Sree Iyer: Hello and Good Morning. This is Sree Iyer from PGurus with your daily update with Sridhar. Shridhar Chityalaji, Namaskar. Good Morning to you.
Sridhar Chityala: Namaskar and a very Good Morning to you, Sir.
Sree Iyer: Sridharji, let’s start off with the Senate confirmation hearings of Amy Barrett. Now if you cast your mind back to four years ago in 2016, Barack Obama also tried to get his nominee nominated to the Supreme Court, but at that time the Republicans were able to filibuster that from happening what is different this time? And what do you think are the chances that Amy Barrett could be on the Supreme Court.
Sridhar Chityala: Well, I think first and foremost, this ding-dong battle goes on between the two sides, the same rules don’t apply to them because it’s just a political kind of posturing that goes on. It also depends on the number of wars that you have and whom you are able to kind of sway it moving the Judgment. So my view is that all these things would turn topsy-turvy as they proceed with the hearings and come close to the voting and nomination not too far away from the election. This is going to be a two weeks process. By the time they get to that, there would be at least hope to be a reasonable outcome. They would also be outcomes on Senate races. So my view is that it will run its course and they would be an outcome that is going to be in favour of Amy or against we don’t know. That would be very much driven by political sentiments, that’s what happens. But otherwise, as far as the process is concerned they are following the due process. I think the President made it very clear in the hearings, which is, ‘I am elected for four years. I’m going to be here till all of this year. The Senate is going to be here as well. So these are elected government organizations. Yes, and so the process continues
Sree Iyer: Thanks for that update on Amy Barrett sir. I apologize. I think now we are back on normal technical stuff. Everything is fine. Let’s hope that the line doesn’t drop again. Now, let’s move on to stimulus, now the stimulus we started with Trump offering 1.8 trillion and then somehow something has changed since then. Can you please walk us through what happened? Because this is where we left off on the stimulus pending, I think yesterday. So what happened since then Sir?
Sridhar Chityala: We started with 2.2 on the Democrat side. 1.6 on the Republican side. Then, the Trump administration came up with 25 billion and 122 billion then subsequently they stalled the discussions and then they came up with 1.8 billion. This is Republicans. And then the President said, we need a much more comprehensive and bigger stimulus package. And Nancy Pelosi said I don’t think we are converging and I don’t think we have time. So basically this posturing has mitigated the need for coming to a resolution around the stimulus for the core sectors of the economy, which is waiting for this thing to happen. So what did they do? What they are right now they’re saying is, ‘Okay, there is about 32 billion dollars or 30 billion dollars left in the city from the past program, let us direct all of that money towards the SME sector and roll out because that’s the program which had not fully spent the allocated capital. So I think that’s where we are. Were they to change again today? We don’t know but I’m sure that something is going to cut loose, but having said that today we are on the 13th, we are less than 20 days from the election. So, there is less time left. And the discussions continue between Pelosi and Mnuchin.
Sree Iyer: Well, the most important thing here is, what the electorate thinks because if no stimulus da gets passed by November 3rd, then the decision time is here in front of them, they have to make a call as to who will be able to effectively pass that and I don’t know where the sword will fall, will it fall on the Democrats or will it fall the Republicans? We don’t know. We have to listen to what the people on the street are saying. Certainly, it does affect or hurt some people. So I don’t know. What is your gut feeling Sir? What do you think if nothing happens by November 3rd, who do you think will be blamed?
Sridhar Chityala: Okay, just recall your sentiments, you talk to The Regulators. We discussed it yesterday, Neel Kashkari, the FED governor and also the bank who ran the TARP program under Henry Paulson, then you have Jerome Powell, then worldwide, you have everybody saying stimulus is needed and good because of a pandemic. Then you have the businesses and communities saying you need the stimulus because we still don’t have normalcy inside. Then we have institutions like Banks saying that we need much more coordinated active mechanism, otherwise, not only the recovery is going to be flat and we discussed what has triggered Q3 v/s Q2. In my view one of the things that would happen, this is purely my personal speculation, knowing the mindset of Trump he is going to do something within the next week or so, this my pure speculation. He’s not going to stay still. He’s going to say ‘Okay, I’m going to pass an executive order and do this.’ Something like this is going to happen, then what would follow is that the Democrats will say, ‘Oh, we don’t want to be left behind and we hold on to this issue hurting us in the politics. So we may see some, active engagement re-engagement again, whether there is time left to pass it, we don’t know, but they would be an outcome before November 3rd.
Sree Iyer: Sir, if you could just indulge me and wrap up the news on Europe and Asia in one minute each. That would be great. Politics.
Sridhar Chityala: Okay, I think in Europe, they’re still continuing to deal with Coronavirus. So that’s one. Britain cases have increased. Francis has reported. Spain has reported. So you have increased covid situation in Europe, number one. On the other political side, there’s always a war, someone somewhere is fighting the war in Europe. So now the latest addition is the Armenian and Azerbaijan, on and off, on and off a war that is going on. And notwithstanding the fact that Russia, the US, EU all had a meeting to see whether there is a successful resolution, but it is still there lurking in the background. Then the third thing that is going on is, there is a great lack of resolution around what they would do with the poisoning case in Russia. Its seems to be a very consistent kind of pattern which is namely when it comes to Russia, there make all out. You wanted to ask me a question.
