EP156 Janet Yellen: US market overheating, may raise rates, Bengal burns, Mamta denies, Floyd verdict issue and more

Janet Yellen says US market overheating, may raise tax rates, West Bengal burns, Mamta Banerjee, denies while Central ruling party doing Dharna, Floyd verdict issue, 1.3 billion people in the world do not want to get vaccinated & more

Sree Iyer: Namaskar, May 5, 2021. Episode 156 of Daily Global Insights with Sri and Sree. In US News, Let’s first look at some economic views, Janet Yellen Predicts a Modest Rate Rise to Prevent Economy Overheating. Treasury to borrow 463 billion dollars in Q2. Actuals are $401 billion in 2021 Q1 and $597 billion in 2020 Q4.  The total projected debt for 2021 is $2.28 trillion. The US trade deficit surges to $74.4 billion and a trade deficit, with China, rose 11.6%.  Your thoughts, Sir.

Sridhar Chityala: My thoughts are that Mr Jerome Powell was waiting for his former boss to give an indication that they can lift the interest rates because of the runaway economy. We are given the numbers in terms of what the market indices are pointing to. So she’s now saying, it’s inevitable that they will be a rate rise with more and more money being put into the economy. The fact that the treasury is now indicating that it is going to borrow $463 billion in Q2 versus the original projection of $95 billion is the effect of this infrastructure plan spend, that is kicking in. And then with the outer layers is at least going to factor in the 1.8 trillion dollars of the child rescue plan or the Child Welfare plan that is contemplated. We don’t know what the numbers would look like for the climate accord that is being also contemplated. In summary, we are looking at a $2.28 trillion addition to the debt on a balance sheet, which is $3.6 trillion in revenues and close to $ 4.4 trillion on expenses.

Sree Iyer:  and in other news, Biden was seen to with President Carter with no Mask.

And Chauvin Juror number 50, Brandon Mitchell who attended the pre-trial rally with jeopardizing guilty verdict. Rasmussen poll finds an over 52% question, Biden’s ability to manage Terror. And Biden tax hikes and High Debt Pathway to the recession are a four trillion budget and Six Trillion spending plans. Sir, your thoughts on what is happening in and around Biden. No masks while meeting with the esteemed president Jimmy Carter and his wife, sir.

Sridhar Chityala: Yes. Just before I transition, I didn’t respond to, we had 200 billion dollars in exports and 274.4 billion dollars imports predominantly because this is excess cash that’s been given to Consumers. The spending has increased, usually, the spend these around the lower-priced items and a vast number of this is imported that is the reason why you have seen trade deficit you know the kind of breaking out. Needless to say, China continues to be the number one. There was a contraction in Mexico but the deficit has grown by 11.6%.

Now, in terms of the specific questions that you have asked to transition to the general news.  Biden has masks when he is on, Zoom calls. Mask is off when he is in person so the Twitterati’s were all over the place projecting here is a President Who critique that President Trump was not wearing a Mask, when President Trump was going around and causing more harm but he has been totally inconsistent in terms of following through, that is the thing. I don’t know whether he is actually creating some harm to some much more elderly President Carter in the process, possibly he is vaccinated. But that’s just the way President Biden is which is completely absent-minded and totally kind of negligent to the rules.

As far as the Chauvin case is concerned the George Floyd and David Chauvin case is concerned. It’s not come to light that juror number 52 did not disclose that, he participated in a rally last year which could put the whole case to risk. Already, there have been some comments coming from the jurors that they were scared and afraid that their life could be under threat if in any way they make a judgment that is counter to the sentiments that were prevalent at that point in time. Already David Chauvin’s lawyer has filed a restraining order citing this specific instance, it will be interesting to see what happens.

As far as the Rasmussen poll is concerned with the withdrawal of the Afghan forces and everybody clamouring as to what is going to happen on two fronts. One is security and terrorist threat. And the second is, the surge in the border where they have now, stopped reporting the news that there has been a number of potentials, National Security, you know, people who are in the Wanted register coming through were a threat to the nation’s security. So the poll was effectively validating, what will people think? It’s astonishing only 30% of the people think he has capability more than 52% think, he is not or is not at all capable in terms of managing the term of managing the terror.

