Sree Iyer: Namaskar, August 3rd 2021, Tuesday. Welcome to daily Global Insights with Sri and Sree episode 216. As always we start with global news, as Covid ravages overburdened Covid Hospitals to take, only the sickest in Japan. Indonesia extends Covid restrictions again as death stay high. China provinces face lockdown amid a rise in Delta virus cases. Good morning to you Sridharji and looks like Covid’s new strain is again having a big impact.
Sridhar Chityala: Good morning to everybody on this Tuesday Morning on, August 3rd. Yes. It is Covid, Covid, Covid if it’s not politics, politics, politics. So, Covid is ravaging Southeast Asia. They were, unfortunately, or fortunately, you know they seem to be bearing the brunt of it right now, having missed the first wave, and many of the countries are facing the Delta variant and rising cases. All the things that we experience in rest of the world, you are beginning to see in places like Japan, Thailand and so on which is, you know, many of these people are not, you know inherently capable of dealing with pandemic and you know hospitalization capacities and so on and so forth. I mean everybody experiences in Wave two in India, in wave one in Europe, etc, etc.
Sree Iyer: Australia will provide 68 million dollars to Fiji to assist with airport upgrades, amid a wider influence push into the South Pacific region, against Beijing’s, encroaching hegemony. ASEAN struggles to end Myanmar, impasse as a week of meetings, begin as public anger simmers six months after taking over. So, the general who took over, who said that he will conduct Elections again, looks like now he has declared himself as prime minister very, very typical playbook sir.
Sridhar Chityala: I think it’s a typical playbook in terms of the Myanmar story and let us see because he seems to have good connections into the ASEAN leadership. And what ASEAN is saying, somehow, if they can persuade him to hold elections in six months, they can have an amicable settlement and move on. It’s a very complicated process in terms of imposing sanctions within the ASEAN, it’s a group where they brought Myanmar in. If you recall Myanmar was given a significant amount of importance. They also have been an ASEAN show in Myanmar, so I think they’re hoping that they can integrate as the protests continue to rise.
Now with regard to the Pacific, if you recall you know both in Tahiti and in other regions of the Pacific that have been either Australia or Japan or even for that matter France investing to prevent this underground cable company being, you know, utilizing the Chinese and Chinese Technologies. So Australia is stepping up its anti and then has invested 64 million which is great news.
Sree Iyer: Popular protests violent crackdowns puts Biden and Obama Iran Peace Agenda to test from Nuke Deal to Human rights in Iran. Iran warns against retaliation by Israel. This is for the Drone attack. Russian Envoy places, blame on Iran, but nucleus stalemate. Sir, the first one where there are protests and riots, this is happening inside Iran, isn’t it?
Sridhar Chityala: This is happening in many provinces within Iran, this is against human rights crackdown, this is against a lot of prevailing economic conditions and the oppressive regime. The new president is likely to be more fundamentalist rather than less fundamentalist. So there is, you know, rising anti-pro-democracy protests happening inside Iraq. So that’s one facet of the story. The second facet of the story is that continuous using their renegade forces, or the gorillas are whatever you want to call the Warriors, persistence attacks around the region, which we call three “I”. And the latest was on Mercer Street, which is a commercial ship, which resulted in two crew members there and Iran has basically said it will not accept any retaliation and it will respond. Then, you have the third thing that is going on which is namely the nuclear deal, it is very amazing that Russia has stepped up and stated that the stalling of the negotiation of the deal Iran is responsible for. Now this whole thing we called the JCOPA, this deal was stitched by Obama. Why we are discussing Iran because the reason is the present regime feels that they have to go back to the deal when Iran has nothing but other than being very very belligerent and continuing to defying the rules enrichment of uranium. And I think we again covered Daily Global Insight, they are very close or very short of coming up with a nuclear weapon. So I think that this Russian statement is a very important statement.
Sree Iyer: Boris Johnson faces backlash over vaccine passports from his own party. Poland grants visas to Belarus athletes seeking Asylum. This is very interesting. Belarus has been having problems politically, now, is it transpires that some of the people representing the country in the Olympics want to seek asylum in Poland?
Sridhar Chityala: So, that is what it looks like. Many of the people who are on the first opportunity to get out of Belarus, they say that, Hey, you know, if there’s a way by, we can get out. We’ll get out. Because again, it’s a repressive regime that is backed by the Russians continuing to lead. if you recall that we again covered in Daily Global Insights that when they even stop the plane, carrying two journalists, who wrote against the regime, and then those guys were, you know, deplaned from the flight. So I think so you have this issue propping up, it is very amazing. This used to happen when you have the cold war, people from the Eastern Europeans trying to seek Asylum and not going back and then the war of words between so that seems to be now prevalent in as far as Belarus is concerned.
