EP 213 | Daily Global Insights | Jul 29, 2021 | Global News | US News | India News | Markets

EP 213 | Daily Global Insights | Jul 29, 2021 | Global News | US News | India News | Markets

Sree Iyer: Namaskar, today is July 29, Thursday, and welcome Daily Global Insights with Sri and Sree, Episode 213 and in Global News, China engages in a Fierce propaganda war during Sherman’s visit. Using online media Beijing shapes the narrative while the meeting was ongoing, Taiwan Ex-Deputy defence minister probed for China spy contact. Good morning Sridharji and what do you make of this online misinformation that China engage even while they were meeting with the US Deputy secretary of state.

Sridhar Chityala: Good morning to everybody on this wonderful Thursday morning and this is a consistent pattern. I think Xi Jinping has realized that he needs up the Anti, he sees probably a clear opening in the absence of leadership and strength. This is a meeting that was requested by the United States to see whether they can be a pathway forward in the impasse that China and the US are in. But what he does is he uses this meeting and engages in propaganda and unfortunately and US’S Wendy Sherman was polite and she says you know, we don’t agree with all this blistering that is going on. And we came here for a specific purpose. So I think that she is reported in a polite way. But, China is upping the Anti. There’s no doubt about it. They feel that they have an opportunity to seize the momentum.

As far as the Taiwan Deputy Minister Mr Chang Che-Ping is concerned it’s alleged that China has been targeting many retired  Air Force and Army personnel and the investigations point out that Mr Chang Che-Ping was involved in, probably potentially sharing some Secrets. His wife was seen to have been entertained in Hong Kong by the same people Etc. He has obviously denied allegations, but what you’re witnessing is a consistent pattern. This we have seen even in the United States. Many of the people, what they call is the Diplomatic wolf Warriors and spy rings etc., engaged in espionage type activities. You see this in India as well. So, I think this is a consistent pattern. There’s no difference.

Sree Iyer: Tokyo’s severe cases of COVID shift to those in the 40s and 50s. Sir, we saw the same thing happen when the second wave hit Mumbai, right?

Sridhar Chityala: It’s Delta or a pre-Delta variance. It is very unfortunate in my humble view that the Olympics should not have been held. They should have cancelled much more important should have been given to health and this is a pandemic and the case are rising, how much Japan is going to suppress till Olympics is complete. We don’t know. But there has been rising cases. And it is now spreading to the relatively under the segment of the population.

Sree Iyer: Koreans agree to restore communication channels and improved ties. This is South Korea, right?

Sridhar Chityala: South Korea and North Korea, I have a feeling that South Korea has not been very warm to Japan, has been reasonable to the United States but it has clearly indicated to Mr Biden, Moon Jae-in has indicated to Mr Biden that you know, he’s not choosing one side versus the other. So, it’s possible that China is again using its diplomacy and telling the two Koreans to talk to each other to normalize. But, normalization of the relationship between two Korean Nations is actually a good outcome. It doesn’t matter who is driving it.

Sree Iyer: Ascendant and assertive Turkey creates tough choices for the world. The Chief technology officer of Baykar, a Turkish defence company, brimmed with pride as he unveiled his future unmanned combat aircraft. The aircraft known as MIUS will eventually possess supersonic speed, stealth capability, and a maximum load of 1.5 Tons. Now, is this Turkey’s on technology or do you think it’s imported?

Sridhar Chityala: Turkeys own technology developed in Turkey. The CTO is obviously educated in the Massachusetts Institute of Technology United States. He’s built a very sophisticated drone that is capable of being a stealth supersonic as well as you know, carries a payload that is capable of causing enough disruptions. So this is not great news for the world. But that’s the way the world goes which is namely to say that you know, technology is the tool and the weaponary is the tool and Turkey says I’m getting ready.

Sree Iyer: The US breaks silence and condemns the shootings of protesters by Iran, this is the new development. China woos Taliban as US military departs Afghanistan. In fact, social media is rife with pictures of Taliban officials meeting with a Chinese official. Sir, this was expected, wasn’t it?

