedan, which is what you can see as the arrow pin. That is Zahedan. It’s at a point where Iran, Pakistan, and Afghanistan meet, so it’s a very critical point. This rail line is going to join Istanbul to Islamabad through these countries. Any thoughts, sir? Do you think this is a feasible project?
Sridhar Chityala: This is a feasible project. This is one of the projects that we discussed that will become part of the Belt Road initiative. If we recall, Rail Link between Turkey and Pakistan via Iran. But what is strategic from the perspective as far as Indian interest is concerned. India wanted to have a link between Chabahar and Zahedan. It is almost equidistant from Kabul to Zahedan and the port to Zahedan. So it looks like both of them want to get through that point potentially creating a logistical nightmare. It is conceivable it remains to be seen how this develops. When you actually take a look at that map one would observe that you can almost divide the West Asian region and the African region is one block and this entire Central region starting from the west of Pakistan into Afghanistan, Iran, and going all the way to North West towards, as you rightly pointed out, Iraq, Syria, and into Turkey as another block. So is it conceivable that the phenomenal policy work is done by Trump Administration to insulate Qatar and make them reunite with the GCC countries? It’s a master policy to insulate that piece and you will observe that potentially India will inch towards West Asia which they already do and then into Djibouti and Gulf of Aden into the territories of Yemen and so on recognizing that there could be potential conflicts because of the Chinese, Iranian, Turkish, Pakistani link in the central block. So it’s looming trouble but I think India has organized itself reasonably well from a strategic point of view and Trump and Mike Pompeo’s policy of forming the investigation block and having a peace accord with Israel augurs well. Because should there be an attack from Israel, it will be in the central region which is around Tehran rather than in West Asia.
Sree Iyer: And we’ll have to wait and see how that plays out. So let’s take a look at the markets now. In fact, before that let’s take a look at covid. Merck, the rival of J&J is also going to produce J&J’s vaccine. So this is a rare situation where the rivals are cooperating together to bring out vaccines quickly.
Sridhar Chityala: I think it’s a great note. President Biden today announced this development is going to help to vaccinate all of the United States by end of May. If you recall, yesterday, we had talked about the entire vaccination program in the United States concluding by November 20th and 70% by September 20th. Now if they can advance it to the end of May, that would be a tremendous boost to a lot of economic activity as well as a general disposition towards managing covid. That will also augur well for the rest of the world as this practice can now be extended or this vaccine can now be extended to all parts of the world and a single dose is a phenomenal outcome in terms of the general management of covid.
Sree Iyer: Yes indeed, I couldn’t agree with you more there.
Sridhar Chityala: So, let me give you a quick market summary. The markets were down after surging progress on March 1st. Dow was down by 150 points, S&P was down by about 32 points. The market took a breather. Here is important data, the oil went down further by about 15-20 cents, it is below 60, it is 59.47, and the 10-year bonds dropped as well from 1.4 by about 10 basis points to about 1.398. The 30-year treasury also dropped to about 2.19%.
But here’s the most important data that I want to touch on. One is, now the economic growth for the first quarter is being targeted at 10% by the FED tracker. I am not talking about the financial institutions and brokers, FED is talking 10% for the first quarter. Why? Very simple, manufacturing has risen and it is at its highest since 2018. There’s a slow rise in prices and inventories are choked because the demand has grown. Though employment remains weak, there are some green spots as the economy opens. This is where the covid mass vaccination before the end of May takes a very significant step forward. But the financial data that backs all this is the personal income surge of 10% in January potentially an outlier as a result of the $600 checks from the stimulus that went out. Then the second important data point is the wealth, personal wealth, household wealth increased by $2 trillion and the spending was just 2.4% because we were coming off last quarter spending rise. Now, the last data point is personal savings, which was captured in these surveys is at an all-time high of nearly $4 trillion personal savings of the individuals. The individuals during the surveys have pointed out, they would not be spending the stimulus money, they would be saving it. Now, this raises the question which is what the Republicans have been saying, one, the household wealth is high, personal savings high, income has surged, this is before the $1,400 is sent out and this is also prior to the so-called ill-conceived recurring payments program kicks in. I that is the case, why do you actually need a stimulus and take this country into deeper debt with another $2 trillion to be added to all the favoured programs of Mr Biden supported by Janet Yellen. So there are some fundamental questions that are arising when you actually look at the personal household data and personal household wealth.
Lastly, the v-shaped recovery worked and the v-shaped recovery that we have been talking about, we have given enough data, that is through the first stimulus that that was applied, 2.1 trillion and the subsequent 900 billion is more than adequate. All you need is a small stimulus targeted to some small businesses as well as some important segments of the economy. That’s my take on markets, but I will pass it back to you for any question.
Sree Iyer: Thank you very much, sir. Is there any way that the government can stop this from happening?
Sridhar Chityala: No, I think the train has left the station.
Sree Iyer: That’s what I thought. We had a little bit of technical glitches here today again, it is just the fact that sometimes the internet traffic is quite high and that can cause some glitches, but I think we have ridden through most of it. Thanks for watching and we’ll be back as always at the same time, same channel. Namaskar. Thank you very much, Sridharji.
Sridhar Chityala: Namaskar and have a good day.
- EP-122 Pelosi defends citizenship to illegals, 21 States sue Biden, India to allow 74% FDI in Insurance - March 20, 2021
- EP 110: How Florida got the Covid-19 response right, US sanctions against Russia & Power grid hack - March 3, 2021
- EP107 US orders strikes against Syria, China insists on taking anal swabs of US Diplomats, then apologizes - February 26, 2021