Sridhar Chityala: Good Morning, Welcome to Daily Global Insights. This is episode number 221. We as usual start with the global news. And the first item is obviously around the UN report on the consequences of the ever-expanding issues and apparently, the UN report warns of dire consequences if the climate issues are not immediately addressed with a sense of urgency and immediacy. There is a target of -1 .5 degrees Celsius to be achieved and none of the countries seems to be on target as yet, according to the UN head. He also forecasts the death knell for fossil fuels which he indicates is one of the Prime drivers of this climate change.
President Macron has also called for a climate deal that matches the UN reports urgency. So, in other words, he’s saying, please countries, rest of the world, come up and let’s all work together to meet this goal. Remember President Macaron and Australian Prime Minister Scott Morrison have also worked with the Indian Prime Minister and one of the deals that they are looking at as part of this trilateral dialogue is the climate Accord.
The US to slap more sanctions on the Belarus regime, which is dictatorial and is been purging many activists. And as a consequence, Lukashenko’s government has been slapped with more sanctions by the US president and what exactly the sanctions are will probably report shortly.
German exports rise in Europe past the pre-pandemic levels and that’s a very positive sign with Europe ravished by Covid and shutdowns and so on and so forth. So Germany has always been one of the drivers of the European Union economic growth and its export-led model, with exports reaching the pre-pandemic levels is a positive sign in terms of the European Union’s GDP growth.
Australia which is also seen modest increases in its Covid. But, the Australian government has been, you know, very dramatic in its approach in terms of its shutdowns. They have now approved the third vaccine Moderna. First, it was AstraZeneca, which was the vaccine used, then Pfizer-Biontech got approved. Now, the good news is Moderna too got approved. The challenge for Australia is whether many people would exceed and accept the vaccinations and complete the targets is Australian government is aspiring.
Russia plans to build more military infrastructure in the Kuril Islands, the islands that it is contested by Japan that it can contest with Japan. We had covered extensively on this topic in the Northern Shores of Japan. You have this Kuril Islands which borders, Japan and there has been this body dispute and Russia has been chipping away and developing infrastructure and the latest in the military infrastructure expansion and we also saw the Russian Prime Minister make a visit more recently. This again we covered in the DGI.
Suga’s sinking popularity post Olympics will not help his case either with threats looming, both from Russia and China. The catastrophic Olympics at least from a public sentiments Point of view, not the conduct or the event itself with rising Covid cases and lockdowns around Tokyo is sinking his popularity further. Suga succeeded Mr Shinzo Abe and Shinzo was a very popular leader and due to health reasons, he had to step down.
China continues its battle with Delta variants, namely Covid and it has Wuhan shut down and Wuhan is to test all its people for Delta variance. And it’s just not confined to Wuhan. It seems to have spread to other provinces in South and Southeast China. Obviously, as is often the case, we get very limited data from China in terms of the scope and the breadth of the issue as it relates to any matter, leave alone covid-19.
CIA director is in Israel as the US is said, to be looking at alternatives to Iran deal as you all know the Iran deal is floundering. Iran has taken a much more belligerent position for whatever reasons, probably it’s dealing with China and it deals with Russia. Now it is issuing various forms of threats. It has attacked ships in the Gulf of Hormuz, Persian Gulf. It is also sent drone attacks on US troops in Iraq. It has been very active with its surrogate forces, such as Hezbollah, not only in Syria and Lebanon but also in Israel, the IDF, which is these Israeli Defense Forces has identified that Hezbollah soldier who fired those 20 rockets on Israel from one single mobile launcher. I’m sure actions will follow soon.
Moving to the African continent, the much-touted Sahel region we covered Mozambique yesterday. Now we go to Mali and Burkina Faso. So the jihadists were active again, in this region with more than 40 people killed by suspected jihadists in Mali and adjacent Burkina Faso 12 troops were killed by another group of jihadists.
Coming to Afghanistan, the Mayhem continues in Afghanistan with the Taliban capturing, more territory, more buildings, and naturally more murders. And they are in six provinces right now pretty close to regaining control with Afghan forces abandoning power one report and Afghan forces fighting for other reports. But one thing is very common that the Afghan is under tremendous pressure in terms of the Afghan forces dealing with the resurgent Taliban.
President Biden had sent his B-52 bombers, especially to Target the Taliban areas are hounding, the Afghan forces. One needs to wait and see what impact this has on contained the Taliban movement and one hopes that there is still an inclusive and peaceful process in terms of transitioning, from the vacating US forces and NATO forces and with the Afghan government and Taliban sitting together and regaining and restoring peace, and normalcy for the benefit of the people. They have suffered for a long time.
Transitioning from Global now, we are onto US News, the first item that we kick off is on the much talked about and the famous infrastructure bill and the budget, 18 Republicans joined the Senate vote, pushing the infrastructure bill closer to passage. So in other words, they got 69 votes to 28 which effectively means the filibuster is gone, the bill will get through. We talked about yesterday, Mr Bill Haggerty asking for more debate, the debate was again in a reduced almost no more than 50 hours. So one can expect the passage of this 1.2 billion or 564 billion infrastructure bill, 1.2 includes all the implications of the budget spillovers Etc or the spillovers that are permitted within this type of program.
