Sree Iyer: Hello and welcome to PGurus Channel, I am your host Sree Iyer. It is episode 13 on our daily updates with Sridhar Chityala. SridharJi, Namaskar and welcome to PGurus Channel.
Sridhar Chityala: Namaskar and Good morning to you and good morning to everybody, good afternoon and good evening, where you are.
Sree Iyer: Good Morning, we are going to directly take a plunge into our today’s evolving events. The first one is the quad a lot of developments happening in the quad, could you please bring us up to date on what is happening in this particular thing, especially with the exercise taking place in Malabar?
Sridhar Chityala:. Let’s start with Mark Esper statement in the Atlantic council’s where he said that the indo-pacific relationship would be the most pivotal for the century terms of security trade and commerce particularly around the security side. With the common thread of a China posing a tremendous risk, not just to the United States and India but to all Nations around the neighbourhood. So that’s a very profound statement as he makes his way into India next week for the two plus two dialogue. The fact that the two plus two that are taking place in person, one week prior to the elections is a telling statement on the importance that the present Trump administration is giving to the nature of dialogue as well as the importance of the dialogue between the two Nations. And on top of that, they expect to sign what we call as the basic exchange cooperation agreement, where Rajnath Singh, the defence minister of India and Mark Esper will be doing the signage. This is a cooperation between the two armies the US Army and Indian army from geospatial to logistics. Remember this comes on the back of the recently concluded my Malabar exercise in the Indo-Pacific where Australia was also invited to play a part. There was some contention before the formation of the Quad, there was the India Japan United States, but then now Australia is very much part of that quad agreement. So, you have a set of activities which is taking place around the Indo-pacific in concert with two plus two dialogue and in person. This is the same sentiment that the Indian Americans have been expressing why Modi-Trump partnership and why Trump winning the election is important from a continuity point of view, in terms of the level of the comfort factor and the dialogue taking place. Not to be left alone, there is also the security cooperation between Japan which is one of the important quad members and Indonesia. The Indonesian defence minister for the first time having been invited to the United States. He coming and meeting the defence secretary as well as important defence officials in the United States. Adjacent to that you also have Vietnam inviting India to the virtual Asian Summit, giving it again the Strategic impetus in terms of the role that India needs to play. So, in other words, both in a political and the security context all kind of game plans have been fairly well laid out, irrespective of the outcome of the elections. In case, the intervening period is used by China to create any kind of mischief, because it’s already happening in Taiwan, in the South China Sea as well as in the northern side India-China issue in Ladakh.
Sree Iyer: Well, moving on, we are taking a quick look at the effects of the virus and when normalcy is expected return? I am hearing news from local companies in the Silicon Valley that they don’t expect to be back in their campuses before July of next year. So, there is a certain concern now that since the vaccine is still not available, that there could be some more delayed before people start working or getting back to what used to be the normal state. What do you see about this virus vaccine? Again, Pfizer said something, it might be there, and it might not be there. India also thinks that by February they’ll be having something that the entire population can get. What are your thoughts on this? And then we can move on to some other important topics.
Sridhar Chityala: Actually the Russian vaccine, which they said, they will be first, but it was washed away because it the trials proved. Eli Lilly and Johnson and Johnson, they kind of wandered off the vaccine. The Pfizer has announced that it may be ready by the end of the year or early next year with the vaccine. So, generally, Israel had only come up with faster test swabs which determine whether you have virus symptoms. The second way which the doctor said promise is upon us and you can see the spurts in parts of Asia but significant in Europe and therefore they’re going from partial shutdowns to almost complete Shutdowns. Australia had one state and albeit very small portion and then the United States we have seen growth by about 5% on a daily average basis consistent with this issue. My impression is that I believe that people will get used to working remotely is going to take. Nobody can predict will be June, July, August next year or whether it would be in the end of the year. But, people have adapted themselves to this and people have started to return to work at least in New York. There’s a growing feeling that 35% or 40% of the people will be working remote and they’re not be coming back to the office for some period of time. I mean not on the valley, but going to the other coast on the west Shores, Microsoft has said that people can work with life remote from their homes. So, you may see some transformative changes occurring as a result of this virus situation.
Sree Iyer: Yes indeed, there are changes coming along. The next topic I want to talk about is Sweden’s rejection of a couple of Chinese Technologies Huawei and ZTE in the 5G trials that they were planning on running. So, now Sweden is usually regarded as somebody who is a very socialistic minded. What do you make of it, sir? What other countries would be doing the same thing now?
Sridhar Chityala: But, Sweden is also home to Ericsson, one of the largest mobile telephony networks and device companies. Now, of course in the network business, the fact that a country which has a network to its credit rejects 5G and ZTE is the reflection that security is a big concern. So they’re following the pattern of every other country that has gone down the path. And this is where again the quad question comes in because the quad countries are spearheading an effort to come up with a set of common standards in terms of building out the 5G, which is secure and away from the Chinese Huawei technology.
Sree Iyer: Again, I think what is going to be showing the way in that. Sir, let’s move on to the Economy. On stimulus, any convergence, any idea which way it’s going?.
