Sree Iyer: Namaskar. It is the 27th of April 2021 and this is episode number 150 of Daily Global Insights with Sri and Sree. Namaskar Sridharji and how are you?
Sridhar Chityala: Namaskar and very good morning to everybody. I’m on the mend and doing very well, and this is the 150th episode. So we are thankful to everybody who has supported and encouraged and being part of the experience of the 150 episodes. So I’m very happy at this momentous milestone. Thanks, Sreeji.
Sree Iyer: Sir, it’s first my pleasure and it’s our viewer’s support. Yesterday, in fact, we did extremely well, and we hope to build on this and go from strength to strength. And let’s start by looking at some United States News sir, the last word on the 2020 elections, has not been said yet. Arizona’s Republicans see all ballots voting machines, from Maricopa County. So what is happening in Maricopa County?
Sridhar Chityala: This is the most populous county in Arizona, much contested if you recall CNBC announced or fox, sorry, Fox News announced the results, much ahead and much contested. So it looks like the Arizona Senate, they have seized all the ballots the voting machines. The only thing that seems to be a little controversial, they seem to have sent it to Florida and to be assessed and validated by a consultant. You know, they could be questionable, they could be questions around the objectivity and the validation process, but let us hope we get to the truth and Maricopa County results are put behind and we have an outcome to move forward. I don’t think this is the last and we will see a few more states prop up not that it is going to materially change the outcome of the presidency. But it certainly sets the framework for what is to come in 2022 and gets the ball rolling for 2022 the House and Senate elections.
Sree Iyer: The Supreme Court of the United States is going to hear the major Second Amendment case over Concealed Carry Permits. Viewers, just for you quickly, the first amendment in US Constitution, if I remember my Constitution correctly was freedom of speech and I think the second was the right to bear arms. So is this something to do with people questioning this law sir?
Sridhar Chityala: The specific case as it pertains to this expansion of this amendment or the questions around this amendment is to New Yorkers, head, permits and carry guns yet. They were denied and arrested, then they filed the case, they lost the case in New York. So they are saying that no state has the right to challenge the Second Amendment and overrule the Second Amendment and four Conservative justices have voted to hear this case. So it’s very interesting. And this sets the trend for what is to come. If you recall that this was through an executive order cancelled by President Biden, and many states Democratic states, have embraced and many Republican states one after the other have been repealing this specific law which is to say that this executive order is invalid and they are still allowing the people to have the right to carry the concealed weapons those who have permits.
Sree Iyer: House Republicans Spotlight, defend the police, push to target vulnerable Congress Democrats. So, to put it in plain words the way I understand it is Republicans are making defund the police a platform, a strategy to try and put some of those borderline Democrats on the defensive for 2022. Is that correct sir?
Sridhar Chityala: It has especially vulnerable once, you know, Portland is a classic example. Washington DC is an example and lots of activity, taking place in Minneapolis is an example and probably some incidents in Georgia, in Atlanta is an example. So they using this as an, of course, in Manhattan as well, but mostly these other states that I mentioned first, including DC, are using this and saying when you defund the police, you have consequences that flow from it. Well, as an example, homicide in Portland has increased by 700%. Would you like this to be the case if you elect this particular person who is not certainly helpful, in terms of the Harmony in the society and it’s a very powerful plank and I think it’s going to resonate?
Sree Iyer: President Biden is going to feed 34 million school children through the food program. Is this like food stamps, sir? I am hearing about this for the first time.
Sridhar Chityala: It is very similar to the food stamps program. If you recall that they have set aside one trillion dollars of which close to 500 billion dollars used towards the child tax credits or the minimum payments, that is now going to be rolled out, and people can come on a monthly basis, they’re going to get the checks for 250 to $300. They’re expanding that program further into two specific, areas one, is childcare elements, they probably will do that in. And then funding, the parental leave the next step for that, false adjacent to that is the food program, which is namely that many of these people go to school will be given free food, especially in public schools. What they would mandate to private schools. We don’t know. So, this is an extension of that child welfare and benefits program. He has plenty of money to print, but these are programs that I tend to support provided, personally if you ask my opinion, I support them because they are the children of the nation, rather than giving to somebody else. These are deserving people, you know, who are in that such strata of society who definitely require that type of support. So, as long as the program is implemented, this could prove to be fairly decisive in terms of Child Nutrition and addressing the basic necessities for children to have food and education.
