EP 204 | Daily Global Insights | Jul 15, 2021 | US News | India News | Global News | Markets

EP 204 | Daily Global Insights | Jul 15, 2021 | US News | India News | Global News | Markets

Sree Iyer: Namaskar, July 15th, Thursday, and welcome to daily Global insights with Sri and Sree. This is episode number 204. Let’s go straight to Global News, China resumes military flights from disputed military bases in the South China Sea with an incompetent US administration at the helm. China threatens to Nuke Japan if it intervenes in Taiwan intervention as an exception to no first use policy. The Chinese regime is in its waning days according to former US ambassador Brownback. Taken together, why is China back to again rattling its sabre. Why is it so taken up with Japan?

Sridhar Chtiyala: It’s rattling its sabre because there’s no voice of the dissent anywhere. In Prior, you have seen there used to be the voice of dissent coming from the United States. There is dissent coming from France. There used to be the voice of dissent coming from Israel to say that it will support those Nations that are under threat. So, there’s no voice of dissent, that’s emanating. The most symbolic thing here that needs to be expressed here is around the South China Sea, especially the bases in Spratly. Spratly island sprang up, if you recall during the Obama years, I keep saying because I am using this you know very seamlessly because there seems to be not much of a difference but this goes back to the Biden and Obama period, this is when all these bases came up and they were built and they’ve been silently building but it’s sprung up. The second is that they clearly recognize that is much closer coordination between Japan and Taiwan, and Japan has been front and centre in terms of saying, you know, Taiwan is a red flag time and their perceptive reaction come from the fact that if Taiwan is taken and next is Senkaku Islands from there they will make your the way into Japan. So, therefore there’s much closer coordination so which is why there’s a lot of Sabre rattling by China. It is testing the waters of the international resolve it was engaged during that period going back in time when ICJ ruled a ruled around the South China Sea in favour of those islands like the Philippines and so on, but the fact is that China never loosened, China never cared to hoops or it because again, there’s an incompetent central body such as the United Nations and the Nations that support. So that’s why you are seeing all these rattling.

Sree Iyer: A generation of young Afghans, face the end of the US era, as chaos beckons with government forces rapidly collapsing before the Taliban Onslaught. Taliban continues to gain control of the territory with claims and counterclaims. China blames the bomb after a bus blast kills 13, including nine Chinese. Sir, people say the Taliban is occupying between 30 per cent to 85 per cent of modern-day Afghanistan. Your thoughts on this and now they have gone for some talks in Doha, Qatar where do you think those are headed? What is the reason for that? And also now China is beginning to see some fallouts from all these activities in Pakistan.

Sridhar Chtiyala: Basically, you know, I think you have asked a number of questions, first and foremost. Where do I see Afghanistan?, I think it’s a matter of time. They had given six months including the present Afghan Administration in power. They said you know in six months either we’re going to have peace or we’re going to have a coexistence or we going to have perhaps a takeover by Taliban. So, the, I think well advancing their way, you can calculate percentages, 60, 70, 80, the fact is that Taliban is well on its way. And notwithstanding the brave front that is put up by the Afghan forces & Commandos. The Taliban behaviour will not change, they will do exactly the same. I think they’re going to come back with a much stronger resolve and they’re going to focus inward, rather than going to try their stuff all over the place because they recognize the price that they paid for it. So they will be much more brutal and regressive within their own territory and guarding and protecting all the resources.

As far as China issue and threat both in Afghanistan as well as Pakistan, at least clearly in Pakistan, many of these tribes and other people have completely opposed the presence of China in their territory and you’re beginning to see some of the consequences that are going from it. So, you’re going to see skirmishes. I don’t think it’s a cakewalk for China to say, okay, we’re going to walk in and give money and these fellows are going to roll over and give access to all the resources which are trillions of dollars to be excavated and taken out. It ain’t going to happen.

Sree Iyer: Russia courts ASEAN on guns and jabs with countries caught between the United States and Russia. Belarus government cracks down on all activist groups with raids and arrests. And Uyghur Turks should live as equals to China, Turkey’s Erdogan tells Xi, that’s a first sir.

