Sree Iyer: Namaskar, this is your host Sree Iyer. I am with Sridhar Chityalaji, we are here to bring you Daily Global Insights, episode number 122. Today is the 19th of March 2021. Sridharji namaskar and welcome to the channel.
Sridhar Chityala: Namaskar and good morning to everybody on this wonderful Friday.
Sree Iyer: Sir, 21 states are suing Biden over the Keystone XL pipeline closure.
Pakistan promotes Belt and Road port for promoting Central Asian trade.
Defenders of the Quad, Austin heads to India for his new China playbook
And AstraZeneca deemed safe by the European Unity after some countries suspend usage.
In America and Latin America news, Nancy Pelosi, the current speaker says that citizenship for illegal sends a message to the word that we in America value diversity. She may want to talk to Angela Merkel about that. What are your thoughts, sir?
Sridhar Chityala: Well, first and foremost I think, you know good to be here to synthesize various events and activities that are going on. As far as Pelosi is concerned, they have been very steadfast. There are about 11 million illegal immigrants in this country by one count, there could be 12 or 10, these numbers vary. You are very right that she should speak with Angela Merkel. But, the story is that Pelosi and Schumer have their own agenda progressive agenda. They were on it, even during the Trump Administration period. They did not have the votes to get it done. They also could not get it done during the Obama Administration which is cited as many of the progressive agenda would be impaired or would be stalled if the Georgia Senate races were not won. So, the HR1 act effectively legalizes immigrants. The first phase of that has passed the first phase encompasses what you call the dreamers. The dreamers, I think one number is 2.5 roughly. Another number is 4.4, but, whatever may be the case that this basically is those who came into the country as illegal when they were young who have grown and become adults and that bill has been passed and it goes to the Senate. It remains to be seen what happens in the Senate whether they going to use filibuster or whether it is going to be again a simple majority and get through remains to be seen.
But this is a very important playbook that Democrats are ushering in. The playbook is on Thursday we had an important report released by Tim Cook which is to say that you know, I have 450,000 dreamers working in Apple. Prior to Jeff Bezos had released to say that he supports the normalization of citizenship to the dreamers and you know, they are the Frontline workers, they have fought during the covid phase, so we need to recognize.
So, you can see that there is both political and needless to say the business community from the West Coast offering the support. So, I think this is more or less unless Lindsey Graham has said under the present circumstances of this surge and the consequences of many illegals making it etc. unless there is a significant stalling supported by democrats. This may kind of get through,
Sree Iyer: Sir, a couple of things, I wanted to clarify that the numbers 2.2 and 4 I think in millions isn’t it?
Sridhar Chityala: Yes, million
Sree Iyer: And I find it incredulous that Apple might have 450,000 dreamers in their payrolls. I’m not even sure they are that many people in their payrolls.
Sridhar Chityala: it is 450, correction.
Sree Iyer: 450, that makes sense. The Democrats are pulling a shroud of secrecy over voter rolls and state elections bureaucracy. Now, is this what you’ve been talking about for the past few days about gerrymandering their counter to it?
Sridhar Chityala: No, I think there is a whole range of issues around the voter reform. This is very specific as it relates to one segment of it, which is the coming of the inactive voter base. There’s a typical process where you look at somebody who has not voted, you know, you don’t keep them in the voter rolls. And you actually call them basically, this could be for various reasons. So, the story is that what Democrats are saying is? This is no more allowed. Everybody should be on the list. And the shroud of secrecy is around whether any of these people voted in this election to be kind of quantified, to be assessed is not to be made. It should be a secret, should not be made public. So, therefore, there is a bureaucratic pressure that is put on in the stage not to go into the details of these inactive voters in the voter list. But, then just to get them through the process. This is been the entire voter, this whole process which is the rules, the governing process, what can be changed, what cannot be changed and what should be the basis and it is almost like an opt-out so everybody has opted in for postal ballots rather than coming in and asking for it, that is an obtained. So here is everybody is opted in only when you say, I’m voting in person, then, you are opted-out. So therefore you have these ballots, signatures, identification, verification all these facets whether you have a signature, whether you have a dual authentication all these processes are likely to be reformed, which are the very wide and sweeping change that is likely to come in. And I have a feeling that this along with the immigration bill could be a big showdown between the two parties.