Sree Iyer: and in other news migrants take to trains to jump the border. Get around checkpoints. So this is a new strategy that the illegals are adopting sir.
Sridhar Chityala: Yes, faster time to get to the border is now if you take a train you know some way from Mexico, get to the border and then, you jump, but the critical checkpoints because the border is still, not complete. The wall is not complete. You have the porous points and if Biden buses are not thinking for you to send you into the cities. I am sure that you can get into the highways and do you hike ride and make your way towards society because these are called migrants, they no longer illegal. There is no ICE enforcement is possible, and they are supposed to be treated with compassion and that there is not even, you know, verification and validation for covid and documentation, etc. When the first court hearing will be whosoever gives the hitchhike ride, they make their way to the specific place and then what is going to happen later? We don’t know.
Sree Iyer: And red State, see gains as census shifts House seats. Viewers, again, this is something that happens periodically in the United States as the population changes in the census adjustment take place, some states will gain, congressional seat and some lose. Sir, who are the gainers and who are the losers?
Sridhar Chityala: You know, that one has witnessed a great amount of movement towards Florida as well as to Texas. One of the states two states, which has seen the migration because of Law and Order and taxes and other kinds of issues in New York and California. So, New York happens to be my state and California happens to be your state and so, we’re going to do two seats each and the beneficiaries of those two seats within the House is Florida, and Texas. Then the smaller side you have five states. I think also gaining seats are Colorado, Montana, North Carolina and the State of Oregon. And the losers are Illinois’s Michigan, Ohio, Pennsylvania, West Virginia. Again, if you carefully see these states, it’s almost like red states are the middle fairly neutral States gaining momentum. While you have the so-called blue States losing, Pennsylvania is a surprise, but Pennsylvania has remained, you know, in the middle between Republicans and Democrats, Biden won in Pennsylvania, this time and Trump won in the prior elections. So it’s a reflection of the demographic, shifts and movement of people towards pastures that move resonate with the value of life.
Sree Iyer: And vice president, Kamala Harris to tell the United Nations body that it is time to prepare for the next pandemic. Wait, we’re still not out of this one.
Sridhar Chityala: I think I’m nobody just like, you know, Biden and Harris make a wonderful team within the construct of this flip-flops and statements, for example, yesterday, she made a statement, well, the surge is on, it’s not going to be tackled overnight, so one can assume that this can be viewed as another statement, which is to say, you know, we have to start planning for the next pandemic now, having screwed up the current pandemic very badly. I just have one single point on this whole pandemic, see pandemic in corporations, I’ve served in quite a few large corporations but more specifically in the last one, we actually had a corporate pandemic program. This is going back to 2008-2009 where a specific group was set up to address the issues and globally in our institution was a global institution. So, globally we conducted a coordinated program as to how to address a pandemic. Now, here, what’s happening is, as you are treating it as a pandemic but you don’t have a national mobilization and then you have what you call a ping pong game that goes on between State and the Center. And each take is left to fend for itself with programs that don’t align with, which is a masking, non-masking, social distancing, No social distancing. Complete shutdowns to no shutdowns to partial shutdowns. I think this is one of the fundamental issues in terms of how our nation manages a pandemic program. A nation manages mobilization has to be National and the issue from vaccines to distribution to vaccinations must be coordinated in a national manner. While they don’t have a national minimum wage of 15 dollars, while they want to have a Capital Gains tax of 1 million dollars. They do not want to tackle, a pandemic program through your nation program. If you happen to be Trump to be the president, you hate him. So therefore you don’t, if you happen to be Biden is only blue states, which is supportive, red states have a different program in this instance, that is red states have demonstrated. I think this will apply to many other countries even including India for that matter is, there’s no ‘national mobilization as to how to coordinate from Oxygen to PPE to vaccines to hospitals, and so on, each state left to fend for itself. So you have asymmetric programs, then you’re not going to be able to address this pandemic. I think some of the smaller Asian countries, like Japan and Vietnam and Taiwan Etc. even Australia for that matter to some extent they seem to have done a better job again, Australia follows, very similar to the US everything is Statewide and you have challenges. So I think to me that there’s no point in making statements as we prepare for the nation in the next pandemic provided your programs are not orchestrated along with that manner.
