Transcript
Sree Iyer : I have the privilege and honour of Sridhar Chityala’s company today, for our daily updates with Sridhar, Namaskaram and welcome to PGurus Channel.
Sridhar Chityala: Namaskaram
Sree Iyer: Good Morning, What is happening in White House, Trump hits the ground running and reverses the decision about the stimulus deal, what little I know from your yesterday’s conversation, we were thinking that they were going to converge, the Republican was at 1.6 trillion and Democrats were at 2.4 trillion, looks like this gulf President realized cannot be bridged, so he kind off went ahead and surprised the democrat by saying that we are not going to talk about this anymore, any updates on that, any reasoning is given? Why Republican are reluctant to raise that number?
Sridhar Chityala: Yes, 2.2 trillion Dollar is house number, 1.6 trillion dollars the Republican number, the gap is about 600 billion dollars. First congratulations to the President, he is back in full horsepower throttling away. Prior to meeting to take place between Nancy Pelosi and Steven Mnuchin, He summoned Mnuchin, Kevin McCarthy, Mitch McConnell had a detailed conversation. It is boiled down to philosophical difference and his belief is that Democrats are unnecessarily tangling up all other kinds of measures which has nothing to do with Stimulus, which more of liberal agenda which in principle is opposing, so he is called the bluff and basically said, everything is off and I am going to come back to power in November which is less than a month away. Therefore, the President will introduce the stimulus, when he gets back to power that’s the position he has taken. The stimulus is inevitable but the framework and line items or the drivers which constitutes the composites of Stimulus, there lies the philosophical differences between Republican and Democrats, I think there have reached the stage where I don’t believe they can converge.
Sree Iyer: Well, that’s the very strong development especially coming on the heels of a statement by FED, that FED wants to continue with the stimulus and they think the stimulus is not going to hurt the economy in terms of putting in money in the hands of people and so on. Before we do that, I just want to clarify to the viewer, who doesn’t know about the Politics of India. In India, once the election date is announced, there is an Election Code of Conduct, once that kicks in the Government in power can longer make a major decision such as this Stimulus Spending, in other words, the government become more of lame-duck government. In the United States, I don’t know if there is any Election Code of Conduct, I think you cannot do few things, as you see, Republicans are trying to appoint one more person on Supreme Court and also trying to take hardball stands. I can understand where are Republicans coming from. After doing little research, I found out that, some of the pork’s pending which is called Pork’s Barrel spending what it means is that, every democrat will attach something which is going help him/her in constituency into this Stimulus bill but has nothing to do with Stimulus itself and then they go to their constituency and say look I got this for you. I think some of those things are also being looked at by these Republicans very critically. What are your thoughts on that? And then we move to our next topic.
Sridhar Chityala: It is a great question which has to be answered slightly differently, United States government functions very much like a corporation, for example, A CEO or Chairman is appointed say till January 31st, that does not mean he doesn’t announce the budgets and results for last quarter that is December, he is the CEO till the date he is appointed. The President is made it very clear in his election even in the first debate, he said “I am the President for four full years and I am not a President elected for 46 Months, so don’t tell me, that the last two months of Presidency, whether I am going to be the President after 48 months is immaterial. I am elected as President to govern the country for four full years. So there is no sanctity of Nov 3rd as the date. There is nothing called election code of conduct manifesto, he can announce a tax code change as late as Nov 1st ,when Nov 3rd is the election or he can announce the change on Nov 5th. They can continue the hearing on the nomination Amy post-Nov 3th because the house and the Senate are still functioning as the extension of the government, so, therefore, that is the fundamental difference. I can comment on all kind of Code of Conduct on India, but in the United States is concerned he is elected and his purpose is to serve full term and clauses, the other fellows can come in and in case he is not the continuing. The other fellows come and change the rule when they assume power.
Sree Iyer: Thank you, sir, Very very good contrast between two largest democracies in the world. Let’s move on to the happening in Japan and Europe, there has been some sighting some Russian plane over Japanese lands, do you have any updates on that.
Sridhar Chityala: I think Japan is in the hotspot in the middle of not only south China dispute but it also got problems with Russians and Chinese on the Pacific Coast. So they sighted a Russian Helicopter off Hokkaido Coast, they scrambled the defence plane as a deterrent and found out that it’s a stray red cross-plane which accidentally spilt into Maritime boundary of Japan, so those fear have been put to rest, but daily activity in this area stirs up interest of people
Sree Iyer: Closer home, India continues to strengthen its borders; it seems to be getting more aircraft from France. What is the latest update on that, sir?
Sridhar Chityala: I think the Indian scenario on the Ladakh, both India and China have come to the conclusions while dialogue continues. They are very clear that India is now unwilling to be told into submission or any misadventure by the Chinese. They have got now the next set of planes from France. They’re getting the five more planes, they launched two/three supersonics, besides one of them is nuclear-capable and they moved I think one of the Nirbhay missile system to closer to Ladakh, so India is fully prepared. In terms of not taking this is kind of not letting it balls drop and making sure that it is fully prepared and organized to assert its rights and regain its borders and also the Army & the Air Force is working in an integrated manner given the terrain of the region.
Sree Iyer: Thank you, sir. And this is to viewers; I am told that Twitter was actually working all the time, so no worries on that. We are continuously live on three different channels.
Sridhar sir, there are also some EU sanctions being mulled over in Russia. Can you throw a little bit of light on what it is for and how it affects Russia?
