Sree Iyer: Namaskar, Today is June 15th, Tuesday, and Welcome to Daily Global Insights with Sri and Sree, Episode number 182. We have a lot to cover and shall jump straight to US News. To start with CNN’s Fareed Zakaria’s views on Biden and the reality reflect the sad state of mediocrity in journalism, today; Thrice Biden slips on Syria. Sridharji, welcome to PGurus channel and with your permission sir, I’ll put up the first slide, which is the Zakaria’s. Comment on what happened in G7 meeting, sir.
Sridhar Chityala: Good morning to everybody and welcome on June 15th, looking forward to another 30 minutes or so or 20 minutes or so as the case may be.
Well, the first slide that Sreeji is putting up is around Zakaria. Zakaria says contrary to President Trump’s General G7 meetings which is could be very smoky and flustery, the meeting were serene and calm. And people preferred Biden’s Presence at the G7 and the change of the regime that has happened, so, that was his observation. And simultaneously around the same time, adjacent news item is the White House, releases an apology, which says that thrice during that meeting, President, Biden slipped and instead of saying Syria, he was constantly referring to Libya. So, what we are seeing here is just a modicum of what’s happening in the mainstream media. It’s not the substance. It’s the person who is standing there and making the comments which should never be the case. The focus is always around substance. The method of delivery is a style but if you’ve only have stand no substance and the meeting becomes irrelevant, I don’t need to say it, you know, you all can draw your own conclusions. Having said that, you can see the video by yourself.
Sree Iyer: Here you go, sir.
Russia’s is Putin counts, Biden, as an oil friend as a world gains momentum, leaving the United States behind. With your permission, Sridharji, I’ll put up the next slide for this.
Sridhar Chityala: The observation as the slide comes out. Putin is saying thanks Mr Biden, you have shut down your own, gas lines, pipelines. You have stopped further drilling, you have cancelled licenses, and you are going to scale back on your crude and thanks to you and the oil prices are going up. The United States, which was a net exporter, now, we’ll probably become net importer, very gleefully myself and rest of the OPEC nations will pick it up and thank you and thank you so much as the oil prices, go past seventy dollars and his reserves begin to swell.
Sree Iyer: And it’s the economy stupid, forget going back to work. The workers are quitting Mr Biden, we have a problem. Sir, who said this thing and in, what context, Sir?
Sridhar Chityala: I said this, so, which is to say, is the economy stupid was said before, you know, in one of the famous presidential polls, by Bill Clinton. So, therefore, so I’ve used that word and forget going back to work, get back to work incentives etc., People are not. People are leaving work, trying to find opportunities the elsewhere. So, this is a dual problem which is compounded the economy, one people leaving their existing jobs and moving. Second, people not coming back to work to take up jobs because there’s plenty of money arriving at their doorsteps. So we are saying Mr. Biden, we have a problem here.
Sree Iyer: Representative Kevin Brady of Texas says, it’s the 6 trillion dollar budget pushing inflation up and killing the millions of jobs and I have the slide for that sir, please continue.
Sridhar Chityala: So, six trillion dollars, budget has been promised by Mr Biden. He said, every year of his present term, the budget would be Six trillion irrespective of the deficit. Should he win 2024? Then, the budget could still be Six Trillion every year. This is just a reflection of the liquidity in the system drawn from the borrowings of the balance sheet, and incorporated into the balance sheet of the government. All it does is pushes the inflation up and he’s going to kill jobs. Compounding already the issues that is caused by one of the biggest sectors being pushed back, which is the energy sector. Now, just to give the context here, yesterday, this is what prompted Kevin Brady to make the statement, the consumer prices shot up in the first quarter on an average 2% if you extrapolate it. Forget, you know what the actual numbers could be? Could be even higher, the inflation could be 8%. Now, that’s just basically means we have a problem and number of economists and bankers have come out and talked about what the FED chairman should do on Wednesday just to calm the markets. See you have a dual problem, the problem here is that one is rates are going up and second, the inflation is going up. And second, it’s the artificially, the rates are being, you know, kept low, which only means that there is a brewing bubble and which could potentially create a problem in very short span of time.
Sree Iyer: Federal study predicts that the Biden’s plan to curb immigration is bound to fail and National parent group emerges to fight Woke education. We’ve been telling about this Woke education of all the different things that are being emerging in the schools to try and influence the new Young Generation. Sir, is this going to be successful? And to what extent will the parents involvement will be needed?