Sridhar Chtiyala: Well, I think that first and foremost, I mean, you know, we’ll probably do some state in more detail, Deep dive. Not many people of Russia is the number one supplier of arms to ASEAN countries. It roughly translates to close 12 billion dollars of arms annual. The US come second around 7, then you have France and other countries. So Russian is the largest supplier and also Russia is a supplier to the old communist regimes which became independent and much more mainstream Vietnam, Myanmar, Thailand Malaysia, Indonesia. All part of this 6 out of the 10 ASEAN countries imports arms from China and that just tells you the Russian footprint is very strong notwithstanding the fact they may not have been bagging their pale or sabre-rattling in that part of the world. So I think that’s the second part.

The final part is the now they’re saying that in many of these countries Sinovac has not been very successful. The US’s lack of production, vaccines are unable to reach. So you are now in a situation where, how come here I have Sputnik, which is fairly effective. India is using it. Some of the countries in Europe are using it, so let me kind of move forward with that vaccine. So this is the whole concept of jab and gun strategy. We can occupy a much softer spot relative to the United States and other nations. It is very sad, but that’s the truth.

Sree Iyer: President Hassan Rouhani, says Iran can enrich uranium to 90 per cent purity at any time. This is a little bit of a thing in doubt because we know that many of the enrichment facilities have been destroyed by Israel, at least that’s what Israel claims? Your thoughts on this sir. Is this essentially embellishing the truth?

Sridhar Chtiyala: I don’t know whether it’s rhetoric because there has been a lot of blasts and destructions have been going around. If they can do 90 per cent, then I am sure that Israel may have different answers to that proposition. So I think I see this more as rhetoric. Coming to one point which I didn’t respond to your previous you know segment or prior segment. Uyghur Turks, it’s an interesting proposition whether it’s a media or whether Erdogan himself is telling Xi it begs, the question we haven’t seen much but we are reporting because the reason, we are discussing it because that’s just the initial statements of the rumour, which says, oh, you know, as you all know and the one is now trying to project himself as their next real czar who is ready to liberate and also doing political posturing. So I see that point is not political posturing but it’s a very interesting observation that you have tried to highlight. But, Uyghur Turk to me seems the same as a Chinese, so, sorry, and I just want to respond. I think to respond to that question that you had asked.

Sree Iyer: Emerging information from South Africa is showing that after protests run amok, over the arrest of President Zuma, there is been a lot of violence, but now the news is emerging that the violence appears to have been directed play, you know, squarely at Indian Amigas is based in  South Africa. These are the ones who are, you know, essentially, Store, owners and things like that. It could be the fact that store owners are being impacted. I don’t know, sir, your thoughts on this. Is this going to be something more than what just is coming out as news? What are your thoughts, sir?

Sridhar Chtiyala: Ethnic Indian Community is very similar to many of the African nations if you recall, you know, are a combination of both business as well as an academic fraternity, it is the same in South Africa. You know, when you have a civil war like this, brought about, as a result of Zuma, whose a communist, you know, being put behind bars. So naturally, they use this occasion and has been economic collapse virtually in South Africa. So the consequence is easy to target, so who are these easy targets? The ethnic Indian Community with businesses because of the other thing that the white South African communities are largely in mining businesses. So, it’s very sad, but that’s where it holds. I don’t know whether we can draw any other conclusions other than opportunistic, rather than specific ethnic topics.

Sree Iyer: And let’s take a look at India news now, India is largely on track with covid-19 vaccination programs per Venugopal Narayanan, a journalist, who’s written in Swarajya. Sir, with your permission, I will put up the graphic for this so we can talk about that. So I have the numbers out here sir it shows about all the States and Union territories Andaman, Andhra Pradesh, Arunachal Pradesh and so on all the way down to West Bengal and the shortfall or the excess as of 12 July that chart is on there. So, please go ahead.

Sridhar Chtiyala: Yeah, I think there are different types of reports that come out. We reported the Arvind Panagariya observation. We are now reporting Venugopal’s observation based on the data that he has connected. And when you go state by state or State and Union territory, you look at about 10 of the States, India overall is minus 1%. So, in other words, it is 1% below Target in terms of its administered versus allocated percentage by and large many states seems to be well ahead of their target. So basically what the message that comes out is the vaccination program seems to be on target and this is subject to the supplies coming through ahead of time in the coming months. So numbers, when you take a look at this, these numbers do look very positive within the context of what is being projected. And even when you collaborate it with other forms of data. As of July 12th, when I take a look at this is about total administrated is 120 million for that specific month of which the doses administered is 45 million, Percentage of the July target achieved is 38%. And still, we have some more distance to go. Overall India is very close to 400 million vaccines. If they can hit that magic number of 500 to 600 million that means, according to Panagariya at least there is an eligible universal 850 million to be vaccinated. So if you have 500 to 600 million people vaccinated and is at the rate of 100 million per month which is at between 3-4 million vaccines on average for the day. Then India is at least reasonably safe as the Delta variant,  takes its shape and escalates, or scales or the epidemic is seen in India. India is already a Delta variant, so that would be my observation on the vaccination side.

