Sree Iyer: Namaskar. May 19th 2021, welcome to Daily Global Insight with Sri and Sree. Episode Number 166. Sridharji, we start with US news as always and to begin with Biden Administration to let illegal immigrants, use taxpayer funds for public housing. Vice President Harris says illegal immigration worsens due to climatic disasters or climate disasters. Your thoughts, sir.
Sridhar Chityala: My thoughts are that this is yet another scheme, which is announced and confirmed by the Housing and Urban Development, HUD secretary, which is if the illegal immigrants apply for public housing. They would be granted housing and it’ll be funded by the taxpayer. So, one more scheme that goes awry in terms of using the taxpayer funds. Now, to compound the matters worse somehow, vice president Harris justifies the illegal migration or illegal surge in the border is only accelerated due to people suffering from climatic or climate disasters, which is forcing them to migrate towards the United States. This unbelievable statement from the vice president of the United States.
Sree Iyer: Fuel shortage exposes Biden energy policy and as prices hike Keystone XL pipeline strategy is in tatters. We’ve reported about this previously also, and this is something that’s fairly contentious because it also created a lot of jobs in the states of South Dakota, North Dakota and so on and so forth. Sir, where do you think this is going to go?
Sridhar Chityala: 19 states have approached the Keystone XL pipeline bill, 19 states are opposing the EPA, and the ban of further drilling as well as the new energy policy, it is called as climate Accord. And that is something that is being offered or being legalized through the executive order by Mr Biden. What has now happened is if you carefully take a look at some of the statements. We will analyze this as the DGI goes on. I’m beginning to see a pattern of news Biden makes an announcement White House rebuts the announcement. So if Biden is not White House, I’m not sure who the White House’s. For example, on the energy policy, yesterday, we had a statement from Biden and then we had a statement from White House, then you find, it was Buttigieg, who was opposing and supporting the assumption of the pipeline work by the colonial pipeline as well the opening up the freeways for carrying gas and opening up of some of the gas lines. So it’s very interesting as to how these policies are coming out as Biden’s policy and White House policy but will report more on the matter. Where is this going? It is going to force when the prices go up especially as summer comes on.
Sree Iyer: Summer is not far away, just a couple of weeks
Sridhar Chityala: You just are going to find the policy progressively being diluted. To make matters worse you have both John Kerry as well as Mr Biden driving around in gas guzzlers when preaching electric cars.
Sree Iyer: US Senate votes to open debate on China Tech Bill, the endless Frontier act, and authorized 110 billion spendings for five years. . Sir, what is this China Tech Bell Endless Frontier act? It is the first time; I am coming to know of it.
Sridhar Chityala: Endless Frontier is about investing in research new technologies, artificial intelligence 5G etc, which gives grants to universities and research funded and sponsored by the government of the United States, which puts the United States, ahead of the world, it is very similar to the Space Program that happened in the US very very similar to the Spy program the defence programs that all happened under the US government. This is specifically targeted at the technology and the United States strongly feels it is a disadvantage. So this is very disadvantaging as it relates to China. So this particular program is earmarked 86 to 11, it passed in the Senate. So it’s a bipartisan unit unanimous support to spend this money.
Sree Iyer: Speaker Nancy Pelosi calls for China Games Boycott. House Republicans Call for Probe of COVID Origins. I think both are concerning China. Why can’t for once the House speak with one voice?
Sridhar Chityala: Why can’t they speak with one voice? Well, you are going to see that on the China games boycott that bill will get through bipartisan. This is just mooted by Nancy Pelosi whereas the Republicans have been calling for the Probe on COVID Origins. If you recall Trump and the Republicans call it, China virus. Democrats dismissed it as a ratio and they didn’t want it to be called China Virus. Now slowly, I think the House Democrats may come around and accept but this bill is being mooted by House Republicans.
Sree Iyer: Republicans to present alternate Infra Plan. $800 billion proposals to be funded, possibly with gas taxes, and no rollback of 2017, Trump taxes and jobs act. On the face of it looks very encouraging, Sir. What are your thoughts?