Sree Iyer: Sir, let me understand this, according to the United States Constitution one must be a citizen to vote, Yes or no, sir?
Sridhar Chityala: Yes, that is the Constitution.
Sree Iyer: So, if they want to change anything would that not by inferring that they would need to amend the Constitution also.
Sridhar Chityala: This is where the Supreme Court has not given a very specific ruling and this is where we needed to kind of going and for a variety of reasons SCOTUS has been very dismissive. Depending on the composition of the court whether it is heavily in favour of the Democrats are in favour of the Republicans, this generally tends to get at the SCOTUS level discussion. Most of the conduct of the elections in the constitution is defined by the governance process established by state legislatures, so, the state legislature can stay. There are some unique circumstances; therefore, I am allowing certain categories of people living here to vote in the election. So, where the state legislature enacts the rule and in the process, it probably bypasses the Constitution. And even the ID whether you need a driver’s license, not a driver license, whether they should be dual authentication for postal ballots, etc. etc., that governance process the states have the right to establish and state legislature can pass rules, which can bypass the Constitution.
Sree Iyer: I am just trying to make it like a black-and-white so that it simplifies the whole question and hopefully these are some of the fundamental questions that people in the Senate will ask. Moving on, Sir, President Biden has staked out new ground in the battle over filibuster this week, saying for the first time publicly that he supported changing the practice now, he is been in the senate for dog years, years.
Sridhar Chityala: 39 years.
Sree Iyer: So, 39 years, he never had a problem with this.
Sridhar Chityala: He never had, because the reason is he was not the president.
Sree Iyer: Well, I find it very strange, sir. I don’t know if you want to add to that.
Sridhar Chityala: Well, I think that it’s political opportunism. That’s what it is. This is politics. Politics has no logic or rationality. Politics is opportunism and using to get your agenda. So, they say that the progressives and the left have prevailed over the president to the extent that now he is issuing a public statement. The fact that you asked a question he has been in donkey’s years. So, he has been in the senate for 39 years. He followed the principles of the rules because he never felt that you know, he did it to work with his colleagues to get things done that works his way or doesn’t work his way. Let’s not forget that once they break this rule today, tomorrow if the Senate goes to the Republican Party, then you know, there’s no filibuster because the Democrats have bypassed it. So, the concept of minority prevailing over the majority. Even if that means that the vice president stepping and voting it is considered a majority. So, equality is considered a majority when the tie is broken by the vice president as per the Constitution. So, this whole concept of the filibuster was to have a check and balance. So my personal view is that as a US citizen, I think they have to come to your conclusion and establish this constitutional premise that there are major for such certain classification of changes.
Sree Iyer: Let’s move on, 21 states that are suing Biden over Keystone XL pipeline cancellation. So walk us through this a little bit when the president signed an executive order, did shell extraction like stop like a switch or it gives like a 90-day period in within which to wind up the thing. How does that play out in reality?
Sridhar Chityala: So, basically there are three specific facets, one is Keystone Pipeline this is about Keystone Pipeline which has a major economic impact both on jobs as well as the energy independent as well as the revenue that the states can from the sale of the energy, so, the taxes that flow with it. So, it has got employment, revenue and it has future revenue built into this. So, as it relates to Keystone Pipeline, you know, the litigation surrounds that. The second facet that is some of these states also has land ready to lease for fresh drilling and also waters ready for offshore drilling in some of the states. They saying that we are filing the litigation basically because you give the environmental rights and this to us and you don’t come in and make a decision on this. I think that’s what this is about.
Sree Iyer: And the Department of Homeland Security Chief faces calls for resignation over border Saga that is a surprise. I mean it’s just a day since he got confirmed.
Sridhar Chityala: Yes, because of the surge and because of this alleged belief that many terrorists or people with questionable National Security or people with records that are questionable, you know felons, drug traffickers, criminals all trying to make their way into the country that’s another problem. Today, there is a report which says according to the research by some of them are either non-profits that over 50% of the people who are getting released or who come from the Border are covid patients, so they have not been tested. So, it is a Catch and Releases policy. So, they saying because of this and then, DHS had acknowledged that there have been mistakes, they have acknowledged that this has become untenable situation. Democratic Party leadership itself are acknowledging that there is a problem. So, naturally, the political play here is asking Mr Mayorkas to resign.