Sridhar Chityala: Well, I think the parents of their own accord from Portland to Connecticut, to West Virginia. They have taken up this issue. They feel many of these things are happening with out they being cognizant of it, as to how surreptitiously this is being incorporated into the education. So, they are now coming together to fight this, with help lines and hotlines, and so on, and making the schools, and making their representatives of the government, both Federal, as well as the state be aware that this is naturally causing a big problem because this is being inculcated, right at the kindergarten and early School levels, which means it cascades down, this mind-set of incorrect, perception or incorrect history, being taught to the kids and the kids growing up with a different mind-set relative to the reality, we don’t want to be in a situation where the kids are beginning to dislike their own families for what they are being told is the responsibility caused by some of the people.
Sree Iyer: Former Secretary of State Mike Pompeo says that Covid-19 leaked from a Wuhan lab and Trump Administration came close to unlocking the details. Sir, this has been something that secretary Pompeo has been saying for a while. Unfortunately, I think the Trump Administration did not get the kind of cooperation it needed from other agencies and maybe that is why they couldn’t bring this thing to light, your thoughts, sir.
Sridhar Chityala: Sir, my thoughts are that the reason why we are bringing this point up is at various levels or various formats of discussion. For example, there is a House committee and there is a Senate committee which is taking this matter up to look at this in a genuine Manner. And there was a question asked to Anthony Blinken, how are you going to enforce the accountability of this? Then, we had the G7 meeting, just concluded. So, Mike Pompeo being, the former secretary of state is reaffirming and keeping this issue, fresh, in the minds of the people, we have evidence, all you need to do is wrap it up and then move forward with enforcement. That’s the message Mike Pompeo is delivering.
Sree Iyer: In India news, PM Modi addresses, the G7 Outreach session and calls for one Earth, one Health approach to deal with adversities. A little bit more context here, sir, is this when in regard to the Covid situation and the response of the world.
Sridhar Chityala: I think it is in response to very specifically to Covid, which is to say there’s only one, there is one Earth or one world and therefore one Health is critical. So you cannot have African nations having no vaccine but all, vaccines being consumed by the United States, the UK and even for that matter, to some extent. India, you can’t have no vaccines in Asia, even a country like Japan suffering. So whenever we have a pandemic, there has to be a coordinated program which factors in the world and universe as a one. Because everybody travels, everybody moves and you’re not going to be able to stop this if you want to just focus on, it’s me and my country first, rest of the world later. So which is them to say whenever you construct a program, think of the world because this is a global pandemic which has been at our doorstep or within our house. Now, close to 17 months running. Okay and it is not ending. So, this is the context in which he has made the statement, and probably, he is saying when the first wave came in, when there was no vaccines India took up and Supplied, to about 60, 70 countries and we lifted the export restrictions, the Hydroxychloquine in the first wave, we Supplied to 64 Nations. To the extent, what is feasible within what we had as a capacity. I think this is the context of his message. It seems like it is resonating and by and large, most of the G7 members supported it. I know in Quad, they had talked about everything in the world, a ceremonial in a meeting, but there’s nothing that comes to as a follow-up on the execution side, 1 billion vaccines was a goal that quad said something similar and the G7 has said, the question is, how are you going to deploy it.
Sree Iyer: The United States decision not to give emergency usage authorization to Covaxin has nothing to do with its efficacy. So what is holding it up Sir?
Sridhar Chityala: So, basically I think what has happened is that they wanted an emergency use authorization, the United States says emergency, use authorization is only given, when we have a shortage. Here, we have in excess supply and, you know, we have got plenty of Pfizer, Biontech, then we have the Moderna, then we also have a sporadic usage of Johnson & Johnson, AstraZeneca is not used here. AstraZeneca has been given back, so, therefore Covaxin, we can support you on the EUA because there is no EUA scheme that is warranted. But, you go through your process and then we will embrace it. Obviously the media does a spin of it and then you know, you have incorrect, message, going through. Same thing, on WHO, WHO Covaxin has now reached the most advanced stage of presenting. I think, stage 2, or stage 3 results to WHO and is likely to be accepted. The reason Covaxin is Indian manufactured and you always have this political rhetoric that happens in India, as long as it’s a made in India or somehow kind of crib it and you support the import model. We will come to Novovax in a minute, it’s very interesting. What’s happening on Novovax as well, but just want to put this to head. Covaxin is accepted. No one, who is vaccinated with Covaxin is India is going to be denied entry into anywhere in the world, just because it’s not accredited by WHO or just because it’s not accredited by let us say, United States, it all get into the system in due course.