Sridhar Chityala: I think it’s a billion-dollar question which way it is going. It depends on like New York weather if I can just turn the computer; it’s a cloudy, doomy, gloomy, dark sky. It’s a rare event in New York. But, having said that when you have rains and so on, but it clears up and you have clear skies and it is very similar in terms of the stimulus. The stimulus is contradictory, we are close but yet we are very far. That seems to be the Nancy Pelosi and Steve Mnuchin’s decision. I have a feeling that there will be some kind of limited passage of the bill that at least covers the Airlines, that covers the SMEs and covers the local government medical schools and so on. There will be some kind of emergency package sometime this week. If not a large package that both Nancy and the President are trying to accomplish.
Sree Iyer: Sir, Is this becoming a poll issue. What is your gut feeling from the ground?
Sridhar Chityala: I think it is becoming more than polish, it’s becoming a political issue. Because it’s basically saying, who is right and who is wrong? The 2.1 trillion dollars was received with great kind of fanfare and has seen economic outcomes come out of it. We have talked about that, how quickly that impacted and helped the economy to recover markets, retail sales, consumer confidence, unemployment etc., The story now is the continuity. So, the continuity does it require small or does it require a gigantic kind of a package. So to me, it is now, who blinks is the question. To a point, is it political? The answer is Yes. Is it polls related? Perhaps not, but, it clearly it is very political between the two parties which are very different in their policy.
Sree Iyer: And Now, we take a look at the markets. The markets have been yo-yoing up and down, up and down, based on the sentiment of when the market feels that the stimulus bill is passed. What do you see happening? The earning season is upon us, a few more companies are now stating earnings. How do you see the market?
Sridhar Chityala: I think the market will be neutral. You will see the gyration driven by sentiments. The stimulus is imminent, stimulus is not imminent. So, you may see gyrations, but you may not see a significant contraction. One thing is clear stimulus is imminent like that the markets have determined. The question is how to time it and how to price it, but, the stimulus is imminent. Post-November 3rd, there will be the stimulus, it doesn’t matter whether the Democrats in power or Republicans in power. So, as far as the 2021 outlook is concerned is very well geared towards, not only the stimulus addressing the economic outcomes, but also potentially the coronavirus betterment as a result of the vaccine, right? So you will see that the stimulus part of it is only for the next kind of ten days, but after that, it will be normalcy and the markets will see up. By the way on October 29th, they will announce the third-quarter economic GDP results. It is expected to be 30% plus, whether by itself would have a bearing on the result, we don’t know but the story is that that’s a very positive sign, that is why the contraction will come down from the – 31.2 or 31.4% that we saw in the second quarter, being up by about 30% and year-end contraction to be around – 5%.
Sree Iyer: So a quick look at Tech. We have got three minutes left in our show, Anti-trust allegations against all the companies and now I’m hearing that Google is first in the crosshairs. There’s a possibility and again, this is a quoting some Market experts that Google might be broken up and so might Facebook because people feel like the real value will be Unearthed only when the components themselves starting to train. What are your thoughts on this Earth?
Sridhar Chityala: I think that there are essentially two elements. The antitrust is about the practices of Google, then there is another element which we discussed Article 230, which is around the behaviour of the tech Platforms in terms of being political influences or activists in a subtle way. So the Antitrust we are talking about is, for example, should Google be imposing is preferred position on every iPhone and to be the default search engine, that’s a question, whether that gives it the advantage. This has been the heart of the contention of many issues but Google implants itself every for dynamic search engine and even preferred tools and having default search option pointing to Google. So the antitrust is about that part of it, right? So we got to be very clear as far as the breaking up of this business is concerned, that’s more around the governance and regulation, rather than a search engine, Media Company, an activists News company and a collaborative arbitrator in engaging and making deterministic rules around the content. It is very difficult when you have, your vast array of assets which are not holistically connected that’s the issue with Google, that’s the issue with Facebook, that’s the issue with potentially Amazon. Amazon is very difficult to break because it is a retail link basically says I don’t manufacture anything, I brand it and sell it. I have got superior kind of quality in my customer engagement, customer preferences, customer behaviour, and Logistics executions and so on. Amazon is a difficult animal whereas the Google, Facebook Twitter they are in a different kind of caboodle in this context.
Sree Iyer: So set it up nicely for the next question. A few of your thoughts on the Microsoft Tesla relationship to go up against Amazon?
Sridhar Chityala: This is itself a very strange relationship itself was like a one-liner couple of lines, which is to say Microsoft and Tesla will form a strategic relationship to take on the Amazon’s cloud service platform. I mean Tesla is a satellite company, the only thing you can think of is that tesla car is going to be is tooled. There is going to be vast if they are going to create a global infrastructure to manage all kind of data and services everything that the tool and power these cars then obviously this requires infrastructure and software capabilities to deliver that so whether the partnership is an enabler in making that and then taking that infrastructure to sell to other industries remains to be seen but it is very intriguing and interesting that two vastly different companies are coming together in tackling amazon.
Sree Iyer: Yeah, absolutely and it is going to be very interesting to see what happens there. Thank you very much, Sridhar Ji and we’ll be back tomorrow same time and same news. Namaskar!!
Sridhar Chityala: Namaskar and Thank you and have a wonderful day in the United States, Wonderful afternoon in Europe. A wonderful evening in India.
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