Sree Iyer: Namaskar. Welcome to episode 155 of Daily Global Insights with Sri and Sree. Today is the 4th of May and let us jump straight to the United States news.
- Big Government is Back. Biden’s Unprecedented actions empower labour unions
- Republicans Texas win seen as a setback for Democrats: Biden
- State Legislatures on track to make History with an Unprecedented wave of Pro-Life Bills. This is in connection with abortion
- Biden SC commission gives Liberals to Curtail Life Time appointments
Sir, your thoughts on all these activities that the Biden government is doing now. Everything seems to be going in fast forward.
Sridhar Chityala: Yeah, for everything is about government, so, which is why you have this cluster, all this news is about how the government manages controls and coordinates. The first of this is the empowerment of the labour unions. We saw that even during the Obama time and it’s a continuation. So, the Right to Work is mandatory. So, unionization is almost mandatory in most workplaces. They have set the minimum wage bills and the government is willing to intervene in terms of the empowerment of the union or a number of factors as far as the employer is concerned. So that is the whole concept. This is one of the aspects of the big government. Now, with regard to, the elections there are two House seats that came up for elections in Texas. Both were won by Republicans and Biden says that Since both we are won by Republicans, it looks like, you know, there is some setback or unpopularity of some of the programs that Biden is contemplating. In Texas, the single issue would be around some of the laws around the EPA, some of the laws around the oil and things around the border. On the state legislators on track, this is 13 states which are mostly Republican states have enacted built which supports pro-life rather than pro-choice and so they may not allow the hospitals and so on and they may not permit and facilitate the pro-choice initiatives. Biden seem to have got your wind and the progressive seems to have got wind or a way out rather than packing the quotes his commission is basically said, you have the right as long as you have the votes to basically go ahead with making curtailing lifetime appointments, which effectively gives the platform, for example, John Roberts is an appointed for 10 years, you know, four years runs out under one presidency. There is an opportunity to turn this around, they’re feeling amongst the Democrats and progressives is very heavily tilted towards the conservatives.
Sree Iyer: In immigration news, according to Ron Klein border surge is not Biden’s fault, DHS that is Department of Homeland Security hails pace of handling border surge. Immigrant rights disagree, activist, however, disagree. House Republicans question Biden’s plan to send cash to Central America to stop migration. We talked about this a little while ago, and Biden Quadruples the Refugee Cap to 62,500 from the current limit of 15,000. Well, the progressives are asking 125,000, I mean 62,500 seem reasonable. What are your thoughts?
Sridhar Chityala: Well, I think is cut right in the middle. So, you know, he’s not in 15, not in 125, he is cut right in the middle 62,500, you know, so there’s legal and illegal, right? So, 62,500 is the official limit that they have set, I’m sure that there’s some amnesty and so on. The numbers would automatically make their way up, you know, not only Biden but also Harris announced a plan in her virtual Summit for 310 million dollars. Everybody raise their eyebrows.
As far as the Mayorkas who is the DHS pace. This is around the number of young unaccompanied children on either side of the Border, their detentions have across more than 133 hours and basically, the Republicans and the rights activist think that is unacceptable. It opens the door for exploitation and trafficking that’s the central piece of the issue and you know, that there is limited staff, limited facilities, etc, etc. whereas these fellows, don’t agree.
Now, as far as Ron Klein is concerned, you know, it’s a typical situation. Nothing is Biden’s fault. It’s everything nature’s fault or at best if they get an opportunity, everything is Trump’s fault, or everything is the States fault or everything, is Trump’s past policies. This is Ryan Klein, he’s for the first time come out and spoken is the chief of staff. You can’t expect anything, you know, better.
Sree Iyer: Looks like filibuster; it could be a major issue in the Senate races that are going to be coming up in 2022 and Cindy McCain, blasts Arizona GOP for 2020 ballot audits. Viewers you might remember that the Arizona ballots audit for Maricopa County has been taken out of there and it has been given to the firm. I think in Florida if I’m not wrong for you to know forensic studies and analysis. And now looks like even inside the Republican party, there are a few who were protesting against, sir. Sir, can you unravel this mystery, a little bit for us?