Sree Iyer: And in Indian news, the United States does a turnaround on vaccine raw material supply after the two National Security Chiefs speak. Sir, what is the underlying story, I am hearing a lot of stories swirling around, do you have any idea what really happened? Why did you the US a take a strong unfortunate stand and then they reverse themselves?
Sridhar Chityala: First, let me address the US side. I think we discussed it, who makes decisions? I was to some extent, involved to see what can be done from the US front in terms of mobilization to change the policy direction that the US had pursued? While we were grappling with this issue to what’s the best mechanism over were the right people, I have to admit, we were struggling to find out who can but we were never able to establish who made this decision if it is certainly not President Biden or does. We have to go to President Biden himself while we were contemplating a strategy. Does it seem like Mr Doval has spoken with who he has spoken to? We don’t know that the rumours swirling around our that he did speak with not just United States alone, but he probably spoke with some of the European counterparts as well as perhaps he may have even spoken with Japan and Australia and so on., then the person who made the press announcement or the announcement or the Press brief was Anthony Blinken, who is the Secretary of State. He made the announcement that the United States concedes and you know looks at the situation and they’re going to lift immediately the bans. Mr Khosla as well as Mr Raja Krishnamurthy from Chicago had been very vocal equally as well in making the statement. We don’t use AstraZeneca vaccines here. We extensively use Moderna and Pfizer. Why not release the raw materials and including finished vaccines that we don’t use in India. I mean, you know, whether you want to call partner or allies, a different matter. How this decision was made, and who made the decision? We don’t know, but certainly, the hand of Mr Doval is visible, generally, he takes a little bit of time the way, Mr Doval operates is that everything is kept under the hoods as one would expect, but he spoke with few countries, not just purely the United States. And by the way, even the EU is stepping up now in terms of oxygen and so on as an entity I know Germany and France have always offered support. Britain more recently came and offered support if you remember Britain is a big AstraZeneca user.
Sree Iyer: In other Indian News, the Modi government has asked Bharat Biotech and Serum Institute to reduce prices. Adani group secures 12 ready-to-use cryogenic tanks to transport liquid oxygen from Dubai. So, a lot of things are beginning to move now, Sir.
Sridhar Chityala: A lot of things are happening. India is a country of 1.3 billion people. No, this is not a static situation. In the event this is a covid -2 wave that India is experiencing as a result of this dual mutation covid that they have discovered, now, they call it the Indian variant. They’ve seen the Indian variant and both in London, I gather that a couple of cases have also propped up in Singapore and Japan and so on. So I think that this is going to be a Continuum. It’s much better than India prepares itself for medium to long-term strategy in terms of oxygen necessity. Oxygen is one of the most critical requirement. One of the things that happen with covid is the relative oxygen dispensation levels come down and that affects your system. So I think from a medium to long term, it’s a very good strategy.
Sree Iyer: In other news, India and France begin a three-day ‘Varunaa’ exercise in the Arabian Sea. India backs ASEAN efforts to resolve the Myanmar crisis. And India asks Twitter to remove tweets critical of covid response. So now India also is beginning to flex its muscles towards Twitter, sir.
Sridhar Chityala: India has been very firm, there have been regular ongoing discussions but with Twitter that it is not going to have its way. I think it has had similar discussions with Facebook. Twitter has not been very forthcoming and cooperative, I will not be surprised if the present trend continues, they may face a ban very similar to China and Russia.
I think on the ASEAN side, Myanmar, there was a criticism that India remained one country that stood outside the periphery on Myanmar issue. Are you pro-Junta or anti-Junta or neutral? Now, India is going with the right tide, which is namely, ASEAN. The ASEAN leadership is taking a coordinated approach in solving this issue. So India says that it supports the ASEAN approach. In fact, the UN head met the Junta leader in Jakarta, which has been spearheading the effort in terms of the resolution to this matter.
Sree Iyer: In Global News, United States troop withdrawal commences from Afghanistan. So, whatever President Biden said that it would be completed by 9/11 has now has started happening, sir.
Sridhar Chityala: I think that the withdrawal process has commenced. It takes 3-4 months for all the people and the establishment to be fully uprooted. Obviously, this decision has been met with tremendous criticism and by either side of the aisle, making a statement that a significant amount of intelligence could be lost as to what is to come out on the terrorism side. So, I think, as you said the withdrawal has started they are probably timing it to 9/11.
Sree Iyer: Very unfortunate choice of date. Five eyes glare at New Zealand over independent China stands. Can you expand on this a little bit? What is New Zealand saying?
