Sree Iyer: Namaskar, hello and welcome to episode number 99, today is the 16th of February 2021. I am with Sridhar Chityalaji. Sridharji, namaskar and welcome to PGurus Channel.
Sridhar Chityala: Namaskar and Very good morning to you from New York on a very cloudy Frosty day from here, just the frost has begun to clear.
Sree Iyer: It’s beginning to rain here. It’s now rainy season in California and we are spoiled for riches. So, we are saying rain rain go away, although even complain when the rain doesn’t come. So be that that’s our weather report for the episode and let’s jump right in and go into the United States news. Sir, some of the states are now acting to censure those Senators who voted against the party lines in the impeachment trial. What are your thought, sir? Where do you think this is going to lead?
Sridhar Chityala: What it’s just going to lead is just going to put a lot of pressure on the Senators. Some of them may not contest the next Senate races to be held there would be challengers emerging for that. Three of them have already been said censured; Raymond Burr, Bill Cassidy, and also Pat Toomey who will not be contesting from Pennsylvania, so, those three are done. I think the fourth one the rumblings but the attempts rumblings are on and possibly they are going to do it, that’s Mitt Romney from Utah, which would be a very unusual move. He has always entertained aspirations to be a presidential candidate and much of the rivalry between him and Trump steps from that, so, that’s the fourth. As far as Lisa Murkowski and Susan Collins are concerned, I don’t see anything happening on those two. Similarly with sassy, so these are the four people.
Sree Iyer: And those of you who may not know this, Mitt Romney was the governor of Massachusetts where he had mandated a universal health care bill, which is what Obama who is a Democrat turned it around and made it into an all Country-Wide Obamacare plan. So, there is you know, Mitt Romney is considered more of a Centrist Republican and you have the other side which is the side that supports Trump, but right now the polls indicate that Trump enjoys about Seventy-five per cent supports amongst Republicans in the entire country. So, Trump regardless of what has played out continues to be very popular among the parties Rank and fire.
Sridhar Chityala: Well, I think that he is the most popular Republican leader post, Ronald Regan. He is the only president in the recent history from the Republican side who has expanded the broad constituency and reach of the Republican Party breaking the myth that it is exclusively for certain types of people. So, therefore, he also has been able to address in an economic contest all the segments of the community through his tax programs and adjustments to Medicare programs Etc. One of the most astounding things and you know, we can put up the diagram or we can put up the pictures, Trump is still the most popular leader across six-seven regions in the world, you know, you can see him with Balsonaro and Balsonaro saying good things about President Trump. He is very popular in Brazil, he is very popular in Eastern Europe. He’s very popular in some parts of Western Europe, he is very popular naturally in ASEAN. Many of them came and met him and he’s also very popular in at least the Indian subcontinent, you know other than you know in the broader South Asian Community, he is very popular in India. So again, you know, a president who has left continues to be very popular because of his policies. He stood by these smaller nations against the aggression of the China and that you saw both in Indo-pacific, you saw it in the South China Sea his actions reflected. So, he’s always been with the people and by the people within the context of not taking any political sides and by being who he is for himself. So, to that extent Steve Bannon will discuss that Steve Bannon story but Donald Trump Junior has stated that his dad is going to take a very big and active role in politics and make America great again, agenda is back on the table, and to that extent, he was seen on Monday, which is a Presidents Day holiday here, travelling in the car and lots of people in Florida coming out in the streets to wave. So, he is a popular president and people have different views, that’s fine, that’s the way life goes.
Sree Iyer: Yes, indeed and we also want to mention here that some of the people very closely associated with his four-year term are now weighing themselves either a congressional run or a gubernatorial run or a senatorial run. For instance yesterday, we mentioned that Senator Lindsay Graham had talked about Lara Trump the wife of Eric Trump, the Second Son of Donald Trump is a person who might run for the Senate from North Carolina and you also have Sarah Huckabee who was a spokesperson, Corey Lewandowski and then Rick Grinnell. So, all these people are now mulling a run and how do you rate the chances of all these candidates, sir?
Sridhar Chityala: The chances are pretty good, but, you need to recognize the Democratic Party today is battle-hardened. It has worked out the formula by which it believes, it can win future elections, which is postal ballots and absentee votes, which typically is missed out when elections are held in the United States. They have found a mechanism using the covid to attract and bring on board, whether it is legitimate, illegitimate etc., time will tell but, right now that formula has worked for the Democrats. So, the Republican Party needs to combat that part of it and say that it is equally organized and well-established to take this segment of the constituency into consideration and make its way forward then it can win. The fact that highest number of people came on board to vote for President Trump, higher than the highest number came to vote for President Biden is a reflection that formula and a new direction has been reached in the United States in terms of the elections circles.
