Mitch McConnell opposes Biden Stimulus plan; Russian Foreign Minister to visit India - S400, AK47 talks; France closes schools on Covid rise; Stocks surge and more!
Sree Iyer: Welcome to Daily Global Insights by Sri and Sree. Today is the 2nd of April 2021. And this is episode number 132. Namaskar and welcome back Sridharji.
Sridhar Chityala: Namaskar, good morning to everybody. It is a wonderful Easter Friday on April 2nd and looking forward to another exciting day.
Sree Iyer: Here are the main points:
Mitch McConnell says that he will not support the Biden infrastructure plan and will fight the Biden Democratic agenda.
Russian foreign minister, Sergey Lavrov is coming to India next week and to focus on AK-47 203 rifles and the S400 Air Defence Shield deal.
France to close schools and ban domestic travel as virus surges.
And markets provide thumbs up as we close out the best March since November with S&P gained up to 4.2%
In US News: House Republicans seek to ban race-based stimulus funding for non-white Farmers. Sridharji, this has been on the front burner, back burner, back and forth for a few days isn’t it or few weeks?
Sridhar Chityala: Well, I think that it has remained and the more constant influx of this illegal or no more illegal, you know, now, these aliens or residents coming from across the border is only looks like more land grab there’s a fear that’s growing. The clause which is very specific is close 125%of the debt was written off as part of the stimulus package 1.9 trillion, whereas the white farmers were excluded from granting this privilege. This is what the Republicans are fighting
Sree Iyer: RNC to intervene and defend Georgia and IOWA laws in the court. So these are the new voter registration laws, isn’t it sir?
Sridhar Chityala: IOWA case there was this too and fro that went on. There were about six seats are eight seats were granted to be Republican and nominated as the Victor. There was an attempt to use the House to derail this and the Weiser council prevail not to do that because that we create precedence, so the IOWA holds. And RNC wants to make sure that such things don’t get repeated. As far as Georgia is concerned the voter sequence number which forms the unique ID is to be is to prevail rather than all these illegal signatures and so on that has been passed it’s been contested by both the business as well as some of the Democrats they still think these illegal signatures of whatever, it is an alternate thing to be used. RNC says they will defend the rights and the rules of the law as enacted by the legislature which is the Constitution.
Sree Iyer: Hunter Biden lashes out at Trump for pushing debunked conspiracy theories. Looks like he has out from under the rock.
Sridhar Chityala: Indeed! Because the reason is on the cusp of his father’s election, there was a lot of controversies and Hunter Biden laptop turned up. The mainstream media and the covert, the kind of surreptitious left-wing groups. It should that whole information is kept under the hoods, investigation commenced Trump and Donald Trump Jr. were lashing out and right during the Trump period, Donald Trump Junior was very similarly the target. So basically he is now it’s his turn to pay back and say, Hey, you know, hold up all these conspiracy theories. I’m not a Chinese agent and blah blah blah. So that’s what he’s trying to play.
Sree Iyer: and another 13 states have filed a lawsuit on Wednesday against the Biden Administration for prohibiting states that accept Federal stimulus funding from reducing taxes directly or indirectly. So this is something to do with that 28%, 21% taxation, sir?
Sridhar Chityala: So, I am going to read the statute, so that it makes it very clear. See basically under the 1.9 trillion America rescue plan, the state may hike taxes, but those are decreased their rates and then use the federal stimulus funding to fill the gap would forfeit the amount used to offset the net tax deduction. This is the interpretation and they have stated even Janet Yellen is unclear in her position. So, the Alabama attorney general’s team Marshall makes a statement that the tax cut ban punishes your States for making changes to the laws that would reduce taxes, the federal tax Band a is an unprecedented an unconstitutional assault on state sovereignty by the federal government, which would commandeer the state of Alabama’s Sovereign power to tax spend and determine its own fiscal policy as granted under the Constitution Marshall said. Today more than 12 State attorneys have filed suit against Biden to block this enforcement of this grievous Federal encroachment on state rights. Three more states have joined along with these 12 States, Arizona, Ohio, Missouri finds similar stories.