Boris Johnson is facing a backlash because many of these people don’t want these vaccine passports, but the UK is number two in the world. We can keep on saying this number two in the world in terms of Active cases, posterior million active cases in Britain, and they want their freedom. And they do not want to have all these identity badges, you know, carrying on, to be taken with them. This is Boris Johnson facing backlash from his own party leave alone from people, his own party people are saying now this is an olation of rights, so we’re not agreeing to it.
Sree Iyer: In US News, no evidence of any wrongdoings, as Trump fights the release of tax returns, and says that the house is on an unwarranted fishing Expedition. Your thoughts, sir
Sridhar Chityala: Yes, I think that you know, President Trump has time till Wednesday that Judge had given to contest this requirement. And I think he’s making his case is basically saying it’s my tax returns and have filed, have done no harm. Why are you looking into it? Now, this Nancy Pelosi and co, they are going to find every which way that is possible to figure out something, you know, in Trump’s armoury or kit, which they think they can use it. If you remember two cases in which they are not pursued our great man In Andrew Cuomo here in Manhattan, the governor of New York is not pursued is more than 10 to 13 people complaining about his issues. Hunter Biden’s computer fairly locked up it tucked away somewhere is now in our deal is, is gone is not pursued and some of the investigations around the connections to covid-19 not pursued but they want Trump’s tax returns.
Sree Iyer: Evidence proves the virus that caused the covid-19 pandemic leak from a Chinese research facility according to a report by the US Republicans released on Monday. The report also cited ample evidence that Wuhan Institute of Virology WIV scientists aided by the US, experts and Chinese, and US government funds were working to modify coronavirus to infect humans and such manipulation could be hidden. This is the gain of function that has been talked about. There is a United Kingdom report that shows that this pandemic has alarming consequences with the potency not treatable by vaccines. We are talking about the new variant, I guess, Delta and people are talking about another one coming down the pipeline, which is calling it Lambda. Sir, why is it that the Democrats refuse to accept this after all pandemic is not partisan, it picks up everyone?
Sridhar Chityala: It’s very interesting. We should ask President Obama to make a statement because some of these things point towards that specific date around that period. So he should come out in public and say you know, he’s a president, he’s willing to campaign for the Democrats, he is willing to talk about the progressive agenda, Etc. He should say, hey, you know what happened, during that specific phase, you should make a statement, which is to say that, hey, something happened with or nothing happened. So it is very clear that according to the detail in the press, I forget the name of the Republican senators or Republican house rep, who issued the report is now fairly public and it is very well covered which shows that there was a close linkage. It also shows that Fauci has not denied that the US Health and Institute of Virology, has funded this specific research. So, if so you know why many of these things are not coming out, it begs the question and you saw Rand Paul go after Dr Fauci on the same topic, so now more and more, and more evidence points to the issue, going directly back to that specific lab and probably some of the people being involved from here. Nobody’s alleging that any intent of crime, but everybody is saying, there was information and why that information has not been released in the public interest, that’s it.
Now, this UK reports we have not examined in Daily Global Insights, but we will do more. But apparently that the UK report says there are viruses, you know, that are in the plan or in the research that they have seen, some of them have a potency that it can be treated by the vaccine. Should that be the case that this is not going to go away? In other words, this research has one big headline which is to say that this virus is here forever with us. Unless something different comes out, this particular report, which was tweeted yesterday is available. You can go back, go and look at Twitter. And then I look for this report if I find it, but we haven’t done the full analysis, but one of the days we will share the findings.
Sree Iyer: Yes, indeed and the White House sees a rising covid-19 Uptake as Delta variant rips through the States. I’m going to put it on the chart browser and this is going to be a video that’s going to be running for a bit but we will just wait for this to run for a few seconds and then I will put you back on sir. Please continue sir.
