Transcription:
Sree Iyer: Hello and welcome to PGurus Channel. I’m your host Sree Iyer, today’s daily update with Sridhar is on. Namaskar and welcome to PGurus channel SridharJi.
Sridhar Chityala: Namaskar and good morning to you sir, and good morning to everybody and good afternoon or good evening.
Sree Iyer: Yes indeed, a good day to all of you and we are going to dwell on the effects of Covid on the world, in general, to start with. There is so much to talk about today the quad agreement. The significance of India as a global power is increasing by leaps & bounds and to talk about all of that SridharJi, please take it away.
Sridhar Chityala: Thank you, sir. Let’s start with Covid, I think the markets fell yesterday by 500 points, today at 650 points and then today it’s looking at another 500 points drop. The markets are responding to rising cases of Covid, not just in the United States, but around the world. On an average per day, the number of cases has grown to about 69,000 plus in the United States. The number of hospitalization is grown on an average of 5%. The states that are impacted in this rising tidal wave are around 36 states in the United States. Apprehensive of this, Germany is now contemplating shutdowns of restaurants and bars in a closed setting till November 30th. So, Europe is generally getting into a lockdown mode. This is all reflected in markets and market sentiments notwithstanding the fact that there are close to 12 vaccine trials around the world that are currently going on including what we heard yesterday from AstraZeneca and J&J that some kind of a vaccine that is ready for going into the market sometime after the elections. That’s reflected in the market sentiments for the fear of the unknown.
Sree Iyer: Well, It was expected that, as the weather cools down in the Northern Hemisphere that things will again pick up in terms of Covid activity, I guess it’s to be expected. But in terms of preparedness don’t you think that the world is better prepared today, than perhaps when it started in late January February of this year.
Sridhar Chityala: I think that’s a very fair statement which is used to just summarize. But, the world is better prepared, the world recognizes that it has to be dealt with, people cannot be withstanding the fact that they are under lockdown. I think a general opinion is that would be prevalent is catastrophic consequences of locking people down, but, allowing people limited moments, but with much more precautions would be the way to go. Yes, the world is better prepared to deal with it some elements of protocols that they can follow notwithstanding the fact that there’s no vaccine. It’s very interesting in India because I was talking to a few families who have been impacted by covid. So they seem to be using a combination of some kind of vaccine serum in conjunction with Ayurveda plus, of course, the traditional Indian herbs. The rationale that is being given is one, the treatment to the extent that’s best feasible in the absence of known protocol. The second, I think this is something that has to be made aware in the Western Nations for specifically the United States and Europe, which is the immunity booster. When you boost immunity in the system of our body can fight any kind of external threat that comes in. So, that’s something that really one needs to focus, which is not just really treating the virus, but it’s also how you empower the body to be better enablers with immunity to tackle the virus.
Sree Iyer: Yes, Indeed and let us gaze at what has been happening in the Indian subcontinent, the United States and India 2+2 have signed some very important agreements and the Star of India is shining bright right now because the United States is recognizing that there is a stable power that could be someone that they can partner with for the near foreseeable future. I’m hearing a lot of good things about this. Sir, what are your thoughts and perhaps you can summarize for us, how you see this relationship evolving perhaps in the next decade or so?
Sridhar Chityala: I think we have discussed this topic for the past few days not only in the daily but in other sessions that India the beachhead and the spearhead of the quad strategy, especially as the indo-pacific region is concerned. To summarize they signed the BECA agreement which is the effective exchange of very important information that’s a basic exchange of communication agreement satellite data, security data, cyber data that spans a wide spectrum of activities that puts India at the epicentre of dealing with any kind of threats that come from Ground, Air, Space Etc., Plus, also to have a peep at broadly terrestrial data across the nearby regions. So, that’s very strategic in terms of signing that agreement. The second is obviously that they would be liaison officers in the AFRICOM and the centercom, which is the central command and the African command segments of the United States armed forces. So, that’s a very important kind of a development where you have liaison officers to coordinate in joint action, very similar to what you would have seen in Nato. The third, the continued exercises that are going on in the Indian Ocean, Pacific Ocean, South China Sea and South Seas and Malacca Straits that is basically as a deterrent to China’s footprint in the region and to protect that there is a seamless Maritime transport going on, it is Pathway to almost 2/3rd of the world’s GDP the travels by sea. So, that’s the basic foundation from which we added these two. What is even more interesting is that, now, they have expanded, the post yesterday’s discussions is the inclusion of looking at mitigating any threats that would come into Taiwan, I think, we discussed this which is one of the quads India will play a significant role to make sure that there are no assimilation threats for Taiwan by China. They also included in the discussion whether there is a broader normalization that India can play a role in the Afghanistan region including rapport with the Taliban, that’s another significant Milestone. Then, Iran came into the equation, which is to save any potential threats from Iran and the continuation of exemption that is granted to India to use the Chabahar Port, which is very important kind of pivot for India in terms of the excess into that particular region and especially the Indian Ocean in that part. So, those are all expansions to the quad and what it just tells us is India is going to be very centrepiece of the strategy in the indo-pacific, irrespective of the political changes that could come about in the United States all these agreements reflects those sentiments.
