Sree Iyer: Hello and welcome to episode 90 of Daily Global insights. I am your host Sree Iyer. Today is the 3rd of February 2021 I have with me see Sridhar Chityalaji. Sridharji, namaskar and welcome to PGurus Channel.
Sridhar Chityala: Namaskar and good morning. It’s getting to be a bright day here. So, we are getting all of the impacts of the snow and trying to get back into the normal things.
Sree Iyer: Yes, and we’re entering into our rainy season here. It rained a couple of days quite a bit as a matter of fact, and today looks like a dry day. It’s cold and dry and Californians are not used to cold. So we are all scrambling now. So let’s take a quick look at the headlines. The first thing looks like there is a lawsuit by Trump that seems to have made its way into the Supreme Court and the Supreme Court is actually going to take a look at it. What can you share about this?
Sridhar Chityala: Well, I think that this case was originally filed, which relates to changes made in Pennsylvania state by Secretary of State in I don’t want to use the word collusion in consultations with the governor and that case was dismissed in the state Supreme Court. And it was filed in the SCOTUS, which is the Supreme Court of the United States that case has now come up for hearing the docket is stated for February 19th for the conference. Lone behold as you know, either on the threshold of that or what it is, Kathy Boockvar who was the secretary who stoutly defended her moves, you know has resigned and so, therefore, it opens up an interesting set of circumstances and people have often kind of critique, which is to say, oh, you know cases filed cases dismissed, cases filed cases dismissed, cases filed cases dismissed. There’s no evidence. There’s no evidence. So to me, I think we have steadfastly stood by is not the question of who is winning versus who is losing or whether the PGurus team is taking a pro-Trump stance. Okay, so it’s not any of that, you got the facts there, which states very clearly that the laws of are conducting the elections is that of State Legislature, the executive and the judicial branch has no role in it. And they did play the role in this particular instance that was dismissed. The question is now that has been taken up because the Supreme Court (SCOTUS) doesn’t take it up unless they believe they have a case.
I think I believe that this is the beginning of more to come in terms of the reform. Damage is done. No recourse of the elections will occur. But, this is going to bring about a lot of things. Wisconsin is also pending in the background that is also going to be taken up. There is still the forensic evidence on the Dominion software. There’s another separate litigation both by the Dominion which is to say they’ve got filed litigations again Sidney Powell and Lynwood and you also have it. So, there is a whole slew of cases that may begin to prop up which is gone in the back of the radar because mainstream media doesn’t want to talk about it.
Sree Iyer: But, then we are not mainstream, we are media and we speak the truth and we are just bringing you the news as it happened. Now, let’s take a quick look at the Stimulus bill, by the way, stay on till the end of the program viewers. We have a very big reveal at the end as far as markets are concerned. Now, the stimulus bill, the Democrats are taking first votes Tuesday to pass the 1.9 trillion dollar bill, so we had talked yesterday about 10 GOP senators meeting with President Biden to press for a 600 billion dollar bill, the Democrats want to pass a 1.9 trillion dollar bill. Now, I think we should probably have a look at both these bills. What is there? What is not there? I think we are I are planning on doing something like a 20-minute session into the deep dive, but on a big picture, where do you think things are headed, sir?
Sridhar Chityala: Very clear. We will get the 1.9 trillion bills passed. Okay. Yesterday the Senate passed partisan basis 52 to 49 on a what we call as the procedural vote. It went to the House, House Democrats again have voted, they passed the procedural bill and today they will draft the various kind of terms and conditions for the release of the money and it will come back get rubber-stamped and then you know the stimulus is on its way. We have given a high level or even a semi high-level detail 1.9 comprises of 400 billion dollars towards Covid, 450 billion dollars towards local and state and other kinds of programs. Janet Yellen had alluded to about 300 billion of that to be dedicated to SME, we need to see how those numbers break out. Then, more than one trillion dollars, which goes towards the direct payments, the direct payments comprises of unemployment insurance, the $1,400 checks, then the unemployment payment extension for 10 weeks $400.00, child credits plus expanding to other Universe both the health care as well as other types of payments.
Now, there is someone who has said to me that you know without quantification that they also want to pay these 12 million illegal aliens who make up about 900 dollars per person one-off payment. Then, you also have embedded within that is all these overseas grants and allowances which are embedded within the bill. So, there is no going back. It’s on our way and 1.9 billion will be rolled out.
Sree Iyer: And other headlines, Florida Governor DeSantis has declared war on Tech cartel, Can you expand this for us a little bit?
Sridhar Chityala: Basically what he has said is that the state is now taking the ownership of what has not been. See, there are two mechanisms, one is the Federal, the second is the State. Often you find in many states Federal don’t act and then you find most of the legal enforcement or the drafting of the laws itself occurs at the state level. If you look at all the financial crimes various aspects of it. It’s all embedded in New York and most of it is tried in Manhattan district courts. So, therefore very similar to that for Florida Governor DeSantis is saying, look we are not going to come to my state and implement all your kind of laws and get away with it. And therefore I am going to come down on you as to how you conduct as far as our State is concerned with regard to your users. You’re not going to block them. You’re not going to penalize them. You’re not going to do the kinds of Draconian laws that you do in other parts of the country. So, there’s no federal law because of the 230, so, he can come up with a case, which is to say you do whatever you want to do outside. You can take immunity, but you can’t take immunity when you’re coming into my state.
