EP 167: Israel pursuing forceful deterrence against “Hamas”: Netanyahu; India’s FX reserves at $590B

Sree Iyer: Namaskar. Today is May 20th, 2021 and welcome to Daily Global Insights with Sri and Sree. This is episode number 167. Here are the top 20 stories making the global headlines. In US News, BLM stands in solidarity with Palestinians vows to fight for Palestinian Liberation. Sridharji, this is a confusing thing a little bit, you know, I don’t think Israelis are fighting the Palestinians per se and BLM is very being very clever or cute with their wording. What are your thoughts, sir?

Sridhar Chityala: I think that two things come out, one is BLM is an extended political organization, it is not some mambo, jumbo stuff as Biden tries to fool us. And they are the extended Progressive group political Wing, which conducts agitations in the United States, that’s number one. The second thing that comes out is that you can see within who are the people Ilhan, Rashida Tlaib etc, are the Advocates of this. So what you’re searing is the political statement which those people make is what is heard or even by including Bernie Sanders is what you are hearing from BLM. So, therefore, as you correctly point out, now BLM is talking about Palestinian, whereas Israel is fighting Hamas, which is firing rockets from Gaza, there’s no mention of Hamas and Rockets in the statement of BLM.

Sree Iyer: Biden urges to reinstate Keystone by 19 GOP, Attorneys General. This is something that is again gathering Steam and we saw in the case of the pipeline, some other things. Why is this government bent upon stopping in stone sir? Is this something that can be turned back on short notice?

Sridhar Chityala: It’s very simple which is namely, the progressive has an agenda, they are more agenda-driven, rather than economics driven. The fact that you have an existing Pipeline and you also have the ability to extend it. The fact that is that will service the needs of the country and make it self-sufficient and also a net exporter. You are finding that being blocked by these activist groups or Progressive groups. This crisis that was inflicted on the United States proved the point that unless you have an alternate plan well-established well-oiled and in motion don’t stop and don’t expand what is current. You can reduce the scope of the expansion but you do not want to cut down what you have.

Sree Iyer: What is the status of the pipelines? Has the pipeline resume 100% production.

Sridhar Chityala: Yes, 100%.

Sree Iyer: In GOP, Governors reject Federal, boost in jobless benefits and on the contrary offer back to work bonuses.  Biden relief package also reaches Japan. Wow. So somebody in Japan got the stimulus check,

Sridhar Chityala: Yes they did. And here is the story. One is, most of the governments around the world are utterly incompetent and when they get enthusiastic their incompetence level even goes further. These are people who are employed, who work in Americans work the United States pre-2005; they have all gone back there. No longer residents of the United States. Not necessarily they are non-citizens. They’re not. So these benefits go to citizens who are in the United States. This is not Social Security. These is the payouts of the relief program here. So when they looked at the database they’re picked up all these people’s name system doesn’t know they went through and said let’s kind of you know give it to everybody. So all these people just as we had all dead people voting for Democratic Party. We are all people who are outside, well who are no longer resident, they all got checks and you know, it became very interesting in terms of banking, those checks because you know, Japan has its own set of rules and regulations. It doesn’t mean you didn’t go to Australia, it didn’t mean you didn’t go to Europe. They all would get it, banked it, you know, very happy with it and thanked Mr Biden who is giving free money.

Sree Iyer: House Republicans offer a counter to Biden’s budget that eliminates the deficit in five years. Wow, that is new, I mean, that’s a good thing to know. Sir, can you share some details on this proposal of the House Republicans?

Sridhar Chityala: The details are yet to be spelt out because they don’t want to put it. But the basic structure of the plan is that, that Trump’s tax cuts will not be abolished that 1.5- 1.6 trillion, Tax cuts will be retained, this on the individuals, then, the funding will be reduced and it will be capped around 800 billion dollars. There is a minimum requirement in 568 to fund the infrastructure projects and it will be funded with alternate taxes but not by increasing taxes on business and individuals.

Sree Iyer: Nike, Coke, American Airlines are the target of AD campaign blasting Woke politics. So, all these are related to Georgia Atlanta. Is that what the relationship is, Sir?