Sridhar Chityala: So if you see this chart that, Sreeji has put up on the screen. One of the key highlights is to look at the column called Active cases. When you look at the column and this is the Indian chart that you’re seeing will get to the other one, Okay, so when you look at the Active cases in the United States, there are close to 5.5 million Active cases that are a significant number of active cases. And when you the new cases, it is roughly close to 49,000 new cases, you see on your screen. So we have seen in the United States in the past one week, 44 to 49 thousand daily new cases, prop up and which are the states that top this list that is California is nearly approaching 1.8 million close to 2 million active cases or in the Indian terms close to 20 lakhs cases in one single state. And then you have Virginia having 628,000 then Maryland having 446,000, Florida is also 307,000. Paul Krugman wrote a piece yesterday just picking up a further because it is in the top 10 you know this happens to be one of the red states which are the very prominent and red-state was one of the state’s we say, no mandatory vaccinations and no mask. But this is an alarming number and more than 60% of this is Delta variant, so that’s on the US. Coming to the Indian side, India saw, the chart that you see is that India is approaching close to 500 million vaccines. The first dose vaccine is quite a remarkable number. It’s around somewhere around 470 or 472 million right now, as we speak. As of yesterday, they had close to 6 million vaccines. The number that you may see is about 1.7, which is only partly refreshed, but the other heartening news India is for the first time, the number of active cases is less than the discharge cases, which has brought the number to that, you know, 404 or 405,000 number. But India still has to be on the alert because three or four states are making up the big numbers. So, this Covid is a big issue.
Sree Iyer: President Biden’s 1.2 trillion infrastructure package carves out broad exemptions for “Buy American mandates”. Would this be like you know made in the USA, brand promotion?
Sridhar Chityala: Yes, made in USA brand promotion. There was a threshold, a 55% are increasing it to about 60% but what I’m also hearing is that they constantly have abused and violated there are two exemptions to this rule. One exemption is if there is a little bit of scarcity of specific raw material whether it is steel, whether it is iron, whether it is construction materials, then they can bypass this as one. The second is also when there is an asymmetric demand, you can bypass this. This is one of the reasons why the United States has gone down the gurgle or gone down the tubes and we lost significant segments of the industry. So, the work sounds good on paper but doesn’t sound very good when it’s actually on a reality.
Sree Iyer: Democratic State legislators to converge on Capitol Hill to demand passage of voting Bill. The Biden Administration signalled Monday that he plans to keep the so-called title 42 coronavirus virus border shutdown in place a little longer. Dashing hopes of immigrant rights Advocates. Progressive activist groups, I should say regressive have renewed calls for a new probe into Supreme Court Justice Brett M. Kavanaugh and his possible impeachment. The Group is demanding that further FBI investigation is necessary. Sir, first of all, what happened to the group that came from Texas. These guys are contacted Covid. Are they still holding up in Washington DC?
Sridhar Chityala: They are still holed up in Washington DC, they do not want to go back. Probably, no pun intended, they want to be generous and socialize because they’re socialists, with the rest of the members. From 27 states, close to 150 Democratic legislators are likely to descend on Tuesday, which is today, in Washington DC to march. So, these 50 people would join that and talk about election reforms, voting reforms, nationalization of elections, etc This is going to bite. If it happens, it will bite the Democrats. They don’t recognize it because what happens to Democrats when they lose power? It is Republicans who will be in power. They will have the same ability to control House and Senate to rewrite the laws. Because we want to rewrite every law that they have written, go forward, go backward, go forward, go backward. So that is number one. Number two, they want no voter ID. So if you demand voter ID, it is correct. How can there be constitutionality and equality? Constitutionality applies to citizens. It doesn’t apply to every visitor who comes into this country or every visitor who comes into the country to stay on. This is utter nonsense. But they feel this is the way they can control. You can see the Cubans are kicked out whereas those who come from Central America are allowed. So there’s whatever the delineations are. Anyway, let’s move to the next one.
Sree Iyer: Nearly two million households or close to 15 billion in back rents as per reports. So, I think, now the point is Nancy Pelosi wants a moratorium on all the evictions extended, but the White House is not thinking of doing that. So there is a clash, looks like, within the Democrats themselves. Your thoughts, sir.
Sridhar Chityala: Moratorium has been bypassed by the CDC. Biden has also bypassed it. It is over. So they have no support from their own party. They have no support from CDC, they have no support from Mr Biden. So it’s done and dusted. So one important point on this is, I was looking for that specific clause which is Title 42. Title 42 is effectively when somebody crosses the border if he is found to be having covid or any disease or ailment, then he will be denied entry. So Biden is supporting that whether it will be implemented remains to be seen.
With regard to Kavanaugh, it is very important, Kavanaugh has intensely contested his nomination to the Supreme Court. There was this issue that he assaulted a lady while in a school or college. Trump Administration did an investigation and passed on, but the Democrats feel the investigation was incomplete. The FBI must pursue and he must be impeached and if he is impeached and removed then that means that they have an opportunity to replace the particular person and that can swing the composition of the Supreme Court. This is an important point to discuss, just as the Trump tax issue.
Sree Iyer: A couple of things, sir. One is, has a Supreme Court Judge ever been impeached before? I don’t know if, you know the answer to that we can look up and tell you tomorrow. The second question sir, is the Florida Governor’s performance as bad as being portrayed in the US media? One of our regular watchers Mr Lee wants to know.