Sree Iyer: And the Senate votes to confirm Xavier Becerra as the Health and Human Services secretary and it also confirms William Burns as the head of CIA. These are expected, isn’t it?
Sridhar Chityala: I think William Burns was held up by Ted Cruz in terms of some of his beliefs and opinions, but he released his hold and so he got through. And as far as Becerra is concerned, that was fair as you know, he had very specific beliefs and principles around, you know abortion and anti-abortion issue. So, he was held up. So it seems like, you know, he’s also been released. So, they are basically more or less allowing most of the people. The only person is Ms Tanden was the only one who faced the Wrath and didn’t make it.
Sree Iyer: And Biden to reach a hundred million vaccines in hundred days. That’s an impressive achievement.
Sridhar Chityala: That’s a very good number. It’s an excellent number and I think that right now we are on target to reach that number and there is a vaccination program in the United States that is going exceptionally well.
Sree Iyer: Now, in Asian News, The US urges China to use its clout to push its ally North Korea to denuclearize. This rhetoric has been going on again for a long long time, why this new urge again?
Sridhar Chityala: Basically, I think that it is a philosophical difference between the Trump model and the Biden model. The Trump model is he was trying to engage with everybody including Iran, which was sabotaged as we know by back door conversations that occurred. In the case of here, he had a meeting with the North Korean leader in Singapore with two days of meeting they discuss, they talk and he kept him in the bottle. So, he was quiet and the moment he saw Trump is leaving, he’s back threatening and making a nuisance of himself. So, the Biden Administration, Mr Austin and Mr Blinken notably. Mr Blinken has said China please your offices speak with your ally and ask him to make it a nuclear-free zone. It is possible that South Korea had two plus two in South Korea too. So, therefore this is Biden and Austin, so they would have said that you know, they would have been pressure from South Korea to calm waters and that is why you have a press statement coming on the eve of the Alaskan meet.
Sree Iyer: And post the Myanmar coup Mobile, Internet and public Wi-Fi blackout continues. How long do you think this is going to last?
Sridhar Chityala: Well, I think Junta is very confident that they can weather the storm. Remember the democracy is relatively new in Myanmar. So they could sustain this for some time.
Sree Iyer: Pakistan promotes built-in Belt and Road Port for promoting Central Asia trade, this is the Gwadar port or is this something else?
Sridhar Chityala: This is Gwadar port.
Sree Iyer: China issues a stern warning the US-Japan joint statement on Coast Guard law, Taiwan Strait issues, Maritime claims Etc. And China stages its own two plus two with the United States and frigid Alaska to stem the image of an international anti-Sino Coalition forming. I mean whether they want to accept it or not. There is an anti-Sino Coalition forming, isn’t it?
Sridhar Chityala: There is an anti-Sino Coalition, but China firmly believes that if the rhetoric of the US is marginalized rest of the stuff will be can be addressed.
Sree Iyer: And in other news, the United States Secretary of Defense Lloyd Austin heads to India with his new China Playbook. It would be interesting to see what’s going to change. What are your thoughts, Sir?
Sridhar Chityala: Well, I think the first and foremost fact is this is now in my view, one plus one rather than two plus two that just reflects that they consider India as an important strategic partner both in the Defence front as well as on the overall Indo quad custodian. And the way Austin is approaching is that everybody is given a role, Korea, you look after this, Japan you look after this, the US will be here, India, this is what are your responsibilities. They are using this responsibility type of playbook. They recognized China has a threat and Mr Austin sees the whole Indo-Pacific be bifurcated into various areas as a kind of responsibility and I think that’s the scope of the discussion with Mr Rajnath Singh in the conventional model of President Trump, Mike Pompeo. There used to be two plus two meetings. So Mike Pompeo would lead the efforts with Jaishankar and Ajit Doval and the Defense Secretary or the head of Armed Forces or the Defense team will be in the negotiation. Dr. Esper was attending not all meetings, but some of the meetings. But, it was part of the two plus two approaches. So that’s the fundamental difference between Austin’s model and the past model.
Sree Iyer: And Rs. 8 Lakh Crore investment in Pipeline in Indian chemical industry by 2025. So, is this just sort of like India’s way to try and rebuild its APIs for the Pharma sector is that you’re reading too?