Schumer awaits the passage of this bill on Tuesday. They expected it to have been completed yesterday Monday, but they move it to today, Tuesday. Maybe later this will get done and will probably report it on Wednesday. So, once this infrastructure bill is concluded, the Democrats are already ready with the passage of the 3.5 trillion Mega packages. It is the mother of all deals, as they say, it is even most consequential since the New Deal that was done some time ago. The 3.5 trillion dollars mega package will include a number of things ranging from expanding Obamacare, which is the Affordable Care Act expanding the Medicaid Program, expanding the Medicaid Program, expanding the benefits. Further, enhancing the child tax credits, further expansion to the infrastructure programs, penalties to those who use carbon fuels, incentives to those clean energy plus money allocated beyond what is already done to the clean energy programs all this makeup, this Mega 3.5 trillion dollars. By the way, the consequence of this particular bill to the deficit is not computed. We will compute once the 3.5 trillion dollars, Mega package details, all laid out. We don’t have the details, but once we have, it will be laid out. Even without that right now, we are sitting at 28.5 trillion dollars total debt and the consequence of which is that we have to do an expansion or extension of the debt limit if you don’t do the extension of the debt limit which is currently 22 trillion dollars, there are consequences, that date has passed and Janet Yellen is pleading for a bipartisan approach to expand. I’m trying to point out here that 3.5 trillion dollars will further push the debt and we need to see what that it and we will definitely report in DGI.
Democrats in a very clever manner have left out the debt ceiling in their budget plan is needless to say, we’ll set up the showdown with the Republicans. If you recall, we have had this drama in Trump years. We have had this drama in the Obama years. We have had this drama in Bush years. We’ve had this drama in Clinton years, which is a government shutdown fur lows and eventually, some satisfactory resolution is reached. The resolution is not an enhancement, it remains always a detriment but this battle is actually set up with is 3.5 trillion and basically, Mitch McConnell has stated he is not here to further the socialistic agenda of the Biden and Progressive within the Biden Administration and he has no mind to enhance the debt limit.
2022 and 2024 elections are the top agenda this week at the RNC summer meeting which is being attended by a number of delegates. So they’re going to focus on inflation and the uncontrollable budget expansion of the Biden Administration as the key theme. In other words, Biden’s economic agenda would be the key theme as they try to fight the elections in 2022 to regain House and Senate. Obviously, 2024 includes the presidential elections, so that’s one item. The second item is, obviously the issue surrounding the border surges and covid-19 management.
Coming to Texas, the Texas Democrats are being mocked for the lawsuit that they have filed against the speaker and the governor of Texas. They have blamed the GOP for their exit and panacea that they are enjoying in Portugal. They call it the unwarranted situation that has been created, including stress and other kinds of factors that have been caused by these extraordinary sessions that the Texas governor has called. This thing has been filed in Houston by not a very reputable lawyer. So this seems to be another drama that is going on.
Texas State trooper has ramped up their arrest of illegal alien trespassers. It is one of the issues that is going on between the state versus the federal. The federal is warning the state in terms of the enforcement process which was withdrawn. But Texas is saying that the law and order is a state issue. And these immigrants are aliens coming across the border or causing two things. One, they causing covid issues. Two, they are a security threat. So therefore the law will be enforced per the state rules which is why not only the Texas troopers but there are other troopers from other states are coming and helping the Texas state.
As a consequence, the House Republicans are demanding answers from Mr Mayorkas from the Department of Homeland Security as the border situation continue to escalate and worsen. In fact, there is one senator who has called for the impeachment of the HS. It remains to be seen what happens. This is another major issue that is looming in the Senate and House debate, as well as in the 2022 elections.
Crime has not been rescinded either. 73 people were shot and 10 were killed over the weekend in Chicago amid the rising crime wave. This is just in one city. We don’t have the data for the other cities, but this is a big issue, which is the reason why Chicago is getting highlighted.
The San Francisco mayor is forcing law enforcement to vaccinate and causing the cops to quit. We talked about this yesterday, mandates cannot be given, mandates are issued, but with discretionary measures, unless the vaccines are formally approved by the FDA. The vaccines have not been approved by the FDA. Once the vaccines are approved by FDA, one will begin to see more mandates coming through. This was acknowledged by Dr Fauci himself. So San Francisco mayor decided to bring law enforcement to vaccinate people and many cops have started to quit because it is not something that they want to do when the law is not in their favour.
Pentagon will mandate all personnel to get vaccinated by the end of next month. So there has been resistance by a number of members of the Pentagon or a number of armed services forces that have resisted vaccination treating it as a personal issue and it is their choice. But it looks like the defence secretary has now mandated that all the defence personnel have to be vaccinated by end of next month for the covid.