Sridhar Chityala: The unravelling of the mystery is that Republicans seem to have two camps. One is the Trump Camp, one is George Bush called row and Mr Cheney’s camp. So you can see a fair amount of resistance coming from people like, you know, Liz Cheney on some of the issues in the senate floor and they are questions, whether she is going to be in, you know, be the whip. Then, now Cindy McCain is raising the issue in Arizona, which is to say she is against this Arizona, GOP initiative of seizing, the ballots, getting the Court’s permission, they also seized the ballots the voting machines, and, you know, from Soup To Nuts, and everything is getting audited to make sure that this legitimacy and transparency. they’re not going to be able to undo, but they’re going to make sure that whatever their findings are is advocated and that may trigger a whole setup action in some of the other states. So this is the if you recall, you are the Supreme Court and some of the former president, from the Republican Party, had raised some questions around Trump raising issues around the legitimacy, it is sour grapes, and so on. But, having said that once the truth comes out, we will know. So this is the second Camp, which is making the noise in the system.
Sree Iyer: And Senator Kennedy says that there is nothing free in the Biden infrastructure plan house House Rep Kevin Brady says that there is a big fight looming over the tax rises in the Biden Plan. Senator, Mitch McConnell, says no, Republican will support the infrastructure Bill in the Senate. And Democrats urge Biden to use House Majority to push through the agenda. So this infra bill is also one of those things that could stall proceedings.
Sridhar Chityala: The infrastructure bill has no support from the Republicans now. The fact that when you had Mitt Romney and the set of eight or ten, what you call, borderline Republican who has sided with Biden, when they proposed an infrastructure bill of that 540 to 600 billion. If you all recall the walk through what those numbers were and those numbers were pegged into four specific domains first was Bridges and tunnels. The second was transits. The third was some of the airport infrastructure development in the airports. And the fourth line item was the development of the Internet, broadband infrastructure in the country. Those were the four things they classified. And the day they put the plan up effectively that means the Republicans are hell-bent on holding on to that number. So, that is why Mitch McConnell is no confidently saying if you bring it to the Senate, there’s no vote. How are they going to pass it? Well, they get a majority in House, send it to the president, he will issue an executive order. I think that’s what he’s going to happen. That’s what the Democrats are saying they are urging Biden to use the House Majority as a vehicle to get this, another two trillion dollars out of the door.
Sree Iyer: Mitch McConnell also says that we are not revisiting 2017 tax bills and Wealthy May face 61% tax rate on inherited wealth and the IRS has sent five million-plus stimulus payment checks to the citizens of the United States. Sir, let’s go back to the first one. What is this 2017 tax break? Is this the one that Trump came out with, simplified at the same time you couldn’t take a lot of deductions?
Sridhar Chityala: Yes simplify tax more money, in the pocket of people. This is what triggered the further continuation of the economic boom, reduction of corporate rates from 28% to 20% reduction, in capital gains tax, increasing the ceilings on the estate duty and wealth tax simplification of capital gains in the medium long term. So all these policies were enacted with the intent that there is more cash is given to people and that gets into the system and the opportunity for businesses to reinvest the capital in terms of driving the growth of the economy. This is the reason why we reach a 3.2% unemployment rate without a significant stimulus in the first three years of the presidency of President Trump and the fourth year, of course, we have the pandemic. So this is what they are saying that he is not revisiting that he is not unwinding the tax plan.
Sree Iyer: In India related news, the United States, approves a 2.4 billion dollar sale of Maritime Patrol jets to India. It’s called the p8 Poseidon. China faces backlash for mocking India covid-19 crisis on social media. Modi to hold virtual bilateral Summit with UK, prime minister, Boris Johnson, and launch roadmap 2030, and the focus will be on five key areas, people-to-people relationships, trade and prosperity, defence and security, climate action and Healthcare. Your inputs, Sir.
Sridhar Chityala: My thought is this, the state department has effectively denied that they are making any concessions on Iran sanctions as a gesture for striking a deal. There was also a rumour floating around or there’s a media report who knows that it could turn out to be. There was a $7 billion or something close to that for a prisoner swap deal. We covered this in the previous DGI, this is a denial of the state department. Also, this Iran deal is running some shivers not only with Israel but also with some of the West Asian allies, notwithstanding the much-touted meeting that happened between Iran and Saudi Arabia. But the United States is reassuring that it’s not going to sidekick any of these West Asia allies and do something that jeopardizes the security interest of the West Asian Nations. Obviously, Hillary Clinton is standing up and basically saying ‘I’m against this deal.’ You can see the differences between Biden and Hillary, also the differences between Hillary and Obama, some of these policy fall-outs. Basically, she’s right to say that it pulls the terrorists into the Taliban.