Sridhar Chityala: It’s expected. I mean, you know, China is been hunching over and trying to see how they can woo, whichever way they want the gateway to into the Indian Ocean. So I think that you know, there are no surprises here. If you recall Afghan once chose the United States, once chose Russia and now it’s the turn of the Chinese.

Sree Iyer: Cuban The embassy in Paris attack with Patrol bombs and no stop impacted Cuba. blames the US Government. South Africa approves the use of 1495 military personnel to help Mozambique to fight Islamic State-linked Insurgency. Viewers, if you remember, we had mentioned this about a month ago and also we’ve also been the first ones to coin the word the Sahel, so we are the tip of the sphere. Sridharji, your thoughts.

Sridhar Chityala: My thoughts are, I think that we continue to highlight this, you know, our goal is to continue to highlight those areas which are the pivotal points for some kind of intrusion. So you can see the African continent, the resurgence of the back, their surgeons of the Islamic State which you are named variations, you can think of most of them are fighting. It’s good that South Africa doesn’t want this to spill over into its own Shores and has offered to send the Personnel to help the local government to fight this Insurgency.

Sree Iyer: In the United States news, Senior Democrats Bristle at being cut out of the infrastructure deal threatened to bolt. Bipartisan Lawmakers reach the final agreement in the 1.2 trillion infrastructure deal. We have the votes and we will advance the bipartisan infrastructure bill in the Senate says, Chuck Schumer. Sir, 1.2 trillion or is it less than that? What are your thoughts?

Sridhar Chityala: It’s 1.2 trillion non-negotiable, 549 billion is accounted for. 549 billion if you recall few shows ago in DGI, we have given the breakdown of the numbers. They are still 700 billion dollars unallocated but distorted at 2.3 trillion dollars if you recall then went to 1.75 trillion dollars then went to 600 billion dollars eventually before settling at 1.2 trillion dollars, so therefore, this is making its way. Now this is the deal that has been struck by Chuck Schumer and 18 Republicans sided with the Democrats in making this possible that is 49 plus 18, then 50th, if you recall is the vice president 67-32, the infrastructure bill was passed. But, the progressives and Nancy Pelosi says, unless the senate ties 3.5 trillion dollars, you know, sorry the budget as part of it, she would not get it done through the House. But there is a deal and they’re going to pass it, write the law and we’ll get more details of the numbers which will share with you on Monday.

Sree Iyer: And as we can see the regressive in the Democrats are already screaming loud. Especially AOC has been going hammer and tongs at her own party person from I think it was New Mexico or Arizona. I don’t remember one of the two, The last name is cinema and this is totally now completely been held hostage by the regressive group in the Democratic party. I’m sorry, I will not call them progressives because their actions are anything, but, that is just my opinion, let’s move on. CDC mask guidelines, get mixed with reaction, in State’s. GOP Governors, push back against CDC Mask guidelines. A new wave of covid-19 is not the fault of unvaccinated, the US is releasing illegal immigrants who tested positive for covid-19, says, Texas police. This is again, something that we had flagged way back as probably six months ago, sir, your thoughts.

Sridhar Chityala: Well, I think, first and foremost, you know, where is the infection spreading from one of the causes people attribute in some of the states, is this, you know, streams and streams of people coming into the United States, you know, with no testing happening and many of them infected with covid-19 that’s number one. The second point here is that one important point of observation is most of the vaccines in the United States has been approved for emergency use with enough data to say that it can combat the virus. Where is the legality? Legality is the, there has to be enough testing that has to be completed and the vaccines have to be firmly approved because when it is done, if something goes wrong, then the manufacturers become accountable for damages. Right now, they are not because it is only an emergency approval. So many people are objecting to it by saying the government, you are insisting on something that you have not only signed off as an approved medicine, you only sign it up as an emergency approval to be put in used to mitigate this pandemic that is confronting the nation. So this is where the legality and the questions that are coming up. Now, what’s happening? Biden, Administration is insisting that this is mine mandate and they are also even asking the government employees. If you are not vaccinated, then you will be tested every week. So that mandating that the government employees be vaccinated. We will become a little bit later or we can cover it right now, which is namely now, Facebook, Google corporations are beginning to say, okay, we’re going to defer reopening of the offices but, you need to be vaccinated if you are vaccinated, you can’t be coming to work. So I think that what’s happening is it’s like it, You know, chicken and egg kind of a situation, you know, the government says, okay, we’re going to approve, we stand by these vaccines, so, therefore, everybody has to be. Now, whether that can be done now or they may require another three months to get that done. He’s holding back this whole process in terms of people being made comfortable and asked to be vaccinated.