Sridhar Chityala: It is rebuilding the APIs for the Pharma sector. It is also consolidating and building, it is refining more oil produced. So, it also building the petrochemical kind of complexes. It is a reflection that they are systematically going after some of these major areas in terms of indigenization and making it a domestic large-scale industry for consumption and potentially for export. Now, chemicals are making their way into that and investment coming reflects the Strategic intent of the Indian government.
Sree Iyer: And viewers if you want to know more about what API for the Pharma industry means? There is a hangout that is going to come your way in the next few days of mine with Lt Gen Ravi Shankar, so stay tuned. And Rajya Sabha passes a bill to raise the foreign direct investment in Insurance to 74%, that’s a significant move, sir.
Sridhar Chityala: Well, I think the Insurance sector was on the radar after the Banking sector, where private Banks were allowed and capital needed to be coming. Insurance was one of the sector’s which was untouched. So I think the fact that they are moving the insurance sector to 74%. I think the original was around 49% then, they are also going to make a LIC an IPO. I think the publicly listed, specific segment of dilution is not 100%. The dilution is part of it,I think this was featured is a reflection of again, one of the areas that Modi government was pretty criticized was on the macro and the fiscal reforms which is namely you know, still not enough privatization of the industry are done. This is people from outside and those who are from inside making this claim notwithstanding the fact that there are 1 million people striking in India today that do not privatize the Banking sector.
Sree Iyer: And Nitin Gadkari announces Vehicles scrap age policy for more about this, please read an article that is appeared in PGurus.com. We have discussed the entire details in that. In Europe Middle-East and Africa news AstraZeneca has been deemed safe by EU health agency after some countries suspend its use.
Islamic soldiers killed about 30 soldiers in the North-Eastern part of Nigeria in the last four days
In the markets, the United States jobless claims rise to 770,000 with workers still getting laid off. What could be the reason for this Sridharji?
Sridhar Chityala: Demand. The economy is not back to its normal. So there are two reasons one is demand. The second is demand across all sectors. The demand is picking up and there is an abnormality of demand in some of the areas for example restaurant business, for example, airline travel. For example hospitality business, some of these sectors have been disrupted and probably will remain disrupted for a period of time. So the layoffs are happening in those segments of the industry. So I think that’s all one can attribute it to.
Sree Iyer: The US manufacturers call on Biden and ask him to be tough on trade issues. The markets ended sharply lower today as the treasury yields edged higher and I will mention the numbers and then we’ll try and get an explanation from you Sridharji. Dow Jones Industrial was down by 153 points, S&P index by 58, NASDAQ by 409, crude went down by 5 dollars, Brent went down by $5.15, 10-year treasury yield 1.73%, Bitcoin is down to $57,859 57. Sridharji, what is the reason for this fall today?
Sridhar Chityala: The reason for the fall are two things, one is the bond market is not buying into Jerome Powell’s theory that they will not be significant inflation as a result of money flowing in that’s number one. Number two is that the markets are also saying if you’re going to continue to push this amount of debt or you guaranteed that there are enough buyers in the market, it’s good. The present tranches have come that’s good. That’s been taken up. Are there enough people to buy, that’s the second reason. Always markets were inverse to the yield curve. As they kind of price of the yield then you are beginning to see the consequences. So it is almost like Tech is your growth stock, the value stocks are those yield dividend and which are like people who use from a daily usage point of view or highly consumptive. So Bond yields indicate that there is this rotation going on from tech. That is why NASDAQ lost 300 points relative to S&P and Dow and Dow was very marginal is less than you know, 1% in terms of the slide. So, that is the reason, I think I may continue to see this. Again, headline inflation numbers that around 2.2% and Jerome Powell believes that inflation will be around 2%. I just don’t believe that is being accepted by the markets. I have not stated this here, but I published it in the blog that we have seen 44 days continuous days of gas increasing prices on the retail footprint in the United States, so which is one of the reasons why that there is a price increase, but, remember gas and food is not included in the computation of co-inflation.
Sree Iyer: Thank you very much, sir. And that brings us to the end of today’s DGI. Have a great weekend; we will be back bright and early on Monday morning with the news. Do subscribe to our Channel and also donate to our cause and if you would like to become a member welcome aboard. Thanks for watching. Sridharji, as always a pleasure to have you with us and we will be back again on Monday morning, namaskar.
Sridhar Chityala: Namaskar and thank you and have a wonderful day!
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