Sree Iyer: I take it that all these states are Republican-run.
Sridhar Chityala: Yeah
Sree Iyer: Okay. Well, it’s the same thing the Democratic Run State and they don’t have state tax. They will be subject to the same rule. So we’ll have to wait and see how long before they also change their minds. Senate minority leader Mitch McConnell says that he will not support Biden infrastructure plan and will fight the Biden Democratic agenda. So what are your thoughts on this statement of Mitch McConnell, sir?
Sridhar Chityala: Mr McConnell is woken up from sleep. He feels his RNC leader is the leader of the GOP. The GOP is in opposition. He cannot take things lying down things are coming all over the place. He stands up and otherwise, he’s going to be ousted. He said, I’m standing up to be counted and I’m going to fight this agenda.
Sree Iyer: And more feedback coming on the Biden stimulus plan. The business world is divided over whether to fight the corporate taxes hike in the Biden infrastructure plan. So, for businesses, especially since many of them are taking advantage of tax inversion laws. This must come as a sledgehammer blow, isn’t it?
Sridhar Chityala: It is, it is. 7% of the significant tax hike. It is almost 30%. The story is, it is ridiculous. So because of the tax, the economy boomed for four years because of the tax concessions, jobs, unemployment was at the lowest at 3.4%. The economy boomed for four years when there was a funding plan. There was no new debt added other than the 1.4 trillion which they kind of absorbed it rebalanced it using the 0% kind of interest regime. So therefore that the Trump policies worked while increasing the taxes to fund something that we are not responsible for.
Sree Iyer: Yes indeed and treasury secretary Janet Yellen presides over Financial stability oversight Council and address reforms covering treasury mutual fund and money market segments. The Treasury secretary also likely to establish a Hedge funds oversight panel as part of the financial reform goals, and she expressed concern that the climate change impact it can have on the overall financial system. Sir, Is she having suddenly butterflies, now?
Sridhar Chiyala: I think she seems to be playing the tune to the new agenda of justifying more oversight, more controls on the funds that the bank’s hold within their balance sheet risks being provisioned against it. So, she wants to oversee every one of these things to make sure that she thinks that they are covered or make sure that any of that money that they can suck into the system or the purpose of this. As far as this climate change is concerned an impact on the potential collapse of the financial ecosystem. She just seems like the butterfly effect. It is somewhere the butterfly is kind of flying and somehow it is going to come in and kind of cascade its way and you know have an impact on the economy. I am astonished an intellect of her calibre is going down this specific path.
Sree Iyer: Biden’s Infrastructure plan could boost the US semi-conductor industry says Biden Commerce Secretary. What are your thoughts, Sir? The semiconductor industry is a fairly mature industry. There only three or four fabs in the whole world, Intel is probably the only last remaining Fab in the United States. What are your thoughts, Sir?
Sridhar Chiyala: I have a feeling they made a provision about what I think 540 million dollars. If I’m correct the number that it there. Maybe some incentives going into this because the supply chain is badly affected. The United States automotive industry is reliant on the chips and they were sourcing. China is unreliable. Most of the stuff goes to Taiwan. So Taiwan itself during the Trump regime invited their TSMC to establish a plant in Texas. So there may be incentives that are going towards it. So, to me to that extent it is a good plan.
Sree Iyer: Yes indeed and in India news, Russia’s foreign minister Sergey Lavrov is coming to India next week to focus on AK-47 203 rifles and the S400 Air Defense Shield deal. So my last recollection is that Russia pushed out the delivery of the S400 by at least a year and that India had paid about 40,000 crores as an advance payment for the S400. Now, what do you see as the objective of this visit?