Sridhar Chityala: My thoughts are that the probability of this getting through, is very, very remote, however laudable McConnell and the Republicans spans are. The original bill was for 564 billion which is purely for infrastructure projects rightly so, but they topped it up with another 200 billion dollars to give leeway and cushioned, they call it the ceiling but I just don’t believe that this is going to get through because 2.25 trillion dollars is well set in the eyes of the Democrats. They need a climate Accord. They need a diversion to probably Palestine. They need to Diversion of money to various types of activities that they need to fund. So they’re just not going to budge. So Biden, may present a cool face and say he wants to do a negotiation. But they may go ahead with their own plan.
Sree Iyer: Sir, I was looking down the road, five years, ten years down the road. Sir, some of the progressives are fairly well, entrenched as long as they stand in their own constituencies, they’ll keep getting elected. Whereas around them because others have much harder battles, they will start, rotating like musical chairs. So what I’m wondering is, what is wrong with this system? You’re going to have more and more partisan extremist viewpoints, 10 years from now.
Sridhar Chityala: As very much likely what you’re witnessing is the concept of appeasement policy as is often stated in India. So what you’re witnessing is the rollout of the appeasement policy, the surge in illegal migrants or illegal immigrants is going to push them into certain States and into certain locus as you may want to call them ghettos or you may want to call them neighbourhoods. You remember that there was also an infrastructure plan that Mr Biden has as part of the housing development to actually put right in the center of certain neighbourhoods, you know, tall rise buildings, which houses some of these people to change the whole demographics. So what you’re going to witness is the beginning of the Journey of this change and shift in demographics, whether that is going to scale and pervade over the next 10 years time, time will tell. And also the progressive policies that you are alluding to notwithstanding the fact that they may still continue for 10 years and 20 years being elected from those neighbourhoods, whether they will be able to get those policies, though, remains to be seen, we have a very weak president. There’s almost an invisible hand pushing this Progressive agenda, we have talked about this so we’re going to see some interesting confrontation evolve as time passes on. I just don’t believe this is scalable.
Sree Iyer: In Indian news, India’s economy will achieve its full potential once a vaccination reaches a critical mass says, Ashima Goyal RBI MPC members. Sir, what is MPC?
Sridhar Chityala: Monetary Policy Committee Member. She’s the one, the monetary policy is established to look at the general economic conditions and vote up and down, in terms of the rate rises.
Sree Iyer: And India has recovered patients rate higher than 422,000 per day as net Active cases, are coming down. Indian railways reach 10,000 tons LMO Supply Milestone. Sir, what is LMO something to do with oxygen?
Sridhar Chityala: The LMO is the oxygen. It’s a milestone that the railways have reached my apologies. I lost the stream of thought on the LMO and it’s a great milestone but we’ve already covered the Indian railways as part of the cogwheel on the supply chain in terms of, medical supplies. This oxygen seems to be the essence of the shortage in India and Indian railways has come to the rescue. The message also on the 422,000 is no paper, no Mainstream media is reporting that India has crossed 400,000 Mark in terms of the cured cases, relative to the Active cases which go up day by day. Today or yesterday evening May 18th they across net 110,000 reduction in active cases, which is a very big number. If this number goes to 100,000 to 200,000, you will find that 3.2- 3.3 million active cases, quite rapidly coming down and the curve flattening in terms of the COVID management is concerned.
Sree Iyer: Reliance is going to build a 16,000 KM long, submarine cable system to connect South East Asia, Europe, and West Asia. It is Reliance’s own border initiative.
Sridhar Chityala: Well, there’s a very big debate which is going on around whether they should be public and private corporations bidding and laying down these cables and managing the Broadband. The fact that you know, there is a very strong, I mean, you know, most of the countries which are, you know, Quasi free market. They allow for your free Enterprises to create this Broadband capability that is leveraging and compliant with the governing principles. It is very contrary to the Chinese situation, very similar to Australia, Japan and the United States. In these countries, when you talk about Japan, United States, Australia and India evolving to that most of the undersea cables or managed by private Enterprises.
Sree Iyer: And in Global News, US-Afghan Crisis Deepens. How so?
Sridhar Chityala: Well, there more soldiers are coming out, there are more incursions happening. There is a growing belief that whosoever the civilians left behind be it from the United States or from the broad NATO Coalition they are left exposed in conjunction with the people. The Afghan army is not in a position to defend itself. So, you’re going to witness some big casualties and fights evolved out of this Afghan crisis. I gather yesterday, there are other reports that are coming out. We now have the Afghan Taliban. I’m told that is also going to be a Pakistani-Taliban coming into Force. Many of these things developments we saw earlier.