Sree Iyer: In the meantime, the Senate has confirmed Pete Buttigieg as the transport secretary and it is also confirmed Mayorkas as the first Latino to the head of the Homeland Security Department. Now, let’s take a quick look at what is happening around the globe? The UN Security Council has stopped short of issuing a statement on Myanmar, but the United States is calling what happened as a coup. What are your thoughts?
Sridhar Chityala: Well, it is a coup undoubtedly and the sad irony here is, this is where I personally don’t believe in the United Nations because it’s an institution which stilling on the merits of the post-world War II. We have now gone past World War III, probably we have gone past the Cyber War, we have passed anything that you can kind of contemplate in the world today. So, we live in a very polarized kind of the world where the application of long is highly subjective. So, UN Security Council, having a discussion and just merely issuing a statement rather than condemning it. This was coming, the Myanmar coup was coming. If you read the Asian press, if you read the private kind of reports it was coming. Whether it is instigated, there are a lot of people who speculate that whether there was a hand of China in this because of the discussions going on between China and Myanmar around the Rohingyas kind of issue and other types of issues. So, therefore what do I say? I say it is a coup. I say it should have been condemned. I should say that sanction should have been imposed on Myanmar and Junta should have been taken to task.
Sree Iyer: Russian Court in the meanwhile has asked ordered a Putin critic to spend two and a half years in jail. Which person is this? Is it Navalny? I hope not.
Sridhar Chityala: It is Navalny.
Sree Iyer: Okay, so he flies back to Russia and he’s immediately sent to jail.
Sridhar Chityala: Yeah. This is a new law which is the new normal, you know, which is the fascism is the new normal, the autocratic is the new normal. China and Russia are measured differently and the United States and the rest of the world are different. And you know, if you are, you know from India always is in the back end of the stick on all these issues whereas the other is Garraway with these kinds of nonsense notwithstanding the fact many things that happen in India are by law. So, Russia, here it is he comes in and the Russian court says this guy instigated the agitation. So it’s all because of those agitations that propped up in Russia. So, a lot of people over the weekend were marching. So, what happens? This guy goes to jail.
Sree Iyer: Well Russia also poses an EMP (Electromagnetic Pulse Threat). We have talked about China having this weapon. Looks like now Russia claims, it has one too. What do you make it make of it? Is it an import from Chinese technology, or is it something that they brewed it at Home?
Sridhar Chityala: Now, what does saying here is that Russia has the capability to launch a nuclear explosion from the space and should that event occur, it gets the electromagnetic impulses can take a lot of your electrical grids out so they can effectively create blackouts and problems. Russia clearly has this and Russia has tested this. So, this is the reason why it prompted the US general to say that there is an imminent threat of a nuclear war either with China or with Russia.
Sree Iyer: Yes, indeed and a quick look at covid. Russia’s Sputnik-5 has proved to be very effective and passing 90% tests which cannot be said of some of the other vaccines. Is it possible that Russia’s vaccine might not have been tested as widely as say, for example, Pfizer?
Sridhar Chityala: Well, remember Sputnik is being also used by quite a few countries around the world and I think some elements of Sputnik has been developed in the Indian serum, I don’t know which lab it is, but one of the Indian pharmaceutical labs. It’s very difficult to give a very precise answer whether Moderna was tested more, whether Pfizer BioNtech was tested more, whether Covacs was tested more, whether AstraZeneca’s new vaccine, which also seems to be showing resilience tested more. So it’s very difficult to answer that question. But the fact Sputnik is being used by quite a few countries and Sputnik is also being used in Russia is a reflection that it’s quite possible that this vaccine has a greater than 90% latency or efficiency or effectiveness by way of response.
Sree Iyer: And now to markets and economy. We are going to spend a little bit of time on this because we have not been looking at markets in detail. Amazon is another company that has reported a hundred billion quarter. Now, in the FAANG which is Facebook, Amazon, Apple, Netflix, and Google, these are the blue-eyed boys of the stock market in the United States, looks like Amazon and Apple the two A’s are beginning to pull away from the rest of the crowd. What are your thoughts, sir?