Sridhar Chityala: Politics. It looks like Russia and China are collaborating and now Iran has joined the group so Russia China and Iran. And so this collaboration seems to be revolving around how to isolate India, right? So, how to isolate India. Now, this fellow Lavrov was in a joint press conference in China, it is coming back. All this being done, you are aware. This has been widely covered in PGurus with various kinds of news. They have been keeping quiet, suddenly this fellow lands and says now I want to talk about the S400 logistics system. S400 logistics system, I am told from a technical point of view interferes with some of the USAF 35 planes and so on and so forth. And when India is in the process of establishing defence production with the US, but it is keeping France in the background. This seems to be more chaos and confusion rather than anything substantive to come out, who knows. I mean, you know Russia and India is a unique kind of political Quagmire, but we let us meet to seek the details.
Sree Iyer: GST revenue is at a record high of Rs.1.23 lakh crores in the month of March and the GST Revenue tops 1 lakh crores for six months in a row. So does it mean that India is on the rebound, sir?
Sridhar Chityala: India is on the rebound. The services sector is driving the momentum back. The vaccination programs are helping notwithstanding the spurt in the covid cases that one has seen. To some extent that manufacturing has been impacted or slowed but the services sector is kind of coming back and this is reflected in the numbers. The covid situation is now for the past six to eight months, things have been fairly stable and the economy has been on the back burner. This is the trend, it is a press release that has been made. We will get more definitive numbers very very soon, but it looks like in the past six months or so, they consistently seem to have exceeded GST numbers.
Sree Iyer: An Indian railway is undergoing dynamic growth with world-class advancements in freight and passenger transportation. I mean, I’ve seen pictures on social media of how clean the platforms are, how much more streamlined Railways appear to be running, sir?
Sridhar Chityala: Well, the whole logistics that happen during the pandemic the foot movement that took place and when they had to mobilize in Ladakh, all these Army Convoy trucks going in, you know in trains and trains, very land and move then integrating with the inland Water Systems in terms of this trucks going in go boarding onto the ships, especially around the Northeast. So really I think the locomotive of the Indian economy is the Train, the locomotive of goods and freight and food is the train. It’s very heartening along with the agro reforms that we spoke about it yesterday that they really have given impetus to the common people, which is especially that that train as the infrastructure which was much neglected. They really have kind of given it the boost, very positive for India.
Sree Iyer: In global news, it appears that the US is likely to abandon the CPTPP partnership and instead go for a bilateral relationship with countries like Japan, Korea, the Philippines, and Taiwan. So this is definitely a policy shift. What do you make of it, sir?
Sridhar Chityala: Yeah. I think that the United States is very uncomfortable. It seems to be very comfortable with NATO. It doesn’t seem to be comfortable with QUAD. That’s all one can infer. What consequence this is going to result in, we don’t know. But we will soon know because most of the game is to be played in the South China Sea where there is land grab and threat and marshalling and controlling resources and tollways and accesses. China is quite brutal and ruthless. This is not like the 1999 Belgrade attack when a B-52 bomber actually bombed a Chinese Embassy and three journalists died. This is going to be a far different situation, in 2021. How they’re going to tackle this issue remains the question. They’re going down this path of bilateral relationships which is not very healthy.
Sree Iyer: Former Secretary of State Mike Pompeo regrets not getting the North Koreans to give up the nukes. Were they are at that moment in history sir, and then somehow people walked away?
Sridhar Chityala: I think they never completed the deal. They should have completed the deal. The goodwill, Trump set in Singapore, he invested time, was given due respect, seems to have been a warm body language, etc. He kept him quiet for four years. There were no missiles flying out here. He should have said, ‘okay buddy’ sign the deal. No nukes, nothing. We have respected you, treated you well, we don’t interfere, but keep the stuff all the way. They should have closed the deal.
Sree Iyer: China supports ASEAN countries in their approach to solving the Myanmar crisis as Junta buildings are burning. I thought China was in cahoots with the military.