Sree Iyer: In American football, they always say if you want to win championships, you have to establish a ground game and a ground game mean like in American football you can either throw on the offence or you can run the ball but, running the ball successfully forward also eats up time giving less time for the other side to respond back. Likewise, I think the Republicans need to establish a very solid ground game, which is what the Democrats appear to have done and that is going to be the challenge. Sir, the Biden presidency is beginning to again face some headwinds because the Biden Administration hasn’t yet reached out to Benjamin Netanyahu.
Sridhar Chityala: Well, on the global front, it’s fascinating that his initial reactions and responses seem to reflect that Benjamin Netanyahu is paying the price for the overtures as well as a well-established relationship with the West Asians. Whether it is true or not, we don’t know but, there is a perceptive belief that the Iranian constituency has been able to receive the years of the Biden Administration. Whether it is fact or fiction, we don’t know but that’s generally the trend because his initial policy seems to reflect that Iran, we are back at the negotiating table with Iran then, we are not back at the negotiating table with Iran but Iran has to be brought into the mainstream. We have to go back to the Obama Accord. So, when you have the prioritization along those lines rather than saying let me talk to my core constituency, which is historically between both Republican and Democrats in West Asia, you know, the Saudi Arabia, UAE, you know, these are the two principal kinds of constituents Egypt is another one. And then, of course, both for Democrats and Republicans Israel has been, the fact that he has been soft on those and then he is also put a hold on the order for the equipment to be supplied or exported the F-35AS is, therefore, I think that too especially to UAE and Kingdom of Saudi Arabia raises some questions around what exactly is his policies. Similarly, he lifted the Houthis from the terrorist list that we discussed it yesterday. I’m still on the holiday. So, the story is we discussed it yesterday. So, he lifted the Houthi situation as you know, not being in the terrorist group and then you are beginning to see lots of incursions in Iraq, Northern Syria, Turkey, Iran etc., And Iran, Russia and China are going to conduct in the Indian Ocean an exercise is a reflection that he has got some challenges that he has to deal with.
Sree Iyer: Yes, indeed and Iraq has launched a rocket attack at a US military base in Northern Iraq in the Kurdish area and it has killed a contractor and a service member. So this is now becoming more and more apparent every day. There’s one attack or the other and Turkey also has been blaming the Americans. So, suddenly now, it seems like business as usual, the four years of tranquillity is all gone and now again, we are back to all these conflicts in areas where there appears to be no resolution, sir.
Sridhar Chityala: Well, I think President Biden is consummated by stabilizing and establishing his cabinet. He is been consummated by covid issues. He is been consummated by this stimulus. He’s also been consummated by the rapid firing of the executive orders that are resetting many of the policies and the most notorious of which is this energy and immigration. These are the two big ones. So when you look at this, he has given little attention as yet, he may change, little attention as yet and this is the window that the opponents of typical the United States peace plan or process leverage and cease to demonstrate where their actions that’s what you’re seeing in Iraq, South China Sea, Indian Ocean and in the broader kind of the troubled areas of the Middle East.
Sree Iyer: And moving on to Global covid Nigerian Okonjo-Ivela has been confirmed as the next WHO Chief and even before we jump into the WHO’s direction. There have been some reports emanating out of the office saying that the initial sighting of the virus, the data was not released by WHO but, instead it was released by the PRC, so, what is the problem now? Suddenly WHO has developed conscience is that how you see it?
Sridhar Chityala: Well, the seat is hot, somebody has to sit on the chair. Okay. So the question is nobody wants to sit on the chair and nobody wants to make the other person sit on the chair. Okay. So WHO said it is going to visit Wuhan, it has access to Wuhan via their established relationship with the Chinese Ministry, and it will find the root cause and it will establish to try and get the data. The Chinese with tremendous euphoria and enthusiasm said they are welcome. Then, they said no you’re not welcome. Then, they said we will subject you to covid test, one guy was found to have a covid positive dropped out. They went in, lo and behold now, they realize that the data is not forthcoming. The data is held back Etc. So they go in and conduct this investigation and find the outcome of the investigation is given by the Chinese establishment rather than WHO. So, one after the other the officials are not coming out and stating, ‘Hey, you know, this is not the correct data. We don’t have the data. This is what the Chinese are pushing.’ So today, one of the WHO advisors has stated that ‘We have been denied access and this data is not our data’. And even further China has around the same time as stated that this virus originated somewhere else, not here and then they went on to add a couple of other things that we’re not going to kind of mention here. indigestion, eating some food, could have caused this and that can happen anywhere in the world. They even made an allegation that a maximum number of deaths are in the United States, so the virus must have originated in the US. They saw India was an outstanding success in terms of managing it. They initially painted that it originated in India, and then they kind of pulled out recognizing, if it originated in India, how India has managed the covid program tremendously well. So they’ve been switching this thing and they’re trying to see who they can make sit on this hot chair and there’s nobody as yet.