Sridhar Chityala: The national because it’s not like, you know, American Airlines flies everywhere. So, they have broadly taken a proactive approach with Woke. I mean, Apple also has made its statement fairly clear, you know, to some extent Amazon has made its statement made very clear, but they are not big advertisers like Nike, Coke American Airlines Etc. I’m not surprised Nike with its headquarters in Portland, Oregon. And so I think that the coke is obviously headquartered in Atlanta, American Airlines is surprise surprise It’s headquartered in Dallas, but the story is that the fact is that as these things come out.

Anyway, the ad campaign says come mainstream, don’t use politics. I think that’s the fundamental premise here.

Sree Iyer: And Trump back into US politics and his rallies commence next month. Did he not already have one rally, sir or it’s not true?

Sridhar Chityala: He is had, but he has re-launched his communication platform, there’s also your famous diagram by the famous picture that is putting up with shows Obama on one side with the gasoline prices at five dollars. And then you have Trump standing with a gasoline price picture around $2.35, then he said, he shows his finger and says, do you remember? I am not in the office. So I want to get back. He is showing points to the gasoline price, and that’s very reflective of the state of the market today. So he said, you know, you need me back because of look at the price.

Sree Iyer: I have that graphic up on the screen for our viewers benefit sir. Now there is a Mischief here, maybe it is unintended but it is showing Obama and not Biden.

Sridhar Chityala: What happens is the Biden’s policies are very reflective of Obama’s policies. He is only a hundred days in. So this is been his premise that what you are seeing is what the Republicans have called it is. This is Obama administration 3 because it’s an expansion of Obamacare, it is renegotiating with Iran to get back to the Iranian Accord that was signed by Obama. It is about some of these things around the progressive politics of climate Accord, United Nations World Health Organization. So, most of his policies are like a reflection of Obama three. That’s why they cleverly put Obama did, which is to say, Biden, you are not running the presidency, it is Obama running the presidency. That’s why we are pointing that out.

Sree Iyer: So now, everybody is joining the chorus. It’s not just Sridhar Chityala ji and Sree Iyer, there are many people now questioning who really is running the government. So stay Stay tuned, you will know more soon.

Indian News, Israel Supplies third Consignment of oxygen concentrators, respirators to India. Israel has always been an all-weather friend of India. Whether India likes to admit to it or not, isn’t it?

Sridhar Chityala:  It is. It is very very what I call disappointing, that notwithstanding the fact that Israel is in the middle of a crisis in its own right and it’s under attack yet, Israel has chosen to Send all the supplies, recognizing the challenges that India faces, if there’s any evidence needed, that’s clear evidence that it as you rightly called it is, there is an all-weather friend of India.

Sree Iyer: Chinese Army has been deployed in large numbers along the Ladakh front. China also has upped its efforts to boost ground units in Xinjiang. Sir, with your permission, I’m going to put up a map here of the Depsang Plains where there is a fair amount build up. Sir,  it’s up there now so you can take it away.

Sridhar Chityala: Yes. I think that was the point that we are trying to mention is that many a time India gets critiqued that it is not thinking ahead. So this was put in place fairly well ahead of time in anticipation. Again, in DGI, we reported this news and the fact is that the Cyclone did come, rescue efforts did rescue. The latest reports are that some of the people slipped and fell from these barges and there has been the loss of lives as well, roughly, a hundred people have lost their lives. We can report it again tomorrow, once we have more specific details. But clearly, those relief ships which were they did do their job.

Sree Iyer: Indian foreign exchange reserves are at 590 billion and Indian Covid cases continue to slide as the wave – 2 battle continues. I’m putting up the chart for the same, sir, so you can talk about both these things. I have the chart up now.