Sree Iyer: Sir, a quick look down the table shows that the non-BJP governments or the state, or the ones that are the worst performers. And is whether it is by design or just plain inefficiency, we don’t know. We just see the data and we are saying it from seeing the data. Blatant violation of covid-19 norms, Ministry of Home Affairs ask state governments to reign in as people flock to malls in stations and Market. In fact, we’ve got a lot of pictures on social media sharing this information. So we have to see why is it that suddenly the state’s feel that they can move about? We don’t know because Delta is lurking around the corner stay safe and stay at home. If Kejriwal cannot handle it, hand over Delhi to Haryana and we will address issues, says Haryana CM. And India’s e-commerce, business is expected to reach 120 billion by 2025. Maruti Suzuki to invest 18,000 crores in setting up a new Factory in Haryana and it will be producing about 1 million cars annually. So starting with the Haryana news saying that if Delhi is not capable of running itself, Haryana will step in and that’s a very interesting observation.

Sridhar Chtiyala: I think it’s time that the Delhi issue is fixed. They have electricity problems, they have water problems, and there are gas problems, despite the best hospitals located in Delhi. They also have had Covid mismanagement problems. I don’t know whether is politically designed or they have seemed to be at the top of the agenda as far as the agitations go.

They have seen to be at the top of the agenda as far as the agitations go. Any major agitation is concerned, they seem to be the ready reckoner in terms of what happens in India. But in terms of civic programs that are needed, they’re very happy to throw away everything free, but in terms of delivery very poor. So what the Haryana CM says is very appropriate. Please don’t blame. If you can’t manage hand over the state. We will take care of everything else and you can contest for Haryana if you win that’s great but if you don’t win then we’ll manage the affairs. But I think that something has to be done to Delhi because people who were in Delhi during wave-2 tell me it was astonishing in terms of what was going on.

Sree Iyer: A Drone was again spotted near the International border in Jammu and after firing returns to Pakistan. ‘Now, India will not accept unilateral status quo change in the Line of Actual Control’, Minister of External Affairs Jaishankar tells China. India is close to signing a 700 million deal to acquire 100 GE – General Electric engines for Tejas MK1 fighter jets from the United States. Sir, your thoughts on this. It’s a very important new forward-looking agreement where General Electric will be supplying these 404 engines.

Sridhar Chityala: Indeed, I think that this is very positive which also tells that there is still defence cooperation between the United States and India. Notwithstanding the fact that there has been a political change here and there has been less and less of India-US news that is making headlines. There is again less and less, I will make my pitch, of QUAD news after the new regime has come in. And there’s also less and less news about the vaccinations drive that the US wanted to embark on with QUAD. So there seem to be many other matters that are being looked at by the US Administration. So this is very positive within a corporate context that the business is continuing to stay engaged and it’s very good for the Indian army that they are getting those engines from GE.

Sree Iyer: According to Dr RM Vasagam, the Indian space programme is far more advanced than China. Viewers, I request you to click on the Bell button in order to subscribe to our program when it is life. Please do click on the Bell button that seems to have a better effect than clicking on the subscribe button. These are all empirical evidence. We don’t have any proof to say one way or the other. But here’s the request. Sir, your thoughts on what he said.

Sridhar Chityala: There are two things I want to point out. One is that India has also done a deal with getting their P8I Maritime Reconnaissance planes that are going to help it in terms of managing the submarine threats that come from China. I think they’ve now got a fleet of ten. I think ten more to come. That again, augurs well, between the US-India cooperation.

As far as the space program is concerned, it is a known fact, but I’m glad that Dr RM Vasagam has come out and spoke in public that not to worry. India is far more advanced and combats China on the space front which is very good. India is now moving more and more from commercial to more military and advanced research and it’s also offering its facilities very similar to NASA here for people to use the services. There is also going to be commercialization taking place of the space program where people can run launch their private satellites using the facilities there. All augurs well in terms of the integrated architecture of India in the space program.