Sridhar Chityala: China is in cahoots with the military. But China is playing a very clever game i.e. says I have a new partner. It’s called ASEAN. So I have a call with the foreign minister of Singapore and he says, I support you. They have a very nice conversation in Mandarin. They have a very warm, fuzzy relationship. If you want you can also speak to your Malaysian counterparts. They will not speak to Indonesia because Indonesia’s Joko Widodo is very very adversarial. The relationship is not great at the moment between the Philippines and China. So, therefore, they say that we will toe the ASEAN line. As far as Junta is concerned the people are against this communist, fascist stuff that is going on. So they’ve targeted some of these things. It remains to be seen as to how this plays out. More and more bans are not going to be helpful. So they want to get Myanmar out of this loop.
Sree Iyer: The US Navy’s Sea Shield exercise sends a message to Russia that the Black Sea is not a Russian lake anymore.
Sridhar Chityala: It is not because the reason is they had the ship Missouri which went in and passed through the Black Sea and returned and made a very clear statement. So whole kit and caboodle of the NATO forces like in Middle Eastern, Iraq, Germany, Georgia and Lithuania participated in this. To me, this is just BS, which is to say Asia is not a threat to the United States. The United States is not a threat. They have also got planes watching got in Alaska. Democrats have got a bee in the bonnet as far as Russia is concerned and Mr William Burns is a very known adversarial critique of Russia. Russia is going to throw some satellites up in space and violate the star treaty and create problems for the United States. Russia is meddling itself and surviving. It’s got its own problems. This is a Nato-EU World War rhetoric, which is well past Cold War.
Sree Iyer: I’m reminded of what transpired or what played out four years ago when the Democrats were painting Putin and Donald Trump as conjoined twins separated at birth and that these two are in cahoots with each other. I don’t understand why this, my way or the highway kind of perception as far as Russia is concerned.
Sridhar Chityala: There is a famous Australian prime minister. His name is Paul Keating. He is known for his very famous oratory skills and he used to kind of beat the opposition up. He used to say, I have to flog you with dead lettuce. So like that these fellows are flogging Russia with dead lettuce. Russia is not a threat to the United States, but these people think. I just wanted to say that they have to satisfy the Europeans. They have to tell them that Nato is alive. Here, we are looking after you, we care for you. So, therefore, they conduct this exercise.
Sree Iyer: You are spot-on because the next news item that I’m going to read suggests the same thing. Italy orders Russian Embassy officials out from the country for spying.
Sridhar Chityala: Russians will spy on everybody because they are looking after their money. Their money is illegal, their money is all over Europe. That’s what it is. It is all Gazprom for money, is in London, is in Europe, is in Switzerland, is in Italy, is there everywhere. He’s in Russia, is in Germany. So well, you know that Nord Stream pipe 2 is still going into Germany the gas pipe? So the Biden Administration banned. This is hysterical political satire, a global political satire that is going on where they somehow are so scared to tackle China in the South China Sea and Pacific. They are just trying to put their attention, all of it on that against Russia. Also projecting that Russia is the big problem.
Sree Iyer: Officials from Iran, China, Russia, France, Germany, and Britain will discuss on Friday the possible return of the US to the 2015 Iran nuclear deal. I wonder if they told the US that they were going to do this or they’re just doing it on their own sir.
Sridhar Chityala: This is an initiative led by China and Russia. China and Russia are close allies of Iran on energy and oil. China did it 10-year 25 billion deal. China has stepped up and stated it is violating the sanctity of the UN sanctions imposed without it meeting the norms. They were close to a nuclear bomb. They have the Al Qaeda footprint there. They have reached the enrichment of uranium beyond the threshold level. They have been illegally transferred. All of these things we have covered in Daily Global insights over the past few weeks. Now, these guys want to do a deal. Who are they? Relegate left-wing EU, somehow their deep malice for Israel is known especially after the West Asia peace deal was done. So what you are finding here is all these razzamatazz countries like Germany and so on. France has got some interest but the story is Britain is also behind this, I will get back to that. What is it? Has anyone enforced anything with Iran since the Shah of Iran’s fall? No, but another geopolitical wasteland.
