EP 153: GOP critiques Biden’s speech, India-Russia will have 2+2, Amazon earnings blowout & more!

Sree Iyer: Namaskar, April 30, 2021. This is episode number 153 of Daily Global Insights with Sri and Sree. Sridharji, time is flying and we are at the end of another weekend, Sir.

Sridhar Chityala: We are and momentous week and we are into the 6^th trillion of stimulus. We have had a hundred days of Biden’s presidency and there’s plenty of activity in the US and there’s plenty of activity around the world. India’s rising pandemic, Global challenges abound in Asia and silently Europe battles on with its covid. And you know re-establishing the NATO. I think one of the interesting questions somebody posed to us. What is the new Global Order looks like? I don’t think anybody knows what the global order looks like because we are now living in a very chaotic world.

Sree Iyer: And let’s first start by listening to some feedback on Biden’s speech of yesterday. Senator Graham says, Biden Embrace socialism and made Obama look like Regan. Senator Tim Scott says socialist dreams will not help America to thrive. Biden urges Congress to act And says 1.8 trillion will help families. We are in competition with China to win the 21st century, he says. Sir, your thoughts first on Biden’s speech on how the senators from the Republican party have responded.

Sridhar Chityala: Basically, there’s a unanimous consent amongst the Republican party doesn’t matter, whether it is Lindsey Graham or Tim Scott who gave the rebuttal to Biden’s speech or whether it is Rand Paul or whether it is Ted Cruz there is a consistent theme which is namely that Biden is pushing the United States to the precipice and driving the Socialist agenda. Now, to their credit, they are backed by AOC or Alexandria Cortez, who says that it is the progressives who are driving the Democratic agenda and they have to be given due credit for the policies that are coming out of the Biden Administration. So, therefore, on four factors one on the economy, they say that it is going to socialism number two, on the Stimulus their view is that the stimulus is disproportionate putting us into the binge on the surge, on the immigration they are overly critical, it is creating a potential security issue in the country. And then on the final matter which is around this whole racial equality, in other things, they are forcing an agenda that doesn’t align somewhere around that is the fifth, which is the gun control and clearly, that is going to be highly contested. So this is the Republican rebuttal to Biden’s plan.

Sree Iyer: Now progressives are quick to take credit for the big-spending plan. They say that we are setting the agenda for Democratic Party. Americans are growing weary of the big-spending game and the American Rescue plan, jobs plan, child plan, all of them put together is going to cost about 6.1 trillion. Sir, who do you think is the leader of the progressives?

Sridhar Chityala: The leader of the progressives, you know, there is a little bit of a leadership battle, which is between, you know, Alexandria Cortez versus Bernie Sanders. I think Sanders is at his, you know what I call at this point of his career, he’s very happy as long as his agenda is driven. So this young group led by Cortez, whether Pramila Jai Pal would accept or whether the other two people Ilhan and Rasheeda would they accept, we don’t know. But clearly, the lady who is making big news on this Progressive agenda is Miss Cortez.

Sree Iyer: 47% support and 20% or 40% disapprove for job plan is hardly support, that’s what people say and Biden draws ire from Republicans and pushback from Democrats on the spending spree. Clearly, even some of the Democrats are embarrassed about the amount of money that President Biden wants to spend.

Sridhar Chityala: Well, I think once they saw the plan, which is given by the Republicans, this around the 2 trillion, we’re not talking about 1.8 trillion as yet. The 2 trillion they felt that there a lot of money that is being thrown away. And the only way to get that plan through is through filibuster because Republicans including those eight Republican Senators who generally tend to align with Mr Biden are against the plan. It is these eight people along with the other GOP who proposed this 547 billion dollars plan. So it’s very clear that there is very little support. There are some Democrats led by Manchin who say that you know filibuster and he says that this is not the way to go and you know we need to have a much more cohesive and committed if you’re going to spend this type of money.

Sree Iyer: Vice president Kamala Harris agrees with Senator Tim Scott that America is not a racist country. I don’t know why people even have this kind of doubt. America is one of the most free countries. It allows people to express their thoughts and views so I don’t know why we keep visiting this question sir but please let me know what your thoughts are.

Sridhar Chityala: My thought is that when you have a specific agenda when you collaborated with incidents or facts, that doesn’t align with your objective. And then you get into this kind of chaos, the Democrats objective is to come up with a reparation Bill and regret and compensate for the people who have been impacted as of the slavery. Now, to achieve that goal, you can use a set of tools and communication to move towards that and make sure those communities really benefit. When you look at the last five presidencies much has been talked about this, but the community from a per capita point of view has remained still well below the acceptable levels, then you add on top of that, the whole concept of racism and the racial theory and try to, you know, push it the from school systems to college systems and create whole paraphernalia around the history and the psyche of the people, then you just going to lose a lot of people including those who otherwise would have supported. That is the reason why it’s very interesting, vice president Harris has said I agree with you Mr Scott who did the rebuttal that America is not a bigot, not a racist country. So I agree with you. So it’s a very interesting you know, rebuttal by Harris herself who’s a vice president.