As far as the Biden Tax rise is a concern, everybody is now coming on board from Market analysts to everybody that this is a runaway wreck in terms of a looming recession, plus it complete blow out of budget, any time in your future come close to reducing the debt or converging on the deficit. We’re not going to reduce the debt, it is only the deficit to the, you can bridge. The deficit is the interest costs are going to be very high. The other important point in this also causing some alarm in the analysis that we were doing. yesterday, is many people are now complaining that this is a significant labour shortage. That people are refusing to come to work because they got a convenient paycheck coming home and there is no will. So, the question, therefore, is the unemployment numbers that are being proclaimed based on unemployment insurance or the actually actual employment in the market and what constitutes employment. Because you if you recall under the PPE program, you know, money does flow into the system to small business, but many of the businesses have no ability to control these people coming and coming to work, but they have signed down to an agreement that they will not let these people go, at least 90% depending on 2030 or 2025, as the case may be. So, whether these numbers are getting fudged in terms of unemployment because I spoke with people across four different cities, Minneapolis, People in Washington DC. I also spoke with some of the people in Atlanta. I also spoke with some of the people in LA and the general impression is that it’s very difficult to get people to come to work when they are comforted by money coming right into the bank account.

Sree Iyer: And in India related news, Bengal Burns, while PM Modi and HM Amit Shah go to sleep. So, that’s just a strong observation. Yes, indeed. We have not heard a single word from the Prime Minister or the Home Minister. And I think the centralization of power only leads one to believe that they are responsible even though it might be that the central Administration cannot really go down to the state to administer law because law and order is state subject. Sir,  your thoughts?

Sridhar Chityala:  My thoughts are, I have a feeling if Amit Shah, is the prime minister of the country contrary to Prime Minister Modi. I am very provocative here but I’ll make my statement if I Amit Shah or Yogi is the prime minister of India or even Nitin Gadkari, we would have seen far more forceful actions coming out without giving any due weightage to what the Supreme Court may say.  Ever since the Arunachal Pradesh verdict which went against Modi in terms of the dissolution of the state and appointment of the CM, he has gone back into the back foot in terms of not doing anything to any state, notwithstanding the fact, what’s happening in Bengal. In Bengal, this is not the only thing. We have had the Shardha scam, the police commissioner running around all over the place and they couldn’t do anything.

Second, you had that terrorist incident in Kolkata and Ajit Doval couldn’t send his NIA to investigate because she said she would block. Then, there was a law and order issue in a couple of universities. She said she would not allow the CRPF because she thinks that it is part of the state. Then you have the issue of both Amit Shah, as well as Prime Minister Modi’s plane not being allowed to land citing security issues. They are the Prime Minister and Home Minister of the nation. So effectively, these two guys have allowed Mamta to rise, like a monster. That is the only word you can say, she has risen like a monster. And he has issued a statement that all the visuals are old and fake. The mainstream media and the Supreme Court of the country, the reason why I keep being Supreme Court because the Supreme Court seems to be India’s governance body, they want to have real-time software systems installed monitoring the oxygen cylinders. They want to be in a position to answer what’s the number of vaccines are there. They want to be in a position to answer whether the guys in Delhi or allowed to riot, or not allowed to riot. When you look at the Shaheen Bagh incident when everything was getting burnt, Supreme Court said, rioting and protesting is the right of an individual. To it seems like the Supreme Court has usurped the governance of India. Probably Modi and Amit Shah, if they’ve confronted head-on, they would have tackled these lefties who are prevalent just as here in the United States, the Liberals believe the court is heavily in favour of the conservatives. The conservatives in India should say, ‘Hey, we have a problem with the judicial system but this is the situation where people are getting murdered, buildings are getting burned. These are not people of wealth, these are very poor people who are getting bombarded. So these are my observations as far as Bengal, India and these issues go, sir

Sree Iyer: India and the United Kingdom are set to sign an enhanced trade agreement. China recruiting ethnic Tibetans amid border standoff with India. I think India and UK’s trade relations is a good thing. Unless you have something to add, I will move to Global News, sir.

Sridhar Chityala: No, I think China tactic is basically Tibetans versus Tibetans because the Indo-Tibetan force is a very strong regiment that actually leads the front end in the Ladakh and the greater Himalayan region. So, this is a clever strategy that they are trying to adapt to basically play the divide and conquer type of game.

Sree Iyer: In Global News, Biden hopes to meet Putin in his June trip to Europe. G7 ministers aim for complete Korean Peninsula Denuclearization. Xi claims ultimate authority and claims the title “Helmsman” like Mao Zedong. Australia ups the ante against China. A flurry of diplomatic contacts fuels the Iran deal. The US mediated border talks between Israel and Lebanon resume. Netanyahu faces a midnight deadline. So, what is the deadline Mr Netanyahu is facing, sir?