One of the other things that are bothering the White House and they have been fairly explicit about is the lack of data and the CDC transparency around the correlation of data to vaccinated and non-vaccinated and rising cases of the Delta variant etc. Many vaccinated people or at least one time vaccinated people have been contracting covid. So they need data that would help the White House to make the case in a much more articulate manner.
Coming to the last news item on the US, New York Governor Andrew Cuomo continues to face saga in the media as well as his survival battle. The top aid of Andrew Cuomo has resigned as the governor faces multiple sexual misconduct allegations. There is an impeachment inquiry currently underway to see whether there is prima facie evidence for commencing impeachment proceedings. More to come on this.
We now transition to India news. PM Modi chairing. The United Nations security council meeting on enhancing Maritime security listed five principles as his priorities. India chairs the UNSC session. So Prime Minister Mr Modi, as prime minister of the nation, chaired the session and several important world leaders attended. Climate, Maritime Security and covid were the three key topics that were discussed. So he presided over the maritime security discussion, he used five principles. He called for open and free maritime trade with no barriers. He said that the oceans are shared heritage and Maritime routes are lifelines of international trade for all nations and this is a time-tested practice. He called for peaceful settlement of all Maritime disputes in line with International Regulations. He said, there should be responsible Maritime connectivity that enables Nations to trade with each other without fear. He also called for containing piracy and non-state actors’ involvement in threatening Maritime trade, and the global forces must come together and must unite to address this issue. Finally, preserving maritime resources and the environment is critical because it also has to do with the ecosystem, and Maritime resources are very precious. It provides lifeline value to many, many nations and many people around the world whether it’s the Indian Ocean, Pacific, South China Sea, East China Sea, etc,
India is considering, we discussed this again in the one of the DGI, India is now considering short import tax cuts on Electronic Vehicles. Why? Because Tesla is lobbying and making a persuasive case to the Indian government as to why they should lower their import taxes which will then help the seamless expansion of Electronic Vehicle programs and know-how. Once you reach a certain captive level, once again, this can become part of the broader Make In India program.
India has come up with a very innovative approach. It allows foreign nationals to get covid-19 vaccines via the Cowin registration app. Cowin registration App has been much sought after. This is how they have managed the covid programs in India. Many countries have aspired to access this application for their own in-house programs. India also has set up a very rapid PCR test facility at airports because many nations today, which we want to open up to India, especially both for transit as well as for people visiting those countries such as European destinations, as well as the UAE want PCR test outcomes, they want vaccination outcomes. There’re no passports as yet but they want vaccination outcomes. So, India has now started to set up a program and they are slowly expanding, I gather. You can actually do a test by paying Rs 5000 at the airports and your PCR results are available in 45 to 60 minutes. You can carry your PCR record and show it as proof of evidence to those countries when you land and then you can get passed.
On the trade front, India and Australia are strengthening their trade negotiating teams to hammer out a trade deal by end of the year. Australia is now meeting with a number of nations. Australia is working with the EU, it is working with India, working on a separate bilateral note with France, with the UK, with the US. They are trying to counter the Chinese influence and they want to find quickly substitution for their trade programs that would make it less, if not, not reliable or not dependent at all on China. But move the trade partnership to many other countries thus broadening their horizon. So, Tony Abbott who was in India was the previous prime minister prior to Scott Morrison seems to have held a number of discussions. He is a big believer in India and so hopefully they would iron out a deal. He uses the word ‘Harvesting A Deal’ by end of the year so they can have trade programs. I think there’s plenty of opportunities between India and Australia.
India also completes 513 million vaccine doses. We talked about 500 million, but this is a very important milestone. Single vaccine dose crossing 400 million is a very important milestone as it relates to the continuation of the vaccine program. India also saw I think on Monday, the number of new cases dropped to 35,000 from about 40,000 prior. It also had a positive impact on the net active cases to about 402,000 cases as of yesterday.
Getting to markets, Bitcoin continues to make its headway. It is around $45,000 as we closed on Monday. It was continuously trading at a given point of time on Monday, Market Pundits predict this to be a $100,000 outcome by end of the year. But forget 100,000, even if you need 60,000 or 70,000, it’s a great number. Again, in DGI we have had extensive coverage on this specific topic. Dow finished at all-time highs Dow and S&P closed on day one of the week, yesterday, at 106 points down, as far as the DJ index is concerned. S&P closed around small 4 points and NASDAQ, as is often the case, goes the opposite was up 24.42 points. As far as the bond markets go, US treasury yields continue to hover around that 1.2 – 1.3. There was a slight dip then it moved up by 0.03 basis points to 1.325% from 1.28 on Monday. The 10-year bond market, as well as the Japanese Yen, had almost no significant impact in terms of the price movements. Oil markets are now below $70 with crude at $66.85, Brent at $69.21 which again augurs very well from an economic expansion point of view. We saw these numbers move up to $74 last week. So they are now well below the $70 mod.
With that, we conclude today’s Daily Global Insights. We will see you bright and early again tomorrow morning. Thank you.
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