Sree Iyer: Under in crime news cops are under siege with a rising wave of violence, whether it is Delaware or Baltimore or North Carolina. Now, these three states have also joined the existing list of Portland and Minnesota, sir,

Sridhar Chityala: Portland, Minnesota and Washington, DC, New York, Atlanta, you know you the list is growing. In Delaware, there was an incident of the cop being beaten up, in Baltimore, there have been sporadic incidents of activity. North Carolina, at least you can expect some trigger because of the specific shooting incident that occurred but what you beginning to see is a systematic pattern of wherever you find opportunities for creating or inflicting this social unrest of crime. This is especially the cops they’re very specifically targeting the cops.

Sree Iyer: Biden floats compromise on immigration plan and he would like to pass what is agreed on on both sides of the aisle. And in an unusual SCOTUS rules, illegal immigrants can avoid deportation on a technicality. Sir, your thoughts.

Sridhar Chityala: On the first point, I think Biden has come up with, you know, three essential categories, one is, you know, the long-term or dreamers, the second is unaccompanied children and the third category is those who are in the long term protected employment category, he believes that this one-third of the list, so at least we should agree that we should give amnesty and harmonize them into the society rather than be limited in scope. So you can see again, the flip-flop just like the infrastructure, you have a flip-flop again happening around this.

As far as SCOTUS is concerned, this was yesterday’s ruling. There was apparently a process called you have the issue, notice and you how to issue a notice to this illegal, migrant to appear in the court and the notice should be one single notice. So, the federal authorities have given multiple notices to him on the issue may be one clarifying the other. There is a  technicality which is called you can have only one issue and typically when you reach that ten years, then the whole thing stops and then, you just have to get this done within that time frame. So he said, the rule of law is a rule of law. The rule of law states that you know, he has not been given one single notice. He has been given multiple notices; this is Mr Agusto Niz-Chavez who made this case. And now, what happens his continuation in the country or harmonization or normalization or integration in the country is determined at the description of Department of Attorney General of the nation. I mean you know the Attorney General of the nation is very supportive and sympathetic to the illegal. So therefore this gentleman is going to be given. Governments are no exception anywhere in the world, only the sophistication, varies the constantly bungle on many of the issues which result in not a very optimal outcome.

Sree Iyer: GOP Senators called for Probe of John Kerry over alleged Intel sharing with Iran. We have touched upon this a few days ago; now, the chorus is growing, isn’t it?

Sridhar Chityala: Yes, especially in GOP Senators. I think there’s about 20 or 22 of the GOP Senators, who in the senate raise, the issue. This is a very serious affair and he must first step down because there is very clearly audio plus there is also, you know, the head of the Iran Foreign Affairs or foreign minister is making this claim. So there must be some substantive truth to it. If this is the case and so he must step down and investigation must commence and this happened, but I remember not now, but, under the previous Obama administration.

Sree Iyer: and India news, India and Russia agree on a two plus two in Diplomatic Balancing Act.  So now even Russia is beginning to make some kind of overtures.

Sridhar Chityala: Look, I think as I said, this is a classic example of what is the new Global Order? When you take a look at this, there was this, whatever the meeting outcome with Mr Lavrov, it didn’t turn out to be fairly successful or perceived impressions is that media coming out, is some communication that propped up around whether he’s visiting Pakistan or not visiting Pakistan, or what etc., But now it says Mr Modi has met with Vladimir. They have deep bondage, old friendship; they are comrades and hugged shoulders and so on. I know, there are several experts in PGurus and each has an opinion. But my opinion, on this matter this is not good, in my view. There are three reasons one, Europeans are very strong allies of India like France and the Europeans are fighting Russia in Europe, especially around Ukraine, and Crimea. Then you have Russia, Iran and Russia, China. And in the South China Sea, India is fighting with Japan and Australia and not necessarily Russia has great ties. They have great ties with China that’s one matter. Second, when you look at the historical Russian association with India, people forget that very much India developed as a socialistic state on the basis of the Russian model and I keep referring all the time. It took India more than 50 years somewhere between 50 to 60 years, using the socialistic model to reach the 1 trillion, economic GDP outcome and whereas it has reached the next 2 trillion in less than 14 years or less than 12 years, as the case may be, because of the pandemic, we had numbers contraction and that resulted in coming back to 3 trillion, I am talking about nominal GDP that’s the second. Third, I think there’s enough evidence written about the deep state presence of Russians within the Indian political ethos and ecosystem. In my view, when I look at these three reasons to combat and go back and say we are back to camaraderie and we will do a 2 plus 2, potentially putting other things at risk looks like Biden is rubbing off his flip flop strategy to Mr Modi as well.