Sree Iyer: In fact, a Japanese Biologist, with over 30 years of experience working with these kinds of viruses has said that this is a man-made virus. ‘I stake my 30-year reputation on this. There is no way a virus could be able to thrive across so many different temperature zones with this kind of intensity plus the fact that it is able to morph itself into various forms. So he has really come out and said that this is definitely a man-made virus. The question now is, who is the one who started it and who has to take the responsibility? Unfortunately, the Biden Administration which is supposed to be showing the leadership for the world is itself caught up in two things. One is that they have to pass a stimulus plan, the second is they also grappling with some of the highest incidences of covid affected deaths. Now, why is it that one of the most advanced countries in the world is also having the highest death rates in covid? Why would the United States with all the Health Resources at their disposal still be unable to combat this? Any thoughts on that, sir? How is it that a country like India, especially places like Dharavi, where people are packed like sardines seem to have weathered it much better?
Sridhar Chityala: Well, let me just speak about the United States. So the United States has three specific problems. One problem is that during the Trump Administration there was a constant and a persistent confrontation between Trump and the state’s managed by the Democrats. If Trump says A, they will say B. You shut down, no we will not shut down, we’ll keep it open. So you saw a spurt in cases even in Florida, which is Republican and then that spread all the way into California and then we saw that in New York, that is number one.
Number two, I myself have stated, in Manhattan and in broader, New York, but more specifically Manhattan, there was no mask. Nobody was wearing a mask in the first four months. Almost from February to June, there’s nobody wearing the mask, people walking around. If we are having a meeting right now, there will be ambulances screeching all the time. So we had high incidents because of the lack of discipline and protocols.
Number three is that we do have, at least in some of the selected States age group, this does impact people with low immunity and age group, and people with preconditions such as diabetes, respiratory disorders. So we do have a segment of the population which is a natural habitat for this virus to come in and be very quickly infected. We also covered in this program and in other programs that the protocols that one should follow was not advocated through mass media communication such as drink hot water, drink tea, make sure that you don’t get signs of any respiratory issues or sore throat and cold, cough get it attended too, Don’t slacken your alertness and be consistently on the hot water and hot showers and those kinds of things. That’s how China weathered it in the initial days when the results were coming up. So there’s a whole set of about six, seven, eight, nine, ten things which we had indicated, not followed. Now, India may have followed as a natural habit and that’s very visible. Some of the Western European nations also probably did not follow and they also suffered.
Sree Iyer: To add to what you said, sir, I think you meant consumed not consummated when you talked about Biden Administration. The second thing, to add to your point, California’s governor, Gavin Newsom is facing perhaps a recall effort that might take a life of its own and if that should happen, the Californians might vote to recall their governor that will be a special election. It has happened before when a Californian Democratic governor Gray Davis was not able to combat the sudden rise in electricity prices as private companies forced him to pay an arm and a leg to get power and this was a very planned effort. No action has been taken. Everybody has been walking scot-free and Gray Davis lost his job. Then we got Arnold Schwarzenegger as the governor after that. So there is history here. There is precedence here of California having recalled its Governor. Whether Gavin Newsom is going to be recalled, we don’t know. But if it does happen, that would be a big blow for Nancy Pelosi as well. As for Gavin Newsom may be entertaining thoughts of running for the president of the United States. So, let’s see how this thing plays out.
Sir, let’s go into markets now. To start with, let’s look at the price of the crude, starting from how it went down, in fact, the Futures were at a negative. On a particular date, it went to -50 dollars. So I have this graphic up on the screen where we are tracing the WTI Crude over from March 2020 to now February 2021, a 12-month window. And we now see that the WTI Crude is at $60. Perhaps the Brent is a little bit more expensive. Where do you see the crude stop, sir?
Sridhar Chityala: Well, I think the curve should show between $20 24 cents roughly around that was the dip, which is the brent and going up all the way to 60. Mind you, when you take on a gradient year over year, the Delta is not very significant. But from the dip, it has gone all the way up. When the covid came in, the demand came down quite dramatically. So, therefore, people started to cut production and cut the supply because there is no demand and the prices began to drop quite dramatically. Now, three things have happened. The first and foremost is this new Biden policy of cutting down the new leases for boats offshore as well as onshore. Cutting the Keystone XL pipeline and then the potential ban on fracking. So we are moving from energy net exporter to energy efficient.