Sridhar Chityala: So, the Indian reserves reach 590 billion. It is now the fifth-largest, if my memory serves me right, China, Japan, Switzerland, then you have Russia and then you have India. The difference between Russia and India is probably less than $5-$6 billion by way of reserves. So India is well on its way to being the fourth largest by way of reserves. The reserves are an important determinant in terms of its ability to meet its import requirements in the event of contingencies and exigencies when it has no borrowing capacity when it has no capacity to borrow to meet its import requirements and rush last-minute to various institutions to find capital. You would have seen in many instances where India takes its gold and pledges it and tries to bring capital when there is a foreign exchange crisis. 600 billion gives it the almighty power. It is also a reflection of the strength of the economy. Why Switzerland? Because Switzerland is a reserve currency nation, reserve savings nation. It is the 2 financial institutions in Switzerland that represent the largest private wealth anywhere in the world. Russia again because of the oil, the energy, of course, China is because of exports and Japan is again because of the exports. So I think that position reflects a very good strength.

As far as the covid wave is concerned, let me also take a look at the numbers, the net difference I think India is now at around 150,000 people relieved or cured or discharged relative to what the numbers we had seen before. 380,000 people roughly discharged on a daily basis. On May 19, 240,000 new cases show that we already talked about the ‘R’ factor across few states. We covered UP extensively in our Fireside session which clearly shows that India is well on its way to managing the second wave simultaneously, putting the infrastructure, which also augurs well for the economic recovery as India steps into the next quarter.

Sree Iyer: Israel is pursuing a forceful deterrence against Hamas, I also read that this is what Netanyahu is saying. It bombs miles of Hamas Terror tunnel. So presumably they act dug several tunnels. Biden has also asked for a ceasefire now, isn’t it?

Sridhar Chityala: Biden is persuading and Netanyahu says, there’s no way. There’s no ceasefire. We have a job to finish. Our defence is our right. I think there’s a tremendous amount of support, Bipartisan support. There are a lot of Democrats who support Israel and then of course the GOP support. So, therefore, the support is from those who have believed in the rights of the Israeli State. There’s always the left around the world without any exception whether it is India, whether it is Europe or any other part of the world which takes a different position. But Israelis are very firm in terms of its pursuit, which is to say no rocket and no individual is going to threaten the state of Israel.

Sree Iyer: Putin says that Russia is ready to cooperate with all states based on equality and mutual respect.

Sridhar Chityala: He’s met and spoken with about 28 leaders and he’s basically telling them, ‘I don’t want to have War. I want to be friendly. So, therefore, if you treat me with respect, I’ll treat you with respect. This is just a statement coming out as a counter to the rhetoric that Biden Administration has launched. Russia was doing its own thing, of course, it never stops itself from doing cyberattacks, surveillance, all kinds of things that as a nation that it does. You go to other places they say the US is also doing something similar or China is doing something similar, maybe India is doing something similar. So every nation is monitoring just as a deterrence. So, Russia is saying, ‘I’m not trying to create any harm and I am minding my own affairs.’ Now, whether that is the case or not, especially as it relates to Ukraine and Crimea region, that’s a different discussion altogether. But this is meeting with people and saying that I’m not threatening the sovereignty of any of you.

Sree Iyer: US Warship sails through Taiwan Strait prompting anger from Beijing. Well, they’ve been doing all the sabre-rattling. Now, it is their turn to receive some, isn’t it?

Sridhar Chityala: Well, I think the Taiwanese have made a statement in which they said, we will defend to every right. Always, when you have an escalation of covid, you see that there is closer attention being paid. We had reported that Taiwan has seen a little uptick in cases and they’re assessing what they need to do. The origin is not clear. They pointed out few boats that came. Were they refugees or press people trying to escape the mainland and landing in boats in Taiwan? Too suspicious. But the fact is the Taiwan which was ranked as the nation which contained the virus suddenly finds itself with escalating cases. It is contemplating a lockdown before this thing gets out of control. And right around this time, you have an attack that is pursued. So the United States is saying, ‘okay, we are sending the ships to the Taiwanese Strait. We are keeping a close eye and we want to make sure that there is deterrence and nothing mischievous happens.

Sree Iyer: EU agrees to ease travel restrictions on non-EU tourists. Vietnam struggles to control covid at industrial parks, and so does ASEAN nations. And in general, the world is sitting on the precipice of multiple crises, the former UN chief warns. So this is just essentially tension all around the globe, your thoughts, sir.