Sree Iyer: Is the background Airbase also going to be vacated by the US. I heard it’s pretty Advanced state-of-the-art?
Sridhar Chityala: It is. They’re vacating everything barring some, you know, technical and contract forces. There are covert teams present that we don’t know, I’m sure they would be. But the mainstream army is vacating Afghanistan that’s why the crisis deepens.
Sree Iyer: Russia’s Nagurskoye base gets the facelift with missiles radar, runways with the capability to handle, nuclear-capable strategic bombers. Where this base is located, sir?
Sridhar Chityala: The Arctic, up in the north Russia. So, they are basically Arctic base is being reopened and this Nagurskoye base was dormant. It’s now being reactivated and the airstrips are being developed including to handle nuclear-capable strategic bombers to take off and land so they are augmenting their military capabilities recognizing that in case there is any threat. They’re well-organized to handle the issues. Biden’s administration has been making more trips to Europe, most recent trip, is Antony Blinken’s trip to the Nordics, especially to Reykjavik, which is not too far and Copenhagen, and Norway. And, you know, he’s kind of he’s basically boosting up the Strategic partnership and strategic defence treaties as a coalition. So, Russia is waking up and saying I’m not going to be waiting in lying idle and I ll going to organize myself in the event, is any incursions coming from the United States side.
Sree Iyer: Israel strikes Gaza tunnels as truce remains elusive. I know the progressives are calling for a ceasefire and so are some other countries? How do you see this thing end, sir?
Sridhar Chityala: Israel will not end until they have achieved their objectives. There have been two-faced comments coming from Blinken and Biden, which is effective to state that they are under no pressure to call a truce. Republicans would not allow that to happen. Many constituents within the Democratic party, would not allow that to happen either. So I see this game coming to an end. There were video clips played out of Rashida Tlaib in the Andrews Air Force Base as the president was about to take off, having an intense debate with Biden that was captured on what they need to do with the Palestinian situation. I don’t think they’re going to buy into it and unless Hamas backs up they’re not going to stop. And Hamas is not going to back off.
Sree Iyer: Covid virus surges in China and some officials are actually dismissed. So finally, some news is coming out of China that there is a covid problem there, too.
Sridhar Chityala: There are messages clearly coming out that the virus is spreading in China, especially in South and Southeast China. Naturally, the first casualty is, obviously the news has leaked so the officials are getting dismissed. They mismanaged it, so that’s one of the reasons why they’re getting dismissed. But there definitely is a problem looming in China. They can’t insulate themselves and they can’t say that somehow they are unique and they are not impacted. But the news is quite alarming that China is also in the middle of this virus.
Sree Iyer: In Japan, Tokyo doctors urge cancellation of Olympics. Southeast Asia struggles with very low vaccination rates and a second wave, now emerging. Sir, your thoughts quickly on Southeast Asia. Viewers, we had a Hangout in the morning, PGurus primetime with Shantanu Gupta, the author of the book, ‘The monk who became Chief Minister’ where Sridharji actually, explained the vaccination rates of various ASEAN countries. Sir, quickly for our viewers benefit, where do you see this going?
Sridhar Chityala: Southeast Asia vaccination rates are very, very low, barring Singapore, which is around 27%. You find that the vaccination rates on the lower scale range from 0% to a high of 3%. There is a significant shortage of vaccine availability, right around whether you are talking about Malaysia, whether you’re talking about Brunei, whether you are talking about the Philippines, whether you’re talking about Thailand, whether you’re talking about Indonesia or Vietnam or Cambodia or Laos and so on. So these are very low penetration rate and they missed the first wave, some of them. But now the second wave is upon them and now they are seeing a rise in cases. It starts with 400-500 cases per day and then the momentum picks up. Taiwan which was considered the best in class is finding that they now have to shut down because they have rising cases in Taiwan. Singapore, which was to start a Hong Kong bubble has cancelled is also under lockdown till, I think, the end of May. So you will see, there is a major crisis looming in Southeast Asia. In terms of the shortage of vaccines. Center for strategic studies has prepared a paper and made a plea to Biden saying, you cannot have vaccine hoarding in the United States. If the world suffers, there could be complete economic collapse so vaccines need to be accelerated and sent across to all parts of the world.