Sree Iyer: In global covid News, France is going to close their schools and ban domestic travel as the virus surges. The much-mooted vaccine passport is being received with scepticism. Your thoughts on this vaccine passport, sir.
Sridhar Chityala: My thoughts on vaccine passport is we have the most obsolete system in the United States where I get a simple printed card, which shows my name, my date of birth. I got a vaccine. It is just a simple white card. Japan and other countries want to introduce this. The primary concern comes from the privacy rules and the access to data. What else is there in that passport? There is a concern at least among some people whether this is the right format?
Sree Iyer: Pfizer vaccine shots are more effective by 91% after six months. That’s great news, sir.
Sridhar Chityala: It is excellent news. magnifies. There’s a lot of rhetoric still going on in the press on more mutations, less effective etc. So this rhetoric will go on. I think is now more than 14-15 months of data available in the system. The doctors and the research scholars are now extremely well-equipped to do different permutations and combinations to deal with this issue. But the good news is that once the second vaccine comes in we have got layered antibodies on top of the first one. They believe that after six months it will be 92% ineffective.
Sree Iyer: US plant ruins more than 15 million J&J vaccine shots. That is shocking.
Sridhar Chityala: It is shocking. Apparently, there’s one contractor, this is not the local supply this apparently imported supplies from Holland are somewhere and there were some compromises in the formulations and mixes that occur. It seems like people were aware one week ago. But as is often the case nobody wants to release the bad news. So 15 million vaccines go down the gurgle. This is one of the reasons why there is fear among the Red States on how good or how safe and secure are these? Who is validating this and making sure that what we are consuming is going to protect us not kill us? So such incidents create disturbances.
Sree Iyer: In markets news, markets provide thumbs up as we close out the best march since November with an S&P gain of 4.2%. And for the first quarter, Dow and S&P Rose 7.8% and 5.8% respectively. on track for 2021 gains. Sir, your initial thoughts on markets.
Sridhar Chityala: I think today we crossed 100 million in terms of the vaccines that were injected. Yesterday, we crossed 100 million. We believe that by July, we will be in a position to cross about 60% – 70% of people vaccinated. Some people may still stay out of it. But by September to November, I believe that most of the country will be vaccinated. So on the basis of his vaccinations and so on, they believe that the economic recovery is taking place led by the services sector. This has also been spotted in the manufacturing sector. And so as a result of the pent up demand that is creeping into the system is all reflected in their earning numbers and we have already predicted 9% growth for Dow and 12% to 15% growth for S&P. We are very much on the way to achieving that growth on the back of the GDP, which is expected to be between 5.5% – 6.5% from 4.3% This is based on the FED estimates. This is the year, remember we mentioned that if in 2021 you are not investing in the US stocks you are not going to make money.
Sree Iyer: S&P crosses 4,019, Dow 33,153, NASDAQ 13,480, crude finishes at 61.21 and Bitcoin at 59,271. That’s all we have for news today. We’ll be back bright and early again on Monday morning, but we may have a weekend slot with Sridharji on some other topic. Stay tuned. We will let you know, please don’t forget to subscribe to YouTube PGurus Channel and Namaskar.
Sridhar Chityala: Namaskar. Thank you and have a wonderful day.
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India has a VERY bad reputation in the Russian press. Most of what Russians see comes from social media and the situation isn't pretty.
Many Russian tourists engage in "poverty tourism" or "slum tourism" in India.
They travel for cheap (hostels) or stay with families of students in Russia. So thee don't spend much and don't speak the language well.
But because their aim is to show how good Russia is compared to India, they only show slums and shit and potholes.
This gives them a lot of views and makes them a lot of money from YouTube.
So the cycle repeats and Indians are held in very low regard in Russia and Central Asia.