Sridhar Chityala: The EU with its kind of socialistic, collaborative ecosystem of governance with a plethora of asymmetric parties it continues to debate, debate, debate and always the issue is Russia, be it Crimean sea – Ukraine border or poisoning of the most avid critic of President Vladimir Putin. So all that they have come up with is to contemplate freezing of assets, limited sanctions etc, knowing fully well that they don’t want to antagonize but at the same time have an optics to say that they did something. These measures are going to be half measured and Vladimir says, no problem, go ahead and do it, it is not going to have any impact on me, and you guys are going to be back talking to me, so consistent with the EU kind of mindset.
Sree Iyer: And they continue to talk. Sridhar Ji the next topic that we are going to look at is the economy itself. Economies of different countries. Now, FED Chair Jerome Powell says we must continue to have a stimulus, whereas now that the talks have stalled between Mnuchin and Nancy Pelosi. How do you see this play out? Now I see that the FED and the Government are on the opposite sides as we speak in terms of stimulus.
Sridhar Chityala: It’s quite extraordinary for FED to step up and make such a profound statement. The profound statement is that which is to say we are in a pandemic. More stimulus and debt is not going to harm the balance sheets of the countries, on the contrary, it is a fundamental requirement to infuse money into the system and push the pedal rather than lift the feet off the pedal is what Jerome Powell is professing in the meeting with EU as well as in the briefing to the US in Global press which is very unusual. But what he is saying is pivotal because when the capital is dried up, when there is no economic activity, the only person who can inject is the Government, so it’s extraordinary to that extent. Whether the stimulus itself is going to be stifled, I don’t think so, I think that the markets are you know may have temporary aberration but there is going to be a stimulus whether Trump continues or whether there is a new government in power. Both of them are committed to induce the stimulus when they assume power. In fact, Trump has made it very clear when I come back, I’m going to be in power after Nov 3, when I’m back in power, I’ll be in a position to reintroduce the stimulus and more agenda forward so the stimulus is inevitable. It is delayed but not defeated.
Sree Iyer: It looks like the markets have sort of digested the news of stimulus because I see that the future points to slightly positive at the beginning, so we will see how the US markets play out, but in terms of growth, Japan has shown growth, China has shown growth and even in the USA we are seeing a fair amount of growth. So, do you feel, at least from the market perspective that the world has sort of acknowledged the challenges that Corona proposes and it thinks it has sufficient safeguards to combat it? What’s your opinion?
Sridhar Chityala: I think my opinion is, we need to look at yesterday’s market as a context of the day before yesterday’s market. The day before yesterday the market went up, S&P and Dow Jones went up 1.7% and NASDAQ and Russell went up by 2%. Yesterday, the markets went down in only 0.7% in DOW Jones and S&P and then about 1% in the Nasdaq. So on a relative basis when you compare the 2 days you know still, it is a modest uptick rather than a down. Now in terms of Asian markets overnight you know we’re up both in Japan as well as in Hong Kong. The general sentiments are that the sentiment there’s the only news that it’ll kind of toggle, you know here and there zero-point very much driven by earning statements issued by companies that specific day rather than the nature of the stimulus so the market has priced-in and that there would be a stimulus That’s number one. Number two. The market is also priced-in that there will be a vaccine somewhere in mid-2021 so there is. And the fact that the president himself was affected came back has resumed work, there is a general sense of confidence irrespective of the volatility of the numbers going up or down on the pandemic, there is a way by which this can be tackled.
Sree Iyer: Absolutely sir, and this is the last topic for the day and we are running a little bit closer to the end. I just want you to give me a 1-minute response to this question – The house is changing the rules for some of the big tech companies. What does it mean for the tech companies themselves? And in terms of making it better for the consumer, do you think these rules, when implemented will make it better for the consumers and also for the Governments?
Sridhar Chityala: We have discussed this in indirect ways, there’s the Main Street, The Wall Street and the emerging Tech Street. The government has its tentacles on the main street and Wall Street. It is to say that, to some extent, it has mechanisms to monitor and manage. Whereas, the tech street is running a mess in terms of there is no governance, no rules and effectively they have risen to such an extent they are more powerful than many governments put together, so they’re basically looking at the base by which three things can be done. One is consumer rights. The second is the basic governance around the content that gets published and the rights and who the arbitrator in terms of the content is. The third is whether the accumulation of various content entities places ubiquitous as well as uncontrolled power in their hands. So whether they should be broken up. These are three topics that are under consideration and I think there is a detailed bill that is presented but the Republicans are not buying into it especially some components of the bill. The fear of the amongst the Democrats is being liberal, generally, liberals or to the left, if the coin flips, goes to the right, if a couple of these companies gets taken over by less sympathetic, liberal constituents, it could be catastrophic for pro-liberal agenda. This is my personal opinion that – the pro-liberal agenda comes from Silicon Valley.
Sree Iyer: Thank you very much. Viewers do subscribe to our channel and keep coming back for our daily updates. We try to keep it up to 15 minutes, today it went a little bit over. We apologize for that but the substance of topic that was discussed was of the highest calibre. Things are going to affect you for many months to come, Sridharji, as always it was a pleasure to have you with us.
Thank you very much and we will be back tomorrow. Same time with ‘Clear Crisp and Concise news’. Thank you very much. Namaste. Thank you.
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