If I were to ask, I would say, because I’m fully vaccinated, I can say, I’m also I got affected with Covid as well. There is no other way, one has to take the chance and get vaccinated and still wear the masks to be made sure that you are not only infected but if you are asymptomatic, you’re making sure that you know, you’re not becoming a problem to the society.

Sree Iyer: With borders open and illegal streaming in, Biden sends back 27 Cuban rafts fleeing communist Cuba. So, some are ok, but the others are not ok, this is why I call them regressive sir, Point made.

Sridhar Chityala: Well, I think that what we are running is a socialist and communist government in the United States. who are escaping Cuba, those are escaping Cuba or the regressive measures of Communism. So if these people have taken in the same, the so-called socialist and communist sympathetic Administration in the United States, well, you know, they may be antagonistic to their own colleagues in Cuba. I mean, I’m trying to be very blunt here. Otherwise, there’s no explanation when you got all these infected fellows coming from Central America, why is sending the Cubans back especially when they are being persecuted. I mean, the guys who are coming from Central America are not persecuted, they are coming for employment opportunities. They see an opportunity here, whereas in the case of Cuba it is. But historically, the United States has supported the people of Cuba against the communist regime. Except for the first time under this present Administration.

Sree Iyer: Google postpones return to work until October and will require vaccinations. Facebook followed suit, also, Apple I should add. Biden will require federal workers to get the Covid vaccine or submit it to testing. Pfizer CEO, says covid-19 vaccine effectiveness drops to 84% after six months. So, we are slowly, but surely leaning towards a booster shot, isn’t it?

Sridhar Chityala: Now, here is where the difficulty is, Pfizer CEO says potentially you need a booster shot. AstraZeneca CEO says with the same breath, there is no need for a booster shot. So you have two bios and pharmaceutical company CEOs giving opposite views. Here’s a person who is sitting and listening to this, is going to say who is right? So this is what is creating doubt in the minds of the people as to why they don’t want to get vaccinated, But, Moderna has remained silent. Pfizer has been insisting that there is a need for a booster dose.

Sree Iyer: I did not nominate her, says Halland as she distances herself from Biden picked Tracy Stone-Manning. Sir, a little bit more perspective on this, please.

Sridhar Chityala: So, Tracy Stone-Manning is, I think, in the Department of Land Administration. She is supposed to have oversight. She seems to have linkages to this shoe bomber. She also seems to have made statements sympathizing with some of these people who belong to the terrorist groups. So she’s being drilled as to why she is the nominee. When questions were asked to Miss Halland has they stated, ‘Don’t ask me, ask Biden because I did not nominate.’ In other words, the controversy is enough and the evidence is very compelling as to why she’s a candidate and there is nobody to hold accountable for and that’s the issue that is getting propped up. Lots of these small-small issues where people with questionable backgrounds are being inducted into the administration, which begs the question, what exactly is the agenda here?

Sree Iyer: Biden tightens rules requiring the federal government to buy more American Products. That’s a good thing. A bipartisan group of senators demand a thorough review of the US funding for China virus research. I thought by now they would have shut it down and also demand that Wuhan shut down their labs, freeze everything so that WHO or somebody has a globally agreed-upon set of inspectors, who can go and look at the source of all this, sir.