Sree Iyer: And like you said, Novovax, which has 90% efficacy rate will be manufactured in India by the Serum Institute of India. It’s low cost, easy storage, and targeted for emerging Nations. It is also branded as Covovax. A little bit more, sir, on who manufactured the original design of Novovax?
Sridhar Chityala: Novovax. The context here is again, it didn’t get through. There is no priority here. Think there is a, I forget the name of the company which is trying to pilot this with $15 million. We talked about this last week in DGI, the name escapes my mind immediately as you ask that question. But Novovax is going to be manufactured in India by SII. It’ll go through its due trials, complete the process and may get accepted by ICMR and get inducted into the system. But clearly, this is being manufactured with export in mind. Now, mind you, this originated in the United States but it’s going to make its footprint first in India.
We have not talked about Eli Lilly. Eli Lilly is again going to have manufacturing facilities in India any line any may be kicking off in India and the rest of the world as we move. Remember, the United States is right now self-sufficient. Close to 50% of the population is vaccinated and we have plenty of doses in the United States because there is inertia and resistance on some segments of the population to vaccinate which is why you have plenty of supply here. So, the least that is needed is vaccines in the United States, but the rest of the world needs them. So increasingly you will see that the manufacturing capacity being leveraged out of India and India is one of the largest producers and has the capability to distribute to the world.
Sree Iyer: Let’s take a look at Global News. Suga-Moon Jae In meeting has been cancelled and chaos prevails. It may be linked to the exercise near Dokdo Island, which Japan calls Takashima. So this is one of the ‘storms in a teacup’ kind of thing that South Korea and Japan have, sir.
Sridhar Chityala: It is. They were supposed to. There was a meeting set up, the details are very sketchy and I don’t want to second-guess what the… But one more issue in East China Sea, South China Sea, and the Taiwan Strait, that’s the objective. So there was supposed to be a meeting. Pleasantries were exchanged between Suga and Moon Jae, but there was no meeting. Koreans say Japan cancelled it. Japan says, no, we never cancelled it. But the underlying issue seems to be the claims for this Dokdo Island, where you find the Koreans are conducting their Naval exercises and Japan is objecting to those exercises. This is a long-standing problem. Now, if you put this in context, you can understand the complexity of bringing powerful Nations together in the South China Sea dispute, where the world is trying to face China, but then you have divided into three pockets you have each of the Nations contesting for little spots that each claim is theirs.
Sree Iyer: ASEAN defence ministers are going to be meeting as South China tensions rise and Biden says, America’s commitment to NATO is a sacred obligation. NATO toughens stand on the Chinese regime. It says Beijing presents a systemic challenge. So in all these things you have to central player, which is China, which is still front and centre of everybody’s concern.
Sridhar Chityala: Yes, I think we discussed this again. There are a series of events and activities that are taking place around the world. The ASEAN meeting with extension and invitation to India, Australia, Korea, I think even the UK. About 10 nations have been invited, Brunei is the chair of ASEAN. They have a virtual conference which would have finished today. The conference was about what will be the Rules of Engagement in the South China Sea, and how we going to avoid the next conflict. Can we work to your set of rules? So this seems to be the objective of the meeting. I hope there is a resolution.
Why we are saying this is, there’s another problem that’s brewing besides Malaysia and the Philippines. Phillipinnes’ agreement with the United States was supposed to expire. They’ve extended it by six moments because they suddenly fear, ‘hey what’s going to happen if we are back in a dispute with China.’ So the ASEAN meeting is focused on how to have a set of rules with which you can deal with China. Biden is also saying, NATO is important therefore I am not shedding NATO. So I am here to defend and meet our obligations contrary to President Trump. President Trump said NATO can deal with it. It was needed post-World War. You guys have to fund and manage this. You can’t expect the United States to fund and be supportive all the time. It has to be self-funded. European nations have grown, and that was Trump’s position vis a vis what Biden is saying.
Sree Iyer: There are wo incidents that are beginning to grow. One is the Chinese transgression, in Luconia Shoals. It’s also called Beting Patinggi Ali. And the second one is Chinese aggression in the Ladakh region as it connects its stealth bomber Shion Xian H20. So they are conducting this stealth bomber testing also along the Ladakh region. And India, I hope is prepared to get the onslaught of what it might get from China, sir.