Now, as far as the US Embassy in China is concerned. This is a real eye-opener that’s effectively 4th evening in China the student visa process resumes which means all is hunky-dory between the US and China.
Sree Iyer: Business as usual.
For the first time since 2019, the G7 ministers from Canada United States, Japan, France, United Kingdom, Germany, and Italy will meet in person. India, Australia, South Africa, and Korea are the other invited members, China and Russia authoritarian challenge hang over the G7 meeting. The agenda for this meet is vaccine access, global education targets for girls, climate, and finance and food security. Sir, how effective are these G7 meetings?
Sridhar Chityala: How effective are these meetings? On finance and ordinated economic policies with regard to the monetary side, they’re very effective because they have shared past G7 and G20, they have coordinated a set of actions. But with regard to this other stuff which is climate, there’s already a body that deals with climate. The G7 is not for food security. Finance, yes, I tend to agree. There is a new topic that has crept up which is the progressives agenda, which is setting and uplifting the education for the girls. They are looking, very specifically, at some of the Middle Eastern countries, West Asian countries or African nations. They really want to provide that impetus to that. So I would say much of the agenda is emerging from some of the EU members, there’s quite a few of them and then the United States because the United States is now much more social and liberal in terms of the agenda. So that’s where it’s coming from.
Sree Iyer: ADB will be holding its annual Board of Governors meeting with experts to discuss the covid-19 pandemic and the economic recovery. United States, Japan and South Korean generals hold their first meeting since covid in Hawaii. Australia reviews Darwin Port lease to a Chinese firm. The Philippines hits out at dangerous Chinese move in the South China Sea. So again, China is almost always in the middle of all these events.
Sridhar Chityala: Well, There are three essential elements that are now causing a significant threat to the world. One is this covid, that has effectively brought global economies to a standstill, not only the economies to a standstill but it is threatening the fundamental health and safety of people around the world. So that’s one issue where China is front and centre.
The second looming issue that has gone on is… When I personally make this statement, people get a little bit annoyed. I had said, Biden and Obama went to sleep during their presidency from 2009 to 2016 when effectively South China was conquered and Indo-Pacific was conquered by the Chinese. So in the South China Sea with incursions and threats to Taiwan, we saw already what has happened in Hong Kong, has emerged as the second major issue.
The third is around the technology, the intellectual property technology, especially with Huawei and some of the AI technologies, there is a fundamental issue emerging that China is using every one of these things either on IP violations or surreptitious or spying purposes. That is why you see a very conspicuous set of focus around China.
Russia is very recent, it’s like waking a peaceful sleeping Giant in the Baltic area.
Sree Iyer: In the covid update, WHO will review and assess the Chinese Sinovac vaccine and has also been assessing Sinopharm. What is the difference between the two? One is a vaccine. What is Sinopharm?
Sridhar Chityala: It is the second version. The second version of the vaccine is like you have J&J, you have Moderna, and you have Pfizer, so it’s another company, making the vaccine. So the two different versions Sinopharm and Sinovac. They are assessing, not yet certified Sinovac. They are in the process of also resuming Sinopharm. If you see it very carefully, Moderna is left out only Pfizer, AstraZeneca and J&J are approved. Moderna is not and Sputnik is nowhere in the picture, notwithstanding the fact, many countries in the world are using Russian Sputnik.
Sree Iyer: WHO is monitoring ten covid-19 variants that are mutating around the world. So we have to wait and see how these things come under control. Reaching herd immunity is unlikely in the United States say, experts. Florida Governor, DeSantis lift all covid-19 restrictions. The world has let its guard down with new cases in Asia and a sustained crisis in Japan. Florida news is very interesting. Does that mean that you don’t even have to have masks?
Sridhar Chityala: Well, if you recall that Mr Biden himself, has signed off that, if you are vaccinated you don’t need to have masks, you can have gatherings, you can have a set of people, all these situations. The case of, I don’t know whether it is climate, it is nature, it is the topography, whatever, you may want to call Florida, and to some extent Texas, they seem to have a natural habitat where the vaccine doesn’t seem to propagate and they’re saying when I have a conducive environment, I don’t have tall structures or tall buildings, I don’t find asymptomatic cases then why should I have restrictions and shut my economy down. The numbers prove that in terms of the people who are impacted or affected by this. And some of the states which are scattered seem to have moved. Whether new entrants will come in and create contagion, which will force people to go back to their safety precautions, only time will tell.