Sree Iyer: Let’s take a look at United States news. In one of the most astonishing and shameful decisions by the Biden Administration for which it gets slammed, it has barred fleeing Cubans by sea. Cubans are rallying in Florida. Communism is the last thing you want for a country like America. Now, the Cubans are trying to come to the United States. The US is not allowing them but then they opened the borders for somebody else. All this is just bizarre. I mean no consistency in approach. So what is really going on? Whose bright idea? Is it now to stop the Cubans from coming ashore, sir?

Sridhar Chityala: Well, there has been a series of statements which is including a statement from Mr Biden which is to say it is unsafe for people to make a flight and so, therefore, please do not do. As far as the Department of Homeland Security, they have taken a position which is they’re going to bar people from coming which has prompted the centre and the right to make a comment that the Biden Administration which is considered to be pro-communists and communist friendly, especially with the progressives leading the agenda. They seem too much more sympathetic to their communist leader across Cuba rather than to the genuine needs of the people. Remember, Miami is one of the largest Cuman communities outside Cuba by itself. So, it’s a very intriguing and very interesting stance that the present Administration has taken. Very unfortunate and rightly critiqued. As you rightly said, we are willing to open the borders to all kinds of people, untested for covid, untested for any criminal records, they all can come in. But somehow for these Cubans who are fleeing in regression, they are barred from coming in.

Sree Iyer: Biden Administration is facing renewed pressure for Iranian Outreach after it comes to light the 4 Iranian intelligence officials plotting to kidnap a journalist in New York City. The DOJ – Department of Justice has charged these Iranian officials. It remains to be seen what action the Biden Administration is going to take vis-à-vis, the talks are ongoing right now in Europe. Texas Senate approves election bills 18 to 4 along party lines, despite no quorum in the house. Analysis of the ballot images in Georgia County show provable fraud in elections, Election Integrity group has this to say. Again, I can’t emphasize more. There is a book that is coming out from me, and that is going to detail all this. This is a fictional book, of course, because I don’t have proof or at least when I wrote it I did not have the proof. So please stay tuned on this. Absolutely amazing stuff, that happened in the 2020 election. Sir, your thoughts on what’s happening in Georgia and Texas.

Sridhar Chityala: Texas is very clear, so it’s moving forward with these voter laws which is within its purview. If the Democrats here want to run away so be it. The questions have been asked, why they ran to DC? They ran to DC both for symbolism as well as basically to tell them, Democratic colleagues, Take control, take it out of the states and bring it so you can impose very similar to police laws that you want to impose. You can also now impose the election laws right from the centre so you can determine how you want to do it so that there is no way by which there is opposition and only one party. It is very much like a progressing agenda. So that’s the symbolism. And there’s also been criticism that some of these Democrats who flew were claiming their daily or per diems from the government which they are entitled to have actually fled from the state when the special session is in place. A typical Democratic approach. I’ll keep the money in my wallet, and but then I’ll kind of predict the person who put the money in my wallet. So that, I can do what I want to do. That seems to be the agenda here. So, now the election thing is going to Pennsylvania. It is going to Arizona. It is also likely to go to Wisconsin and probably a couple of other states. So this thing is spreading. Arizona is now stating that there is a discrepancy between the audited votes and the votes that were actually countered and polled in determining the outcome for the Arizona elections. So this is now beginning to take its legs in its own way. The objective is not to change the presidency, the objective is to establish there was no integrity and therefore the rules need to be tightened.

Sree Iyer: Pramila Jaipal, the house representative from Washington state has taken that the Biden Administration’s 3.5 trillion budget includes funding for a pathway to millions of illegal immigrants. Of course, illegal immigrants of Democrats choice. I must say the White House, however, claims that it lacks the votes for a 3.5 trillion reconciliation infrastructure plan. Sir, your thoughts on this. I think this is a non-starter. I mean, you can do some blatant mischief by allowing people to come in for about 2 months but now the borders are again closed. There is now a lot of massing going on the other side and the US is trying to talk Mexico into regulating it at its border down south. All this is happening. Sir, why this madness. Right now, there is still a pandemic. The US is still unable to control it. Not even 1 in 2 Americans are vaccinated, why is this madness.