Sridhar Chityala: Yes, we covered this in DGI. We said that the New Zealand foreign minister had endorsed and accepted that China has to be treated with a soft hand and we believe in partnership with China, we are going to coordinate and collaborate with China. Now, equally, New Zealand is part of the five eyes. I think we discussed the Five Eyes were the old, vintage World War II partners. So now the Five Eyes group is saying, if this country is aligning with China, is our security is at risk? Intelligence gathering, which used to be around the security and army movements, now Five Eyes has extended its scope to include human rights, technology, security issues, intellectual property, etc. So they are beginning to question the wisdom of somebody sitting within the camp this side and also sitting on the other camp, which is being looked at.
Sree Iyer: United Kingdom carrier strike group to embark on a 6 month Indo-Pacific deployment. So now, UK also has joined in this exercise of being active in the Indo-Pacific.
Sridhar Chityala: Well, you can see that it’s now going like on a rotation basis. So you had Japanese carriers going around, obviously, the US has been leading this effort, German vessels have passed, the French have done their part. French is now doing a much more coordinated approach with India and Australia especially around the Indian Ocean because they have a couple of islands and then Britain did with their ships, I don’t remember the name. Now, they have a strike group, which is making its navigation, obviously, they anticipate, expect issues. All of them are getting familiar with the terrain. All of them are getting familiar with what is needed in the event of a confrontation.
Sree Iyer: In other news, Myanmar Junta chief meets UN special envoy in Jakarta, what could they be discussing?
Sridhar Chityala: I think they would be discussing, what exactly is the state of the situation? What is going to be the resolution? Will there be elections? And when is this arson and riots and human rights violations going to stop? What is the path of normalcy for Myanmar? Myanmar is a very strategic state. It shares its border with India, it shares a border with at least two other nations. Many of the countries have industrial investments, from China to Korea, even India has investments in Myanmar. So naturally, that’s another area that would be of concern to them.
Sree Iyer: South Korea’s Posco is going to stick with Myanmar’s gas business. Israeli gas giant plans a 1.1 billion gas deal with UAE company. So now, Israel is beginning to formalize its relations with UAE with more and more Investments happening in UAE.
Sridhar Chityala: Technology, we saw that. We saw the Commerce Arrangement between Israel, India and UAE. I think it’s a $110-$190 billion range providing logistics and being part of that triangle. Then, you have the latest announcement that Israel is doing a joint venture with UAE around the gas. So all augurs well in terms of mainstream integration of Israel to the West Asian Peace architecture. What happens between Israel, Iran, United States, and Palestine is still a puzzle.
Sree Iyer: In the global covid update, the EU Commission launches legal action against AstraZeneca. EU is Finalizing plans to allow the US to travel to Europe this summer. Biden Administration set to relax outdoor mask guidance. Fauci says the US should see a pandemic turning point within a few weeks. So all this points to perhaps some sort of control in the West.
Sridhar Chityala: Clearly, I think there is a lot of confidence as more, and more vaccination takes place in the United States. We have crossed the 50% mark. There’s a lot of comforts that the US will be able to overcome the tide. If you remember, the original timetable was close to 70-74% by September and by November to be almost close to 100%. It’s not going to be 100%, I think, when we hit 70-72% then we have crossed the threshold, still, about 20-30% of the people do not want to be vaccinated, so that percentage of the population will remain.
So Europe is also slowly, notwithstanding the fact that there are lockdowns and shutdowns, but I think they also believe that by summer they want to start opening their borders.
Sree Iyer: India continues to lead the global covid rise. Do you see the light at the end of the tunnel now for India?
Sridhar Chityala: We need to wait for a couple of more days. Few more days of data to see this 350,000 come down to somewhere around 200 or 150, or even a 100 thousand number. That’s when we can say, yes… But there seem to be initial indications that India is seeing the de-acceleration of the new cases coming up. One of the data that is not available, notwithstanding what we saw yesterday is what is the net new additions? We have fragmented data, which is today if 300,000 people or 350,000 people were tested positive, how many people left the cube? Did 100-150,000 people get cured? Unless you see that specific data one cannot indicate the magnitude of this issue or the magnitude of the downward gradient of the tangent. The other thing is, everybody is saying India is still 100 thousand and per million the deaths are relatively lower. When you look at the United States, Hungary, the UK, some of the European countries, India is on the lower side of the path relative to a rise in cases in a million or a rise in cases in a hundred thousand. Again, remember that it’s data, emotion runs very high because death is a death. Also, everything in India points to emotion and the consequences of the lack of availability of critical resources. But hopefully, as you rightly said we need some more data to see whether India has been able to tackle this dual variant.