Sridhar Chityala: Florida performance has been extremely good but this is the targeted agenda they’re going after.
Sree Iyer: Remember Modi of 2002 – 2012. What used to happen?
Sridhar Chityala: Why he’s targeted? Very simple. He is emerging as a strong contender to be Presidential nominee in case Trump chooses one way or the other way. So he’s also been very silent. Originally, he was supposed to be the deputy, now he is not Deputy, he is silent on that. He has administered the state very well, so they’re targeting him, mismanagement, this, that, and so on. But the fact of life is, if you look at the industry, the industry is moving from New York to Florida and so, therefore, who do you target? You are the target Desantis. Why don’t you target all others? Why don’t you target the California governor? Why not be target New York Governor? Why don’t you target the Illinois governor? You don’t because they happen to be Progressives. So, the United States and India are effectively mirrored images of each other. Now, the only thing that was left was scheming and the voting fraud and all these making up the numbers in one way or the other has also entered this scene in the United States. Media has entered the scene, targeting of people as entered the scenes. So if you are looking at the oldest and the largest democracy it reflects an identical state of affairs on all such matters that make difference in terms of acquiring power.
Sree Iyer: Yes. I might also add that one should not rule out Mike Pompeo from being a possible candidate for president in 2024 because if we look back and we are going to publish a couple of interviews in the next few days with Elmer Yuen and you will see what is happening on the backside. What is happening on the other side? How a part-time actor went on to become a big monster, that is Xi Jinping, today. Very interesting video. Do watch that.
Now let’s go on to India news, Modi to address the UN sessions virtually on Maritime Security Issues. Dr Jaishankar, who will be in-person in New York and will chair sessions on technology and peacekeeping and will be discussing strategic-level reports on ISIS. Dr Jaishankar will also represent India and Iran President Raisi’s oath-taking ceremony. Looks like India was invited. Sir, your thoughts.
Sridhar Chityala: I think the Maritime Security, which is the front, centre and the back of Indian Ocean, South China Sea, Pacific extending all the way up to Djibouti and the Gulf of Aden. So you have Modi taking up that issue quite rightly. India has been given some specific responsibilities, so it is the right issue. Dr Jaishankar is focused on some of the ISIS, as well as usage of technology with the advent of drones.
The invitation of the Iranian government shows that there is still a trusted relationship that India enjoys with some of these nations.
Sree Iyer: Indian exports are up 47.91% in July to 35.17 billion. Import surge 59%. India sees the strongest manufacturing growth from 48.1% to 55.3% in the manufacturing purchasing managers index. India sets an ambitious exports target with a new foreign trade policy targeting 1 trillion by the fiscal year 2026. It must grow at a Compound Aggregated Growth Rate – CAGR of 15% against the past five years’ growth rate of 5%. Gross GST collections continue to rise pointing to a robust recovery as the unemployment rate falls to 6.95% in July. Sir, your thoughts.
Sridhar Chityala: First and foremost, India is recovering from the pandemic. We discussed it a little bit yesterday. All these numbers point to the fact that there is momentum relative to the corresponding period during a pandemic. In pandemic, there was a contraction. So, if these percentages look exaggerated. These percentages are compared relative to the corresponding period the previous year. So when we come to next year, the normalization will happen because then we will know whether the growth is at 59% or 10% or 12% as the case may be. But the good news is, India is on the move.
As far as the export target of 1 trillion is concerned, we have discussed it. The bilateral trade with the US itself, people are targeting a $500 billion, whether they achieve at the 15% CAGR or whether they achieve at 5% CAGR, today it is at 5%, it doesn’t matter. But they have set a target that they’re going after. Immediately, people will descend and say they will not achieve 15. You have a target and you go after it. If you land at 8% of 9%, you’re much better than where you are today and eventually 1 trillion which will make up 20% of the 5 trillion whenever it reaches that number is a good outcome because you have a blended economy of consumption and exports.
Sree Iyer: At the E-Rupee launch PM Modi says government saves 1.7 lakh crores via direct transfer of subsidies. This has been one of the best things that the Modi government has accomplished because there are no leakages, no seepages. Many of us remember growing up when Rajiv Gandhi used to say that out of a 100 paisa that the government sets out to give its citizens only 15 used to reach the citizens because those are the middlemen the Congress system had encouraged. Now all of it goes because it’s a direct transfer of subsidies. India nears 500 million vaccine doses as it battles Delta variant in select states. You did see the chart that you put up.