Sree Iyer: Sir, in exit polls for the State Assembly elections that took place in India, there is a clear verdict in Assam, Tamil Nadu, Puducherry and Kerala with a close contest in West Bengal. I will share the results of our poll. We have been doing polls on Twitter, polls on our accounts also. But first, you tell me who you think is going to win, sir?

Sridhar Chityala: It’s not what I think, it is what the Indian media is projecting.

Sree Iyer: And they have been frequently wrong.

Sridhar Chityala: So in Assam, they’re predicting NDA, in Tamilnadu there at predicting a thumping victory for DMK, in Puducherry, they are predicting NDA, in Kerala, they’re predicting Mr Pinarayi to come back. They are giving a little bit of an edge to BJP in West Bengal, but they think it’s a very close contest. So these are the numbers that I have seen.

Sree Iyer: So according to our poll which is like a sampling of about a thousand people in each of the these, in Assam, Tamilnadu, West Bengal and Puducherry  NDA is going to come to power, and in Kerala, it’s still a tough fight although the numbers I’m seeing is unbelievable. They are saying that BJP is going to get a lot of seats and that I’m not so sure, I see single digits happening but I am not sure if BJP can get double digits, but we will wait and see. We’ve been frequently wrong before too.

So next news is the Indian private sector continues its momentum with the oxygen battle. Tata steel increases production to 800 tonnes, and commonwealth countries and Taiwan extend support to India. UP receives record supplies of oxygen amid rising cases. Sir, this augurs well, that India seems to have found its feet as far as managing the oxygen supply is concerned.

Sridhar Chityala: I think the growing momentum from around the world and the elevated production levels, and Indian Corporate Enterprises stepping in and many of them, even reaching out to the adjacent countries, like Singapore, UAE, and so on and are lifting the oxygen and then getting it to the appropriate venues like UP, Delhi, Maharashtra, even Rajasthan, MP and maybe even Karnataka these are the large states. Nothing is mentioned about what’s happening in West Bengal, probably West Bengal is inaccessible because of the elections, and so on. But West Bengal and Kerala are two states where you do have a high number of cases and fatalities is there, but the good news is that it is reaching. The other good news is, notwithstanding these big numbers, 379 459 new cases coming up, the general impression that I get is that the curve is flattening in terms of the new cases. This is the impression that I have, perhaps, my set of people may have specific views and that may be different to what the reality is. But there is a general impression, as the vaccination level grows up, things are likely to be in much better control than what we have seen in the last ten days.

Sree Iyer: In Global News, Taiwan’s new Coast Guard Flagship is going to counter China’s “Gray Zone Threat”. Could you please expand on this, sir?

Sridhar Chityala: Well, what’s happening is that we have three zones? One is the Gray Zone, then you have the Economic Independence Zone and then you have the narrow strait which is the Maritime Neutral Waters. So Gray Zone is the one that poses a very serious and imminent threat. The Economic Independence Zone, just as we had in the Andaman and Nicobar Islands where you had the crossings. So you find that there are more warning signs but those when you enter the Gray Zone, that means you have effectively entered hostile territory posing an imminent threat. So Taiwan is enhancing its flat Coast Gaurd Flagship to make sure that they can counter any kind of intrusions into these Gray Zones.

Sree Iyer: In other China-related news, Japan expresses concern over China’s military expansion plans. Chinese military says General Rawat assertion that China tried to change the status quo in Eastern Ladakh is inconsistent with facts. Tibetans see a repeat of their own repression in China treatment of Uyghurs. Chinese lease of Port Darwin, open to review. So we have a lot of things again happening around China and they lie through their teeth. That’s all I can say, sir.

Sridhar Chityala: Well, there is a significant credibility Capital issue between China and many nations like Taiwan, Japan, India, Tibet, Australia, all involved in this quagmire let alone the Philippines and the United States. So there is a quagmire that is developing. The fact that the Australian prime minister and the Australian foreign minister have talked about whether the Port Darwin… If you remember yesterday, we talked about the augmentation of the defence plan in terms of preparedness, Port Darwin is one of the port’s where Australia plans to enhance its Airforce capabilities in terms of protecting the merit of the borders. So the common thing here is that China is single-handedly posing significant problems and that is being expressed one after the other around the world. Is anyone going to do anything about it? The answer is, NO. There’s a lot of bravado. So this is another example of the New Global Order. In the New Global Order, one player has stood out and that is China. China has very categorically and clearly stood out and says, ‘I make the rules. Everybody follows.’ It doesn’t matter which facet, we are dealing with. Are there any Nations aligned with it? May be silently and subtly some nations are aligned with it. Then you have Russia, which says, ‘I’m very opportunistic and I will navigate whichever way I feel comfortable. I may even partner with India and partner with China as appropriate. Then you have a massive confusion. This is not the case as it used to be, ‘Once Upon a Time the United States used to lead the world and had a set of allies and took a strong position.’ We began to see to some extent under Trump, but we are seeing that dissipate very fast under Biden.