Sridhar Chityala: Well, let’s just analyze this a little deeper. When you look at the broad policies that are coming across from the Democratic party, you can basically say the Democratic party is divided, probably into two groups. You have the Progressive Democrats who want to take charge of the agenda and who say that enough has not been done in terms of its values and principles. Then you have the traditional Democrats who sit in the centre and make decisions without sacrificing some of the principles around being a little more socialistic relative to the more abrasive agenda that is Progressive Democrats are trying to pursue. So, therefore, here we are talking about the Progressive Democrats who are hell-bent with no economic rationale, with a blindsided way of pursuing things that seem to only show their purpose and principle which is typically the case when you have communist types of regimes. So here is a person who says don’t worry we have money set aside in a 3.5 trillion, we are going to find a way to fund and normalize. This is exactly what we have been saying that all these green accords, clean water, all of these will be loaded and padded with numbers to support some of these efforts. Why? Because you can create saturated and concentrated areas of the population that mandate and guarantees this person who wants to be elected irrespective of any attempts to change the policy.

Sree Iyer: At this rate, we can expect more Ilhan Omars, Rasheeda Tlaibs, Pramila Jaipals, AOCs, all of who will not be able to win a district council election outside of their chosen place, but in there they are uncrowned Queens and Kings. The reports indicate that most of the illegal immigrants who are part of the surge are no shows after catch and release. This is something that was expected. They’re just going to dissolve and melt away. The compliance rate is less than 25%. What it means is, when the court date comes, at least that’s how I read it, 1 in 4 or less than 1 in 4 is showing up for that date. That means the intent is just to come and melt away, but then magically with Pramila Jaipal’s resolution suddenly these people will all become citizens and they’ll start voting and God knows what’s gonna happen to this country. I am really, really scared of the way it’s going. Biden’s claim of voter obstruction laws is getting a push back. I think the US needs a consistent single policy for elections. I think this is done and run its course. Sir, your thoughts before we move on to markets.

Sridhar Chityala: So here is the situation. One line to summarize is, if the Texas Democrats fly to Washington DC as one, it is to fight racism and discrimination. If they stay and ask to vote, it is to preserve the norm as it’s happening in Washington DC, which is the progressive agenda and progressive budgets breaking the filibuster, using reconciliation process has a mechanism to get to their agenda. So it is like, if it is this way, it suits me. If it is that way, then I will call it racial and discriminating. That seems to be the unfortunate trend that is going on.

Now we can conclude this section with that last one which is very important, which has never happened. The United States is going to invite, Biden Administration is going to invite UN Human Rights Specialists to come and study whether there is racial injustice and inequality prevalent in the United States. UN experts are going to come and study the United States. So you can draw your own conclusions, where we are heading as a nation.

Sree Iyer: Now let’s take a look at Markets. Federal Reserve Chairman Jerome Powell on Wednesday downplayed the recent string of high readings of inflation, telling Congress that price pressures will still likely abeid. The S&P has gained and touched an intraday record, shaking off losses from Tuesday’s session. The Dow session rose while the NASDAQ erased earlier gains to end lower. All taken together, the market is kind of treading waters because I guess the earning season is just around the corner. What do we read into Powell’s statement, sir, before we do a wrap?

Sridhar Chityala: Powell’s statement again reaffirms the position that he is not going to lift the pedal on the interest rates because it would be too soon. He is going to allow the asset bubble to continue driven by seasonality, as well, as the specific demands arising from covid and non-covid situations. I think, based on the track record of Jerome Powell so far, we have to agree with him that we not going to see bond vigilantes or pressure on the interest rates, the 10-year treasury bonds interest rates. Basically from 1.7, 1.8 which we originally projected is likely to cross 2%. It’s fallen back to about 1.3-1.4%. Will it flip the coin in the first quarter? Possibly. As far as 2021, this we have been saying all along, 2021 is the best year as far as the coming out of the covid and even during covid, we had market highs. We will probably see again, greater than 16-17returns across the three indices, is one of the best years then the reality will begin to set in as we get into 2022. One caveat, again, we don’t know what we don’t know which is namely the Delta variant impact. We will cover that, in the interest of time tomorrow. We already are 10 minutes past, we are at 30 minutes. But the active cases continue to rise in the United States. We are probably the only people going on making this statement. The Active cases continue to rise and most of it is the Delta variant. People have to be careful in the United States because it’s only a matter of another couple of months before we have the flu season, then it can all get out of control as it happened in 2020.

Sree Iyer: And with that our news hangout comes to a close. We will be back again tomorrow, bright and early. Namaskar, stay tuned and do not forget to click on the Bell button. Thank you very much.

Sridhar Chityala: Thank you. Namaskar.



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