Sridhar Chityala: Again, we discussed this in DGI. India has been enhancing its border positions and they have ordered a whole ton of slew of equipment – Aerial Vehicles, Unmanned Vehicles, Drones – everything from Israel. The Rafale fleet is fully deployed. The BraHMos batteries are packed in that. They’ve got this light helicopters, they got this light moving anti Tanks, and Tanks moving around. The region infrastructure has been developed and they’ve also given the perspective on the rotational frequency of the Army stationed there etc. So this could be a game-changer. The stealth bomber Xian H20, which is conducting its test runs and trials in the region is supposed to be quite formidable. Whether Raphael would be a deterrent and whether Rafale is up against it to deal with and what would be the strategy, obviously, we’re not going to discuss here. And that’s something Indian Camp is probably well prepared. This doesn’t land just like that. There is sufficient intelligence, but what it tells you is that this border problem in the LAC and the Ladakh is not going away. The China-India confrontation is not going away very similar to confrontation in the South China Sea.
The reason why the Chinese are now looking at Beting Patinggi Ali is that area is being used by Malaysia to do exploration and testing of natural gas. We already talked about why South China Sea is important. It has oil. It has natural gas plus other reserves which are prevalent and China’s eye is on how to engulf it or how to gulp all of it by staking a claim that seems to be the motive. Whenever you see the dispute, you have South China Sea-China-Malaysia dispute, Malaysia-Brunei dispute, China- Philippines dispute, China-Thailand dispute, the only place where China doesn’t have a dispute as yet is Indonesia because it is a little distant. All boils down to three things – crude, natural gas, and other rich tapestry of resources that are available in that part of the world.
Sree Iyer: Italy joins the latest list of countries turning the Chinese regime away. Taiwan thanks the G7 leaders for their support after Chinese aggression. Putin praises Trump and presses Biden for stability ahead of the summit that’s about to take place, sir.
Sridhar Chityala: Indeed, Mr Putin calls Trump a man extraordinary. When asked about Biden in yesterday’s interview, he said, I’m looking for stability from Biden. I think during the Trump-Putin years the leadership had less issues notwithstanding the Crimea one that propped up, actually during the prior regime – the Obama Administration. There has been constant skirmishes that have happened with Ukraine, but they somehow managed to keep the tensions away. Now, with Biden coming in they started to engage and activate NATO around the whole Balkan area and in the Black Sea stirring up the issues with Putin and Putin says ‘I’m ready’. Putin is also saying I’m ready in the Indian Ocean. So the question is going to be what’s going to come out of the summit.
Antony Blinken has already answered that question, ‘We are at the lowest point in terms of our relations with Russia. I don’t think we should expect much out of these discussions. It is just the commencement of the journey.
Sree Iyer: Let’s take a quick look at Markets. Markets slip on fears of inflation. The Dow and S&P suffer losses as the Tech Stocks rise, sir. The Fed is meeting and what is your expectation for the outcome tomorrow?
Sridhar Chityala: My expectations are that we are all expecting Fed to at least give directionally that they are keeping a close eye on inflation. We don’t expect them to increase the rates, but just a statement to say, we are keeping a close watch on inflation’ will be sufficient for the markets to agree and accept, ‘hey, somebody is having and this is not a free flow of cash into the system.’.So we have what we call in markets risk on, risk off trading that happens. The FED statement is an indication whether there is a risk on or risk off trading that occurs as a result of the predictable rise in the interest rates versus predictable rise in no interest rate hikes.
Sree Iyer: Bitcoin surges past $40,000 on an Elon Musk statement. There are gyrations and these are wild as far as Bitcoin is concerned. Enjoy the ride. I’m not sure I can suggest somebody buy this thing. This is a series of numbers 40,000, it boggles my mind at least. Sir, your thoughts before we wrap up this program.
Sridhar Chityala: My thoughts are, to expect Bitcoin to finish the year at 70,000 but don’t go and buy based on what I said. But I expect the Bitcoin to be somewhere between 60 to 70,000 by end of the year. So at the end of the year, if you ask me the question, either I got abysmally wrong or I’m a hero, whichever way you want to look at it.
Sree Iyer: Well, that brings us to a close of today’s episode. We’ll be back again tomorrow, bright and early, do subscribe to our channel by clicking on the bell button and also consider joining our membership program as we come up with members-only program and events which will be very very small set. By and large all our programs are available for everyone to see. Thanks for joining Sridharji, we will be back again tomorrow. Namaskar.
Sridhar Chityala: Thank you. Have a wonderful day and nice to have you all and have a wonderful evening if you happen to be in India.