Sree Iyer: In Turkey related news, full lockdown takes effect in Turkey as people start leaving cities. What is this regarding, sir? Is it covid or some other fear?

Sridhar Chityala: It’s covid. Now, turkey is more into the top 10. It’s fast-moving towards the top five, it’s fast-spreading, so what we are referring to is covid. Obviously, cities are concentrated locations. So that’s what we’re seeing.

Sree Iyer: In the Global covid update, the world is going to spend 157 billion dollars on covid vaccines by 2025. Fauci says the US should see a turning point in the pandemic in the next few days. MIT study says time spent indoors could increase the pandemic’s 6 feet of or 60 feet. Outdoor guidance echoes what many Americans already do. So now as this thing unlocks, I think people are now putting into place something where people can safely move out outdoor also, isn’t sir?

Sridhar Chityala: It is, I think we discussed this. This is the problem with research like some of the economic predictions or some of the weather predictions, everybody has hindsight. I think we talked extensively about this. Dr Shiva has also spoken about why people have to be outdoors. Thanks to you Sreeji that you shared that video and, and it spoke quite nice about it. Anyway, so vitamin A and vitamin D are essential vitamins. A is available food and vitamin D is available outside. So you can’t be inside, confined. That’s why they say whether you are 6 feet are 60 feet, being indoors is not very helpful.

Sree Iyer: In markets-related news, consumer fueled economy pushes GDP to 6.4% first-quarter gain. Wow. We were thinking 4.5%, now it’s a clear 2% more than expected, sir.

Sridhar Chityala: No, this is just the first quarter. Annualized, we see 4.3% but remember we already talked about north of 6% movement. These early signs indicate that maybe we’ll finish with a much higher number between 6% and 8%. So the trends at least are pointing out that the economy is moving. This is endorsed by the Fed chairman, which is to say economy on its momentum. There are inflation possibilities and we may not do interest rate changes in 2021, but we are taking a cautious look at what’s happening.

Sree Iyer: Jobless claims fell to their lowest pandemic level. S&P and Dow hit records after record earnings and Bitcoin and Tech soar as Biden stimulus signing feeds Risk Rally. We can see some numbers like Amazon sales surge 44% as it smashes earnings expectations. The earnings EPS $15.79 versus 9.5 for EPS. Revenue was 108.52 billion versus 1.4.47 billion. Amazon crossed 200 million prime subscribers which is 150 million at the beginning of the year. That is impressive growth for Amazon, sir.

Sridhar Chityala: Indeed. One correction, it is 108.52 billion versus 104.47 billion.

Sree Iyer: So, it is 4 billion more than expected.

Sridhar Chityala: Yeah, 104.4 billion. This is based on the forecast of the analysts, but overall the sales grew by 44%. The EPS increased quite dramatically. If you recall in the last quarter, we touched on this, that they were provisions made for the pandemic to the tune of about $3 billion dollars. $3-$3.5 billion increased safety facilities, increased wages, etc, etc. So there was a provision and they had said they would wind it down in the first quarter so the fact is that the pandemic has led to more and more consumption shifting, this is the destructive transformation we have been referring to and sales surging in the online retail of Amazon.

The other key number is they now have crossed 200 million Prime subscribers versus 150 at the beginning of 2020. But when I say the beginning of the year, not the beginning of 2021, because these numbers relate to the last year – 2020, they have grown, pretty close to 35% in the Prime Membership numbers.

Sree Iyer: With that, we bring today’s segment to a close. Have a great weekend, folks. Namaskar.

Sridhar Chityala: Namaskar, sir. Can I just wrap up with one important thing? Folks, you need to take a look at this world to spend 157 billion on covid-19. Look at all the companies which are in the vaccine business and look at the incremental revenue that is going to flow from this 157 billion. Make your own judgment if you are in investing business and you want to invest in some of the stuff. So that’s my first observation. The second observation that I have is, which I was briefly talking to Sreeji about, while there is this pandemic, I analyzed the most recent earnings projections and earning reports of no less than 20 companies across a range of sectors, ranging from automobile to telecom and so on and so forth. You find that while there is the deep anguish and so on people have consumed out of their wallets like no one’s business. But all these companies have reported and there is one common line – pandemic, including Deutsche Bank, which has reported best earnings relative to the past seven years. So there seems to be some message here while there is anguish there is relentlessness in terms of unleashing the wallet, perhaps, the stimulus which implies that with more stimulus to come at least in the United States you can see markets going further north as the year rolls up.

Sree Iyer: Thank you very much, Sridharji. Namaskar.

Sridhar Chityala: Namaskar.