Sree Iyer: In markets news, markets clash on sluggish, Housing Starts Data and inflation fears. The Dow drops 250 points. In fact, it went down 287 points, I think. Sir, your thoughts on whether it’s going to keep going down or is there a flip?
Sridhar Chityala: It’s very hard to speculate what the future looks like, because of two factors. One, the Housing Starts slow is as a result of the labour shortage. If you recall, we have a labour shortage. Second, there is a migration taking place from some of these activities or some of the affected urban areas to more stable areas such as Texas, Florida, Arizona, and so on and so forth. So, as a result of that, there is a shift taking place. The rate at which some of these houses needs to start is not keeping up with the demand, though there may be a demand, the housing starts are dipping the land sale etc. The other problem is the availability of labour. A lot of people are getting free dough, so there is no labour. So this is one of the things that was picked up in the April numbers. So markets say there is slow housing data. So, therefore, is this the beginning of the economic slowdown? So that’s one fear. The second is more cash. Yesterday we had the PPI Purchase Price Index go up. So these inflation fears have been lurking. This is more of sentiment rather than something fundamental. So, whether the sentiment will continue to keep the markets dragged down for a period of time. No, the answer is no, because there is plenty of liquidity in the system and there’s going to be more liquidity coming down the pipe. There is still the $1.8 trillion that needs to come out. There is still the $1.8 trillion dollars, this is the America child plan, then you have 1.95 or 2.1 or 2.2 or 800 billion that needs to come out into the system. We are talking about close to 4 more trillion dollars of money coming into the system. So, by the time we get to 2022 we’re going to have more problems, not in 2021. 2021 will experience the curve but you will begin to see the markets move into opposite territory in 2022, sir.
Sree Iyer: Amazon in talks to acquire MGM Studio to compete the Disney. Crypto market cap crosses $2 trillion dollars. First, Amazon sir, so James Bond is coming to Amazon Prime!
Sridhar Chityala: James Bond, looks like, is coming to Amazon Prime. The Epic Studios, the MGM Studios in Los Angeles, all of that seems to be part of the broad Amazon acquisition strategy to combat and compete with Disney. So if Disney has properties and various categories of assets and has seen prolific growth in its Disney plus, Amazon says, okay, now I’ll have both content studios, as well as the physical studios and, then as part of it I will get a huge client reach. This is also, the disruptive transformative change that is taking place and some of these big players are well-positioned and they seem to have the strategic agenda well, laid out. and they are maniacally going after.
Crypto Market, we talked about, the market went down by about 1,200-1,300 dollars, but the volume of activity has picked up and it has crossed two trillion. The gold is around 10 trillion in terms of the market cap. It is a strong belief that crypto will reach that market more quickly and would be a competitive currency.
Sree Iyer: Sir, which is your favourite Bond movie?
Sridhar Chityala: Goldfinger.
Sree Iyer: Good to know, sir. Yellen pushes higher taxes, stronger unions and more global competition. Now, I wonder if she would have said this thing if she was a federal Chairman.
Sridhar Chityala: Well, I don’t want to second guess, it’s quite astonishing. I’ve never seen anything like this from a treasury secretary promoting taxes, promoting unions. And then this is under the American Chamber of Commerce. This is talking about more Global competition and then harmonizing rates around the world so that the US can be a competitive player. Who is going to listen? Is anybody going to listen?
Sree Iyer: Actually, Rishi Sunak has already said no. If you follow what he was saying, the US Chancellor of the Exchequer.
Sridhar Chityala: I don’t think any free-market fiscal conservative leadership anywhere in the world would be supportive of some of the schemes that are being contemplated and for a treasury secretary to come out and say, it is a bit disappointing.
Sree Iyer: Yes, indeed. We will be back again tomorrow with more news. Do watch our program, refer it to your friends, share it, retweet it and post the links on your Facebook pages. As always it’s a pleasure to be with you. Viewers, we depend on your support for keeping this going forward. Today is 166 and who knows, we will be very soon at 500. Sridharji, Namaskar. Thank you very much and we’ll see you soon, sir.
Sridhar Chityala: Thank you and have a wonderful day in the United States and Have a great evening in India.
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