Sree Iyer: India continues to make progress with its needs and challenges. The government rubbishes the reports that vaccine shortages are there. It claims that there are 160 million ordered in April. Merck is making overall drug testing for covid non-hospitalized patients. Merck also enters into an agreement with five Indian manufacturers to produce and distribute this vaccine. The virus infections appear to be flattening in India, which is a piece of good news. Sir, so what are your views about how it’s playing out in India?
Sridhar Chityala: India is a state of two stories. One is, there is an oxygen shortage. There seem to be concentrated areas where demand and supply are asymmetric. When you anecdotally speak with a lot of people, you hear that oxygen is not available, beds are not available in certain concentrated, metropolitan cities. I don’t want to pick one city over the other, but we have listed these 10-12 cities and those are the cities where you have cleared this problem, for example, Delhi seems to have a major problem. Similarly, I think Maharashtra, Bombay, but Bombay, they say has clawed its way back with plenty of oxygen available now. So I think there are problems, there are challenges with India, but India seems to be… The media is making a meal out of it because this is the time, if you are an anti-Modi, guy and if you are a liberal, then this is the time to have your goal. That’s what you that you have besides the practical problems. But when you actually look at the number of people that is the question I asked, the number of people who are vaccinated is about close to 157 million – 158 million people. The number of people who are tested for samples is about 300 million. The general rule of thumb that is used globally is about 9 to 10% of the people in a nation gets affected with covid. Then, if you have vaccinated 40 to 50% of your population, then you have crossed the threshold point.
Right now, United States is around the threshold point of 50%. We have seen that as the vaccination rates increase or the number of people vaccinated increases the daily rates of people who have contacted with covid, we have visibly seen those numbers come down. So you saw India picking up to about 400,000 people reporting contracting the ailment. But what people forget is also a set of people who can recover and leave. So India set not only the 400,000 records, but India also set the 300,000 records. So this is the highest number of patients, who recovered on any given day. So when you look at the net new additions to active cases, if you recall a few days ago, we had put a number of 85,000. It is actually come down to about 64,000. So today, the active cases are about 3.4 million. Again, recall, going back in time during phase-1 of the covid, we never cross 400 to 500,000 in India. So there is a definite dual mutant that has quite rapidly scaled up and which is one of the reasons why you find this big number of active cases. On the deaths, it is still around 218,000. The United States is close to 600,000 deaths on a 1/4 population. We, in the United States, even here we suffered all the things that India is going through, vaccines, bed shortages, morgue etc. So when you look at these numbers, people can’t look at this situation with numbers, but when you look at the numbers and de-emotionalize the issue, then India is not in a bad situation because we are dealing with a pandemic. If it’s not managed well, it can get to the worst situation, but they seem to be moving towards a good position.
Sree Iyer: In Markets News, Hong Kong returns to growth after an 18-month recession. Dow starts the month of May again with a forward direction to add 200+ points. Oil at $64.50, Bitcoin gain another $1000, now at 56,870, Coinbase stuck around 290 range and overall, the markets were up today. Sir, your thought before we sign off.
Sridhar Chityala: I think the only headline news here is Hong Kong returning to normalcy in 18 months after much turmoil, which is good news for the region. It seems to be coming out of the issue. We have already predicted that the markets are doing very well in the first four months, the numbers tell the story. And more cash, the reason why we put up the number that five million new checks have been issued, so there’s more money to be pumped into some territory and they’re all going to have retail consumption. So the general outlook is 2021 will have a good year in the markets. The inflation and the rates are looming, for the first time, the central banks are beginning to acknowledge. So we could see the rape rises coming in 2022. If you are looking for a mortgage, you cannot get a 30-year mortgage at 2.29%. You will not be able to get a 10-year yield at 1.6. Remember, these are the index rates, so the banks will charge something more on top of this. So markets finished well.
Sree Iyer: Thank you very much, sir. Namaskar, and we’ll be back again tomorrow, to talk to you gentlemen, ladies. Please do subscribe to our channel and Sridharji as always, a pleasure, having you on the panel. And we will again meet tomorrow, sir.
Sridhar Chityala: Thank you. Have a good day, everybody.