Sridhar Chityala: I think he’s pointing out at least three specific issues. The first issue that he is pointing out is covid. Many nations don’t even have the vaccine and capabilities. And if it continues this could go completely out of control. I think that is the first thing he is pointing to. The second is pointing to is that only one in eight, 1.3 billion people are still without access to clean water. They struggle. And then he gave another number, which is around people who have no access to water. One is clean water, one is no access to water. Then the third thing that he pointed out is the climate which is a big United Nations topic. The asymmetric nature of the climate caused by emissions is causing problems in terms of ravages of flood and drought. Taiwan for example has drought. They were suffering from the drought as well. So he is pointing to these three factors, these three drivers, accessibility to water, the climate which is causing an imbalance in the ecosystem and the spread of the epidemic, where the world is confronted with a lack of facilities and vaccines. So he’s saying that and then, of course, the geopolitical tensions that are creeping in be it on the Russian side, be it on the Iraqi side, be it on the Israel-Palestinian side, they’re all problems to be dealt with.

Sree Iyer: In markets news, Bitcoin tanks 20% in 24 hours to fall below, 37,000 and Coinbase drops 6%. So, what is the reason for the steep fall, sir?

Sridhar Chityala: The steep fall is caused by three factors. One is the mumbo jumbo about the Tesla, which is to say, I accept Bitcoins, I don’t accept Bitcoins, then suddenly Elon Musk saying, I’m not going to sell, I never said I’m going to sell my Bitcoins. That’s one factor. The second factor is, it is causing this constant notion amongst the people. Suddenly China is saying, we’re not going to allow Bitcoins. Now, the markets are reading it quite differently. We have covered this quite well, which is to say China doesn’t want a Bitcoin, China wants a china-based Bitcoin, it’s even pushing the Japanese, the Koreans and even the Southeast Asian Nations to absorb something that is linked not to the US dollar, but to Yuan or Renminbi, as you want to call it. So you have the Chinese statements that we could put regulatory clamps on the Bitcoin. So that’s the second. There have always been some regulatory pressures around the world, for example, India. To some extent, we have had inconsistent statements, even in the United States and then Bank of England. So that’s the second. The third is that there are these Institutional investors, people who take contra-positions and say nobody is flying from Bitcoin to Gold. Institutional investors are shedding Bitcoin. It went down to 32,000, it picked back to about 35,000, it finished the day at 39,768 yesterday. It still is moving up a little bit. So I have a feeling that this will eventually settle down and make its way. It just crossed the day before yesterday, we reported $2 trillion, in market cap.

Coinbase had a fallout with the volume of trading and because of the Bitcoin, the correlation in terms of volumes and performance. So it took some heat. So we started around 330. We are around 226 – 230. If you are still a believer, you’re making a hundred bucks, a share if you choose to be a man with a great heart to withstand the tensions as we go through in the next 12 months.

Sree Iyer: What can I say, sir, you’re a man with the golden coin.

Sridhar Chityala: Indeed.

Sree Iyer: As inflation fear gather, the 10-year treasury rate now climbs to 1.6%. Will that mean that the mortgage rates will also start slowly going back up just to tame inflation?

Sridhar Chityala: It’s gone up to 1.683%. We’re getting close to the 2% which we had predicted would happen before the end of the year. One of the questions that was asked by one of our viewers is, when would we see 2%? I think, we said that it would be before the end of the year, so we have a very striking distance. Like Biden Administration, we have so many inconsistencies that come out every day. There is one more inconsistency that came yesterday. If the economy begins to show steam and picks up momentum, we will reconsider our monetary policy. In simple terms, we are willing to change the rates, if we believe that is what is needed to contain inflation. So that’s a very big statement from the Fed and to some extent from the treasury. So, the gyrations in the market what you are seeing caused by all these upheavals.

Sree Iyer: And with that, we bring our today’s episode to a close, do join and subscribe to our channel. Join us as a member, and share our links with your friends and families. And with this, we bid adieu and tomorrow, we’ll be back bright and early. Sridharji, namaskar and thank you very much, and we’ll be back tomorrow.

Sridhar Chityala: Namaskar. Thank you so much. Have a wonderful day or have a wonderful evening depending on where you are.