Sree Iyer: In Markets News, Biden’s 100 days Stock Market performance is the hottest going back to the 1950s. Sir, with your permission, I’m going to put a drawing here which shows that Biden had a 24% growth in the stock market during his first hundred days. So, take it away.
Sridhar Chityala: Yes. Well, I think that if you see the chart, Biden has 24%, Trump has around 11.4%. Then HW Bush was around 12.5% and then going all the way back to Kennedy who had 18.5%. So, to some extent, one can credit Trump to make it into a v-shaped recovery and the regaining of the markets, then the consistent policy extension of Biden. More stimulus and more cash into the economy are certainly helping the markets to continue to rise with more spend and earnings coming out of the companies.
Sree Iyer: Energy prices could be flat till mid-year of 2021 and Bitcoin climbs 8% as the cryptocurrency makes a comeback. What is the reason for the optimism in cryptocurrency?
Sridhar Chityala: The optimism is purely the continued climb of the markets. There is more cash. Whenever there is an 8-10% slide then people see it as an opportunity to buy. That is why you see fluctuating prices. Is 50,000 to 60,000 the right price band? It seems to be the right price band. We have seen the price toggle between 48 on the lower side and go all the way up to 60 on the higher side, especially in the last 30 days. So when you look in the last 30 days, the price seems to be hovering around that specific mark. Whether they will breach that? Soon the time will tell. And usually, when the market buoyancy is good, you see the cryptocurrency also moves equally quite well.
Sree Iyer: Dow flips negative while this S&P and NASDAQ surpassed prior closing records. Tesla posts a record net income of 438 million. Sir, this is a computer on wheels.
Sridhar Chityala: It is a computer on wheels. Essentially, there are three strategies that have worked for them and today, the earnings call Tesla CFO made an announcement that they’ve been able to adapt better to the chip. They say that their platform can work to multi-chip architecture and they have extended the firm were, you come from this specific field, they’ve been able to integrate to various chips in terms of the architecture of the various models. So this has helped them while the rest of the auto industry has struggled to see growth. Now, they expecting a 50% growth in vehicles in 2021. They are expecting 750,000 vehicles to be on roads. So, architecture, their ability to understand the technology, their ability to enhance these EV charge points, and their ability to understand the customers and prices has made them a very powerful company. I think this ninth successive quarter, to make it to S&P you have to have a minimum of five successive quarters of positive earnings to make the listing. So Tesla is on there. They have also made some money by selling, I think about 100-110 million dollars, by the sale of their crypto.
Sree Iyer: Yes. But not only that their most profitable segment is selling carbon credits for those companies who are not able to make up the carbon limits that they have to adhere to. They happen to have a lot. They sell that and they make money too. You have to read the fine print to understand where Tesla’s profitability comes from. But sir, this computer on Wheels can give you a nasty surprise. Recently, there was a software upgrade where the position of various dash controls have actually changed and I am just outside and I’m putting the car in park and the indicator that says whether I am in the park or reverse or drive, it is one of the most important things, that has good from the right of my steering to the left of my steering and I’m panicking at this point because I am going forward and I’m beginning to move very close to the garage door until I figured out that they move it here because I was thinking it was going in reverse, it was just a panic moment, sir. So sometimes these guys can give you these kinds of unexpected surprises but be that as it may, it’s in a nice good curve and I have a lot of faith in this car.
Let’s move on to other market news, oil finished at $61.97, Brent at $65.82, Bitcoin at 52,740, Coinbase at 304. I remember, Sridharji Chityalaji said that at 290 Coinbase was a good buying opportunity. It’s already gone up by $10. Sridharji, if you have anything to say in conclusion, please go ahead, sir, otherwise we can call this a wrap.
Sridhar Chityala: No, it’s great. Thank you so much, and have a wonderful day and we look forward to seeing you again. Thanks to all of you for supporting us and supporting the program.
Sree Iyer: Yes, indeed. Namaskar, and we’ll see you tomorrow. Same time, same place, Namaskar.
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