Sridhar Chityala: Well, I echo your sentiments and I believe that Amazon and Apple have effectively become the leaders by way of not just the development and application of new technology, but the broad consumption of this technology around various places. It is probably inappropriate to call Amazon as purely technical, notwithstanding the fact, a vast pool of its revenues comes from Amazon web services. Amazon would call itself as a more consumer discretionary type of entity, that’s where it is placed. Apple, though it is tech, it is in the same category because you are not using Apple as a phone, notwithstanding the fact that is the single largest driver of the revenue with margins anything from it was once upon a time greater than 69% but is still somewhere hanging around that. So Apple today is an all-consuming device. So Apple and Amazon have pulled away because they have not only been able to create more than one stream of business and really scale it to a sustainable level. These big numbers of a hundred billion-plus per quarter, the next quarter guidance for Amazon is between under 106-109 billion. We’re not talking about a market cap. We’re talking about the sales of these companies. So this is an astonishing number by virtue of what they have done. When you see Amazon’s Andy Jassy is going to become the CEO, the person who runs the AWS. When you see the revenues from the AWS business of Amazon, on the same day we had revenues reported by Alphabet, which is the parent company of Google, it had 23% reduction in volume and it is still making losses in its cloud services business. So Alphabet still remains a single trick pony with a vast pool of its revenues coming from its advertising business, not from other adjacent services. So how far Alphabet can keep steam with these two guys remains to be seen. Microsoft, which is not in the FAANG, but as far as Microsoft is concerned, Microsoft is again principally coming from software as well as from the cloud services, but in some more Tech business rather than the platform business which you can call of Amazon or platform and services of Amazon, and Apple and also Alphabet or Google. These three are different when you compare or even Netflix. Netflix is basically a content business, content delivery business. And then you mentioned Facebook. Again, Facebook is an advertising business in social media. That’s where it has made a lot of big money from. It is a social platform. There is no enterprise licensing revenues as yet from Facebook, but you have more of the advertising. So I think that to summarize what you said, it’s a stellar performance. The numbers speak for itself and they have been on continuous growth. The fourth-quarter results they attributed to tremendous demand that flew in, in the holiday sale season. Remember, we are in a pandemic. But we have had significant growth in sales. This is where our focused session on the budget, we will again recap and get into the details and specifics of how stimulus flows through the economy and into the system, how it gets translated into the revenues. So the question that you had asked about demand stimulation when you put money into the hands of the people, especially those who have, Maslow’s theories of needs in the bottom, which is, I have a lot of unmet needs I’m going to go and spend the money you see that spurt in the demand coming through. That’s what we saw in Q3 and Q4. Again. We had shared another chart which shows that the stimulus of the original 3.1 trillion, which is 2.1 plus 900 billion resulted in especially, the 2.1 resulted in the retail sales reaching pre-pandemic levels to the same point with a big week with 2 quarters. Around the same time, the unemployment dipped because the money was put into the PPP program. So what Amazon and Apple are reflecting is the translation of the money that has been put into the system through stimulus making its way into the outcomes of the sales, hence they’re saying that in 2021 you may not see exactly similar patterns because there was an abnormal activity.
Sree Iyer: The Dow jumped 470 points yesterday. It had its best day since November and Oil also jumped 2% again. There seems to be some supplies side concern.
Sridhar Chityala: The 2% oil jump is very specific. They’re saying very clearly that the Keystone Pipeline, then the leasing contracts for water and for the land usage looking at oil plus additional capacity exploration, all stopped. So there is a tremendous pressure both on the employment side as well as on the supply side from within the United States. We are now going to go from a net exporter to net importer. So what the people are doing on the import side who have been waiting for this kind of an event or basically saying now I’m going to control, I think we reported. So there is a very clear correlation that is going on between what is happening in the United States versus what you are seeing in the markets. So this is only aggravating the problem and we’re going to see double whammy. We’re going to see unemployment in that sector group in any of these states ranging from Louisiana to New Mexico, South Dakota, North Dakota all these places. It is not one job, it is a very detailed study which says, people who have gone and spent time specializing in what you call as this technical jobs, those who are welders, tube layers and all these different kinds of semi engineering jobs, which is unique for this industry. Many of them are going to go out of work.
Sree Iyer: Thank you for that update. And I stand corrected viewers, we are starting a new initiative this month it’s free. It’s called joining our membership. We will be putting the data out in the next couple of days and what that means is nothing is going to change. We may have some additional bonus content for the members. For example, there may be some in-depth analysis like the one that Chityalaji is mentioning about the budget. We have some look into what makes Amazon tick, what is the success story of Apple and so on and so forth. All these are niche things that many of you will find it useful. However, these things come with a slightly different tag in the sense that you have to become a member. Our membership prices, you will find out are very reasonable. We just need this thing for a couple of reasons. One is, those of you who are based in India are unable to donate to PGurus because we are US based company and PayPal does not have a provision to accept donations from you. Instead, if you use this to become a member on our YouTube channel, you are effectively doing the same thing. So that is one avenue for you. The other thing is that we are now beginning to scale up our operations. We are trying to do more things. We’re going to be doing more Snazzy Graphics to give you the real impact. We all realize that no matter how much growth has happened everywhere around the day is still 24 hours. That doesn’t change. So your time is becoming more and more valuable. It is our belief that we can give you the most bang for the buck in terms of time versus content. Thank you very much for watching. Please do subscribe to our channel. Sridharji, as always a pleasure to have you. Namaskar.
Sridhar Chityala: Namaskar and Thank you so much. Have a wonderful day.