And then the second one in conjunction with these programs is the weather. We are having a very very cold weather condition in many of those key areas such as Canada South Dakota, Oklahoma, Texas and adjacent regions. These are all oil production regions, which is also resulting in the cutting of the production. So, all of a sudden these importers are seizing this moment who have been acquired all along and you are now beginning to see their Futures pointing to Rising quite rapidly. The Futures are actually at 64, what you see here is around 60 plus kind of a dollar whether it is WTI or Brent crude. So where do I see this going? I see this eventually tapering up. I don’t see this touching $95. But the world is balanced somewhere around $40 – $45 in this new economic order or the new normal. So that is the price band we are looking at. As far as its impact on inflation, this is a question that often is asked. Remember, two items, which are excluded from inflation or deflation. One is energy, second is food. So on the inflationary side, may not be directly on the consumption, indirectly, yes. But for countries like India, which is reliant on the oil or crude as is called rather than gas. They have to decide how to manage their resources because it directly has a correlation to their expenditure in the balance sheet of the government. So, therefore, whether they use their reserves to manage it remains to be seen, but it certainly has consequences. So I feel that unless there is, we’re not going to see a change in the policy of Biden and so there is going to be, whether they will allow some of the other people to lift their supplies or the some of the people who would lift the supplies at a specific price remains to be seen. OPEC comes into the question. Right now, the oil futures are at about $65.
Sree Iyer: We should wrap quickly, sir. So, the next one is about five countries getting together, their ministers to chart out how the economies are going to perform. I’m talking about Indonesia, Philippines, Singapore, Thailand, and Vietnam and I have the graphic up here and we are looking at a GDP rebound in the range of 3% to 5% for these countries. How does this affect the world economy and India, in particular?
Sridhar Chityala: The range is, as you rightly pointed out somewhere between 3 – 6/6.5% which is set in Vietnam and Singapore probably the higher range. There are two observations. The first observation is, the v-shaped recovery is consistent. So, therefore, the US which put in a huge lump of stimulus going back to March/April timeframe. The world consistently seems to have followed and you have seen a symmetric recovery around the world. Even in India, it is a v-shaped recovery. So that’s number one. Number two. It shows the Asian economies are backed resurgent. Number three, two major components of the Asian economy Taiwan and Vietnam are considered world leaders in governance and the management of covid and economy during the covid phase. And finally,, these were the two countries especially Vietnam which saw the benefit of the migration of Industry from China to Offshore when the covid-19 detected and China was under the radar. India was one of them but Vietnam was one of the biggest beneficiaries. Vietnam is called China 2 on the manufacturing side. So how does it help India? India has a very strong relationship with the ASEAN nations and has bilateral trade agreements. I think it should all get well for India.
Sree Iyer: Thank you. And the last item for today. Dr Subramanian Swamy, a senior BJP leader has tweeted yesterday that he will be beginning to start taking an active role in trying to explain to the world, the good things that the farm laws of enacted and he’s also suggested a way out for those states that do not want to comply with the law as of today. I spoke to him yesterday and he mentioned that there are some misapprehensions about what this law does and he said that he has written to the Prime Minister on how this can be made optional for the states and let the states choose whether they want to join it or not. And then as some states start looking and deriving the benefits of it, hopefully, the entire country will come on board. The most important thing that he emphasized is that the MSP is going to be the same regardless of whether the current system of intermediate buyers or companies such as the Ambanis or the Adanis are buying. Everybody has to still pay the MSP that has been determined by the centre. So there should be no concerns for the farmers in terms of their purchase price. Yet, we are now looking at a situation where this is still continuing. Let’s wait and see how it goes. We seem to have run into some technical difficulties, but I think still the video feed is working. So is there anything else you’d like to add to this before we bring it to a close?
Sridhar Chityala: No, I think that will take up the other things tomorrow.
Sree Iyer: Thank you very much for joining again. Please subscribe to our Channel and also donate to our cause. We also are running a joint membership program for our YouTube channel you may want to consider joining that. That also helps us with our programming costs. And as always it’s a pleasure to have you with us, Sridharji and we will see you again bright and early tomorrow morning. Namaskar.
Sridhar Chityala: Namaskar for the 100th program.
Sree Iyer: Yes indeed, that will be event number 100. A very very special day for us. Thanks for all the support. Today, the crowds were excellent. And we really really thank you for all your support.