Sridhar Chityala: Let me give you my provocative response, if I have to say, nothing will happen. There will be no investigation. There will be no accountability. There will be no reparation. There will be nothing. So this political rhetoric doesn’t matter whether you’re a Republican or a Democrat, will go on. So, a bunch of statements will be made. The guys were making rhetoric one way or the other way have no mandate have no quorum. So every day you will get statements. The objective of pointing this out is first they demanded that there has to be transparency and make China accountable. Not happened. Second, they have stated that we need to investigate and see whether Dr Fauci was called and said, ‘hey did you spend the money for this purpose?’ It dodged this, that. So Rand Paul is now thinking of using the Department of Justice and launching a formal subpoena and making him accountable for all his statements. Then, you have bipartisan Senators say, Oh, we must do and see what exactly we did here. So there are lots of statements every day. This is the final statement. We want to cover this topic, any further, unless there is a dramatic shift. But the point here is nothing is coming out of this.

Sree Iyer: Let’s take a look at India News. US Secretary of State meets Dalai Lama’s representative in New Delhi. QUAD to tackle most important issues of our time, says, Blinken in India. Blinken has also stated that the US sees India as a force good in defending free and open Indo-Pacific. The US announces an additional $25 million aid to the Indian vaccination program. ‘There are few relationships that are more vital than US-India partnership’, says again Secretary of State Blinken. So, all in all looks like it was a fairly successful visit from India’s point of view.

Sridhar Chityala: Yes. Very good visit both from US and India point of view, very bolsterous, warm, committed to working together, etc. But whether there is anything material that has come out of it, the answer may be NO. So I think that would be the takeaway. Nothing material, substantive has come out except that possible Afghanistan, there could have been some backroom channels, discussions could have happened. Because that was one of the other important items on the agenda. But, when you ask on a  material basis, not sure whether something has come out.

Sree Iyer: Well, these days we are reading every day that the United States is doing drone attacks against the Taliban positions, and the Taliban is sitting down to talk again. So, this is something that we’ve seen with many of these terrorist groups, what they will do is just before they make it for a conference, they’ll have an incident where they will have a massacre because they believe that that gives them an upper hand. In fact, Trump got so disgusted with this that he cancelled one meeting. In fact, the US withdrawal was pushed off because he said that we are not going to talk to these guys. So unfortunately you see what happens is the common Afghani is taking the brunt of this attack. Very very regrettable, how these people do it and I still can’t believe that the free world is talking to terrorists. Anyway, that’s just my point of view. Rajnath Singh meets his Belarusian counterpart in Dushanbe. Saudi adds India to the red list and imposes a three-year travel ban for citizens visiting red list states. So this is for the Saudi citizens, or for others.

Sridhar Chityala: Saudi citizens. India makes the list with a whole bunch of Nations from Iran, Turkey and most of them are emerging Nations. Surprise, surprise, the US with the highest number of cases, the UK with 1 billion active cases are not on the list. India is on the list. Let us see how India responds to this red list that has come up. That one.

Belarus has been the centrepiece of controversy with the President usurping power, etc. But it’s interesting that what India is doing is it’s not delineating the good and the bad guys sitting out with everybody and talking to them. Once upon a time, these renegade countries were part of the great Russian and non-aligned movement. So Rajnath Singh, who is on SCO meet – Shanghai Cooperation Organization seems to have met him as well. It is important to understand what is going on in that part of the world relative to the story. So that’s the piece of news here.

Sree Iyer: Indian Air Force on Wednesday formally inducted the Rafale aircraft into its 101 Squadron at the Airforce station in the Hasimara under the Eastern Air Command EAC. The MiG 27 Squadron has been decommissioned. IMF trims India’s GDP forecast to 9.5%. While India’s CEA, the chief economic advisor KV Subramanian forecasts the fiscal year 2022 to be around 7%. This is interesting, sir. India is downplaying to growth while IMF is more upbeat.

Sridhar Chityala: No, IMF is talking about FY-21 and KVS is speaking about FY-22. He says he has already indicated in his prediction, it will be greater than 10%. But most of the people are airing on the caution and putting the GDP to be 9%-10%, purely on the basis of the extended pandemic, and everybody is following the news. You can see an uptick in Kerala, Maharashtra and I think probably New Delhi. Apparently, Kerala now makes up close to 50% of the active cases that is booming every day. So, therefore, the temperness in the growth is only a result of that.