Sridharji, I’m going directly to Market because we’re running a little bit late. As the economy hits its peak, Markets finished lower today. The Infrastructure Bill could target Crypto Markets rocking in further. So you have something to say about this Infrastructure Bill and how it could be affecting the Crypto markets?
Sridhar Chityala: Infrastructure Bill is a targeting, now, they said that they need revenue because the infrastructure bill is about expenses. $1.2 trillion of the deficit with a $3.5 trillion in the reconciliation budget in the offing. So this simply implies that they must find sources of revenue, and lo and behold, we now go to Crypto. Janet Yellen herself has stated, in my view, it is bad news and good news. The bad news is $28 billion they targeting on crypto trade. So what’s the good news? The good news is we have stated before that it is not from hero to zero, it is going from zero to superhero. Why is it going to superhero? Because the reason is, ‘hey, now we are going to tax you. You do more trade, we will tax you.’ So it’s going mainstream.
Today, Gary Gensler would be speaking, at the SEC in Forum in Aspen Institute. He is the SEC chair and he is saying that he wants the exchanges and trades to be under title oversight and he wants regulation to come in, he himself has started crypto and he also feels that he has been silent on what happens to the ETF – Exchange-Trader Funds on Crypto. He said that that also will be reviewed. So, it means that crypto is going mainstream, whether it is $100,000 dollars Bitcoin whether it is $50,000, doesn’t matter, but it’s going to be mainstream.
Sree Iyer: Treasury to deploy extraordinary measures after Congress misses the debt ceiling deadline. This is another joke that gets played out, it is a cruel joke, in fact, that gets played out on the American public. They’ll start shutting down non-essential government functions and poor people who are working on such projects, for example, if there’s a NASA contract that is being deployed, they’ll miss the payment of the next schedule and many of those people will be furloughed. They won’t get the benefit. It’s just a mess. These people are irresponsible. They think money grows on trees when it comes to allocating money. It is a silly exercise, just get rid of the debt ceiling. Why do you even have to have it? Anyway, you’re borrowing against I don’t know what, our younger generations. The next generation is going to get burden like crazy, anyway, so why have this charade? That’s how I see it. Sir, the debt ceiling deadline is a charade. What are your thoughts, sir?
Sridhar Chityala: Well, I think that we are going down what you call open borders, open access, open sesame. Everybody is allowed. No identity. Everybody is allowed to vote. Borrow till cows come home, no debt ceiling limits. So, therefore, we will be running a kangaroo country very soon in the United States. So we can borrow till nobody needs to repay. We don’t need to have anybody checking at the borders. Anybody can come. We don’t need to have any ID. Anybody can go and vote. Very soon, anybody can be in Capitol Hill and anybody can do anything. There’s nobody to question. That’s the state of affairs in the United States. It’s not a very positive feeling here, but there is when you look at the crimes when you look at all these specific issues that are going on, it makes a mockery of the Democracy that we think is very precious in terms of governance.
Sree Iyer: Let’s take a quick look at markets that are doing extremely well. Sir, I have the Dow market up, you can see it, I guess.
Sridhar Chityala: The markets were down, yesterday. They were up, they were down, 100 points. The Futures are up. So the Dow was down 100 points. The great news is oils. It is within the $75 band. So that is extremely positive news. Now, when you see the next chart, it would be staggering, the bond market. Yes, 1.17% is a 10-year yield. This is the best time to borrow. You look at the Japanese and you look at the Deutsch, then you can see that especially the European one is negative. The Japanese is very close to 0%, sir. So this is the time to borrow. I don’t know why people don’t want to borrow. This is the time to borrow and make a bump on real estate. 1.18, that’s an amazing rate. That is an amazing rate when the economy is up, so that’s what I would say.
I am sorry, I was a little controversial on your observation around the debt ceiling. I think a debt ceiling is required, otherwise, there will be no checks and balances.
Sree Iyer: Sir, you are a banker, you are going to say that. You like numbers. You need the left-hand side to meet with the right-hand side. I am saying it in a very sarcastic way. These regressive have no idea. They probably can’t count beyond their fingers. I’m sorry because you just keep throwing numbers. Three trillion for this and that. It says it’s supposed to go into US infrastructure and then the money is being allocated for Palestine and other stuff. It doesn’t make sense. If you want to set aside money for that, say so, get it separately passed in Congress. Anyway, you have the majority, let it come out of that. Why try to hide it somewhere else? That’s my point, sir. With this, we bring to an end today’s episode. We’ll be back again tomorrow, bright and early, as always. Sridharji, Namaskar. I will see you tomorrow.
Sridhar Chityala: Namaskar and thank you so much. It was a good session.