Sree Iyer: Then the Malaysia, Anwar Ibrahim
Sridhar Chityala: Ya, Anwar Ibrahim. Coming to Malaysia, the man who was thrown out, political cases hoisted, put behind bars is now back after Mahathir, controversial kind of face, has now presented claims to the prince that he has 122 members supporting came out of the 222. So he has a majority. The King has called all the different parties. Mahathir’s party basically has said it will stay neutral and not stray one way or the other. But the fact that he is back in the scene is a reflection that nothing goes away in politics. And he is a good conservative guy, good politician. So, hopefully, Malaysia will see a resurgence. Staying on Malaysia, the Chinese fishing boat tipped into Malaysian waters which is Malacca Straits and Malaysians chased them away. so Malaysia is anywhere there is political instability and confusion, you can see the hand of China trying to test the tenacity of the defence.
Sree Iyer: And has some infrastructure build-up on the Indian side at Ladakh. Could you please appraise our viewers on what’s happening there, Sir?
Sridhar Chityala: I think India continues to do some extraordinary work in terms of what they are doing. They clearly recognize that this is not going away. That’s number one. Number two, they also are saying that we are not going to step back. This is the time for us to push the pedal and reclaim all the land that has been incorrectly or surreptitiously taken away by the Chinese. So they have built no somewhere close to 40-45 small bridges which interconnect the very complex region of Ladakh and the continued expansion of the infrastructure is a reflection and the more troops and more and more weaponry moving into that area is a reflection that India is going to be there to fight it out.
Again, yesterday we talked about it, Mike Pompeo saying more than 60,000 Chinese troops have been amassed around the region whether it is a deterrence or show-off or internal politics consumption within China because they are getting outnumbered everywhere. We don’t know but he’s very clear both sides are unwilling to ease on this matter.
Sree Iyer: Sir, We need to catch up a little bit on other items today. Let’s look at the economy. Now, what is happening with the United Kingdom? Is it also leaning towards negative interest rates?
Sridhar Chityala: I think that the general speculation is that the UK has to prepare itself notwithstanding this complexity of Brexit. Whether you covered it on the political side or whether you covered on the economic side, there’s still that Brexit exit issue that is going on. The Central Bank Governor has indicated it’s time for Britain to accept that negative rates are looming in the horizon and to get organized. And that would be quite harsh because there’s a hugely well-established pension system in the United Kingdom when you have negative rates; it’s going to have consequences in terms of the balance sheet side of the government. Also, there is the annuity program etc., how that’s all going to play out in a consumer confidence point of view is a big question mark. And adding to this HSBC basically indicated, the world is flattening; the recovery is flattening, so you need to do something, so to counter the central bank’s move. HSBC is saying I need as much money as the United States if the UK has to sustain.
Sree Iyer: For those of you who don’t know the expansion of HSBC – Hong Kong Shanghai banking corporation, I believe, Hong Kong Shanghai is correct. So this is a very very colourful past 2008 series Euro crisis and so on. Well, let’s not go there today because we still have to a few more things to cover. On the markets, the markets have still baked in the feeling that something on stimulus is going to happen. Isn’t it?
Sridhar Chityala: The market is baked in the stimulus is inevitable irrespective of whether it is blue or red leading this way on the presidential outcome. In fact yesterday, most of the pundits in the markets believe that the market drivers are going to be driven by the vaccine of Covid rather than who is going to be at the helm. So, Stimulus and Covid are the two important factors, of which stimulus is certain, Covid vaccine date unknown, political outcome unknown, but the markets are moving. Two major institutions announced their earning because earning, most notably JP Morgan, it substantiates 30 billion dollars in revenue earning, of which 9 billion dollars in profits and they have reduced the risk Provisions for the second half relative to the first half and we are in the pandemic. So they say is that the balance sheet is performing well. There is no stress on the consumer and the small business or the corporate side. So they don’t need to make more Provisions. So they assume the next quarter to be normalized and the year to be favourable, Which is a very unusual endorsement of not only the stimulus but the state of the US economy.
Sree Iyer: Viewers on covid – Regeneron mark this name and follow it because that was allegedly what was given to President Trump and allegedly one of the good things about it is something that we can build your immune system for up to two months? Just mark that name. Let’s see if we can revisit that in the next few days. Lastly, on Tech, Disney is making a major move into online streaming, isn’t it?
Sridhar Chityala: Yes, Disney doesn’t want to be left behind. Generally, it is the leader of the pack as far as the media and entertainment business go. They have dominated the theme park, they have dominated the television, and they have dominated the in-home entertainment. There used to be separate businesses, the fact that the Covid has resulted in more direct consumption. So, they have reorganized their business and made it into one single vertical unit with very specific Focus around direct streaming consumption and they see that as a huge opportunity be it on the media side or be it on the content side or be it on the distribution, which is the consumption side. They feel you have to have a vertically integrated business to drive the outcome and compete with people like Netflix, compete with people like Amazon, because Amazon has a decent subscription. We don’t know whether Microsoft and Google and Apple, we also talked about Apple, extending the subscription as part of the package for one more year to see what happens.
Sree Iyer: Yes and viewers, we are up to the end of our program today and I request you all to subscribe to our Channel. Please refer our channel to your family and friends. You would like to see you all hang out here. This is 15 minutes of pure gold in my opinion because it sets the stage for many to know what is coming down the pipeline in the next 24 hours. Thanks, once again SridharJi, and we’ll be back tomorrow with the latest news.
Sridhar Chityala: Thank you so much and have a wonderful day for those in the US and have a good evening for those in India.
Sree Iyer: Thank you, sir.
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