Sree Iyer: Let’s take a look at Markets, now. Fed holds rates near zero and says, the economy is better even with pandemic worries. Facebook beats earnings with expectations and reports the fastest revenue growth since 2016. With your permission, I’m putting up the Facebook data. Facebook shares actually fell by 5% after an extended on Wednesday after the report. So does that mean that the market was expecting an even better number?

Sridhar Chityala: No. It’s always like this. You get a bonus for your past performance. When you come to the future performance, you need to deliver against the future. Always the trading is on forwarding markets, not on the backboard revenues. So, the market is already rewarded. Facebook has been up, rewarding for the performance that they have been forecasting and then delivered of that. So everybody says we are happy. Now let us wait till such time. They seem to have done exceptionally well. They did about $29 billion in the quarter, roughly, a run rate of about $120 to $140 billion and that’s a significant number. I just want to use one minute here. We had this fireside chat the other day with Mohandas Pai as it relates to disruption. Facebook is an example of disruption. Though it is conceived as a social media channel, social media channels don’t deliver economic value. They are great gossip. What delivers the revenue for them is the advertising that they make on that. When Facebook was first launched, it was around the $24 to $30 price at which it made the IPO. It quickly dipped to about $15 to $14 purely based on that they couldn’t deliver on mobile and they could not show revenues. Today, in five years – six years, they have now grown to 140 billion. This is a change in the business model as you think about disruptive innovation. So they have transformed themselves to a new platform in which advertising can take place and monetization can occur. The markets and the industry has rewarded shifting from the traditional methods of advertising. This is an example of disruptive innovation, which has transformed the business model and the platform is showing that you can produce revenue. $120 – $140 billion advertising revenue is a significant achievement in a span of time. I think that’s the headline that I would like to make on Facebook as it relates to the innovation part.

As regards their stock price, I have answered the question, which is namely, we will begin to see an uptick as we begin to hear more about the forecast. But until then they say, let’s take some profits. So people are exiting and taking some profits. That’s why you see a slide in the market.

Sree Iyer: One must look at how Twitter has performed in a similar way or Snapchat. All these are in the same category. They have not been as successful as Facebook. Although, I must also say in the same breath that Facebook’s video strategy has been a big failure. YouTube continues to dominate that segment. We’re saying this purely from the numbers we see. It’s a personal experience. We hope that somebody has a contr-experience, they can come back to us and say, no with Facebook video is doing extremely, extremely well, but we will defer to that.

Sir, the last thing that I would like to show now is the market data. So, we finished down yesterday. S&P also is down, but NASDAQ was up. Your thoughts on where the market is headed today, sir.

Sridhar Chityala: The markets are continuing to be flat as we speak. The NASDAQ is basically tech stocks. You know that all the tech stocks made their revenue. So there is some optimism in the NASDAQ whereas the Dow, as well as, S&P is reacting to, we have taken enough profits, we have factored in, I think there’s another interesting number which is 88% of those companies that are in S&P 500 Index have shown revenue increases, that is earning per share increase in 2021. So Chelsea makes a fantastic question, is the pandemic actually good for the companies or is it bad for the companies? Because everything seems to indicate that the people are having problems but the companies seem to be doing reasonably well. If 88% of S&P 500, sarcasm aside, the reasons are only twofold. One is the low cost of interest rates. Interest rates being low has helped the companies in terms of funding their businesses and plenty of liquidity in the system flooded through the stimulus programs has kept the demand going, notwithstanding the fact that, there has been a shutdown of economic activity.

Sree Iyer: With that we bring today’s DGI to a close. We will be back again tomorrow, bright and early. Do click on the bell button, that’s what gives you the notifications when new programs from PGurus arrive. As always Sridharji, a pleasure having you on the program. We’ll be back tomorrow. Namaskar.

Sridhar Chityala: Namaskar. Thank you so much. Have a wonderful Thursday.


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