Sridhar Chityala: He is basically trying to form a coalition with centre and right. Everybody has ambitions. So the question is, whether he can come to a consensus, at least basically say, ”l’ll be the Prime Minister for six months and I’ll transition the power to someone else.’ He has to come up with some kind of a power-sharing formula. Naftali Bennett is aspiring to be the prime minister of the nation. And Naftali has also developed some ruffles with Mr Netanyahu. He was one of the key partners of the prior government and then there was, again, a new coalition. He stepped out, he was still active within, he was not the defence minister at that point in time. He is a very powerful figure with his own little faction. He has a sway for Netanyahu to form the government. So this where Mr Netanyahu is having a problem.

Sree Iyer: In Global covid updates, Biden sets July 4th goal of vaccinating 70% of the US population. In a Gallup poll, 1.3 billion people from around the world reject covid vaccine. Russia turns to China to make Sputniks to meet the demand. No more lockdowns, and shutdowns – lessons from covid. Pfizer is seeking an expedited approval pathway for the role of its two-dose MRNA covid vaccine. Indian covid numbers are being presented now, but before I do that, sir, your thoughts on the other areas.

Sridhar Chityala:  I think that the July 4th goal of vaccinating 70% of the United States is very much on target. This is at least one vaccine. Gallup Poll is not a surprise. We are beginning to see that there is tremendous resistance at least in some segments of the universe. What is surprising here is Russia turning to China to make Sputnik’s in China, recognizing that China is aspiring to be the vaccine hub and resurrect the vaccine diplomacy. One of its own vaccines has not done very effectively so it’s a bit of… We’ll see what happens to it. Originally, Sputniks were to be manufactured in India. There was to be a big deal with the Serum Institute until some set of people issued threats which made Mr Poonawalla flee to London make an announcement that he is going to make things out of London and then now to come back to India again.

No more lockdowns and shutdowns – that’s a big lesson from the United States and countries that are trying to you know go back to the old model. They’re going to face the consequences. Even the EU has come to the conclusion, those who are vaccinated must be allowed to be brought in. And this is unrelated but very related to Pfizer. Pfizer reported earnings and their first-quarter earnings was $3.6 billion. If you recall we had mentioned what’s going to happen to some of these Pharma, Biotech, vaccine stocks. 3.6 billion and we mentioned yesterday, 195 billion is the amount of money that’s going to be spent on vaccines are going up to 2025. So make your own judgment.

On covid data of India, there are 2 important charts. one is yesterday’s May 4th and the other is Mar 3rd chart at 8:00 am. Everybody points are to two numbers. The two numbers that they point to are the total number of cases and the total number of new cases. What they don’t point out is India did have a very high recovery rate and the second number that they don’t project is the net increases in Active cases. The net increases in Active cases are reduced by close to 25,000. Again, they talk about the number of deaths. The number of deaths naturally will increase when you have, in my view, this double mutant virus that has come in.

Based on some of the reports that we are seeing is how could it have been triggered, whether it was triggered as biowarfare or whether it was a natural thing. There is a report that has been published by the state department of the United States that says that this Wuhan Institute of Technology or The Institute of Virology seems to have a close connection with PLA. Whatever may be the case, the Indian numbers will begin to taper down, that’s the general projection, some people say by mid-May you will begin to see the tapering of the numbers. Reports predict based on modelling by the first week of June things will begin to normalize. As proof of that, you need to look at the Maharashtra numbers. When you drill down on some of these things when you go you go back, we only have given the highlights, you begin to see the evidence of the tapering down. Having said that the oxygen shortages, whether we have enough vaccines, the government says they release 176 million vaccines for the month of April, etc. Again vaccine numbers are given, quite a significant population has at least received one vaccine in India. So those are my observations on the Indian numbers.

Sree Iyer: In Markets News, NASDAQ drops 1.9% as Yellen talks of a rate hike. S&P drops 0.67%. The US 10-year Treasury bill is at 1.592%, 30-year at 2.265%, oil is at $66.13, with Brent at $69.32 a barrel. Bitcoin at 54,845.10 and Coin is a 280.66, maybe another good entry point for Coin. Dow Jones is at 34,113.03, S&P 500 at 4164.66 and NASDAQ at 13,633.50.

With that, we come to the end of today’s episode. We’ll see you tomorrow bright and early. As always, thank you, Sridharji and Namaskar.

Sridhar Chityala: Namaskar and have a wonderful day.



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