Sree Iyer: Yes, indeed and all the pressure being applied at the Malacca Straits will come to wane, if China were to be allowed use not only Gwadar port but also Chabahar and I think the United States has refined its thinking a little bit around Chabahar and I am glad that India is very much in the mix in terms of dealing with Chabahar, perhaps do some limited trade. The most important thing about that Chabahar port was that through which there was going to be road access to Kabul. And that particular project was something that India wanted, also I guess the United States because you wanted an alternate way to reach Kabul not just through Peshawar and Khyber Pass. And so lets we can see how this thing plays out. I do believe that for India stature in the world that it is the third-largest economy in terms of PPP that it needs to shoulder the responsibility of maintaining world peace and if that requires boots on the ground, so be it. Let’s hope and pray that this Chabahar revival will lead to that kind of stuff where India can be a pacifier in this area, in this region. After all, Gandara land is all part of India’s history, Kaikei is supposed to come from there and so many other people, So this is all basically Bharat-Varsha at some point of time. Let’s wait and see how this plays out. So, the next point is at looking at the economy. What do you see in terms of the stimulus deal? I guess, now the stimulus is off and going to run out the clock till the elections.
Sridhar Chityala: Yes, just before I take 30 seconds to transition this very important point that people constantly overlooked in the core strategy. Today, India’s strategic energy, security is coming from the United States. The United States has become not only a strategic power in terms of its energy needs but 40 million barrels under President Trump is being imported from the United States translating into close to 60 billion dollars of annual trade. Is that is what pushed India far ahead of China in terms of India-US bilateral trade putting it close to 159 billion dollars and the target is somewhere close to 230 – 240 billion dollars trade by 2025. Just wanted to mention that energy, security is an important view. What people often mistake and the consequence of the bilateral volume, as well as the strategic mitigator.
Now to a specific question around the economy, there are some positive signs in September you had materials sales up, you had manufacturing sales up and you even had marginal improvement in the volume of exports and domestic traffic airline traffic, all resulting in about 1 – 1.4% growth in terms of the trade volumes in September. So, therefore, the economy at least should initial positive signs that are reflected in the uptick in the stock markets that one witnessed. So they are positive signs.
As far as the stimulus is concerned that I think stimulus discussion is now over with one week, there’s no more stimulus. I think President Trump is campaigning, I don’t know, in 11 states in the next 48 hours going into the election kind of cut off. So stimulus is imminent but it’s after elections.
Sree Iyer: And I’m also hearing a lot from the ground that the competition is actually heating up and a lot of the stuff that was kind of buried under the carpet is beginning to trickle out and the stench of the Democratic candidate is a little strong right now again viewers I want you to know politically PGurus is independent, but it has the mandate, it is this responsibility to endorse one candidate or the other. For this particular election, PGurus endorsing Donald Trump. And that’s all there is to it. We are still objective. We will be objective, and I just wanted to put that thing out there to clarify because I see some comments saying that oh! now you switch this way, no switching. This is what we see it and this is what we said.
Sridharji, now a look at the markets. The last couple of days there has been a pullback because of covid concerns. How do you see it, today’s futures, how do they look like? And what is the prognosis for today in trading sir?
Sridhar Chityala: Well, I think today again the market is going down. Yes, it down 480 points. S&P is down 1.4% Nasdaq futures are down 1%. All reflecting the sentiments of the covid scenario having said that I think people have to keep in mind one factor, covid simply doesn’t mean that people are going to stop doing things and even with covid in the first wave we saw many of the tech-related stocks which will extensively be leveraged by people in their consumption habits, like for example the online retail sales consumer discretionary, the online content which is the growth in the Netflix and Disney type of traffic. The drivers of those things which mitigate going like, covid like the biotech stocks, the consumption that drives the semiconductor which forms the basis of some of these technologies, those stocks going up and we have seen AMD, Xilinx, we have seen Nvidia transactions. So you will see some sectors which will leverage as a result of the covid. So you may see that market temporarily dips as a result of lack of stimulus, but with stimulus eminent post-covid, the size of the stimulus, depending on that tax regime, you will find the markets again responding favourably. Everybody has expected the markets to rise, the economy to grow in 2021. In 2021 the target for economic growth is 3.6%, depending on if you’re JP Morgan you will say in a Trump presidency will accelerate the stocks by x%, depending on a Goldman who gave a counter which is to say even if Democrats come in the stock market may see an upside tick. So these financial institutions are not taking a political kind of stand, but there’s general posturing that markets in 2021 and 2022 will see an uptick with an imminent vaccine as well as imminent stimulus driving the underlying growth and most important low, almost close to 0% there is no foreseeable prediction for growth in the interest rates at this stage.
Sree Iyer: Thank you for that sir, and viewers, Sridharji has touched upon it but recently Nvidia has acquired arm for forty billion dollars and that’s a story in itself. Nvidia becomes a major semiconductor player. So does AMD because they have acquired Xilinx. This is a very very significant move. So now you will have the three top semiconductor companies all of them in the United States. So big change in the whole orientation of semiconductors.
Thank you very much Sridharji. We will talk about the tech in a separate series of charts that we have in mind. As always viewers it’s our goal to give you an in-depth perspective of a lot of things. We hope that you are liking our program. This is our fourth week. We wish you would like to continue this little further. We would like to have your support. Please forward the links to your friends and family, also subscribe to our channel and we’ll be back as always tomorrow morning. Namaskar.
Sridhar Chityala: Namaskar. Thank you, sir. Have a wonderful day all of you.
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