Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: What an honor to have with this Noural Rubini professor.
Speaker 3: He's not emeritus. When you're you know, you travel like
Speaker 3: he does. Such a young kid. I don't know how
Speaker 3: emeritusy he is at New York University in christ Chairman
Speaker 3: Rubini at Global Economics. One of the great moments for
Speaker 3: me was with Professor Rubini and Davos a million years ago,
Speaker 3: where he's simply outlining two thousand and seven, eight and
Speaker 3: nine to come.
Speaker 2: No, I don't care. The reason you're here is I'm.
Speaker 3: Looking May thirty first, Munich, I mean a hitter like
Speaker 3: you. You gotta be looking the private skybox on StubHub inter
Speaker 3: Milan versus PSG for twenty nine thousand dollars. You got
Speaker 3: two seats in the private skybox. Are you gonna roll that?
Speaker 4: I'll watch it on TV.
Speaker 2: It's very exciting. He's a diehard from his youth in
Speaker 2: the old world inter Milan. I want to go back.
Speaker 3: This really serious, folks, and it's off the radar right now.
Speaker 3: It shouldn't be bread sets or who you started has
Speaker 3: been on fire. You and bread Setster wrote a book
Speaker 3: eleven years ago whatever. Fred Bergston wrote a wonderful introduction
Speaker 3: on EM. How does EM affected when I see Taiwan
Speaker 3: dollar go out?
Speaker 2: Five standard deviations? Whatever? How is emerging a market off
Speaker 2: the radar?
Speaker 3: Affected by China, US, US, Canada, US EU.
Speaker 2: What happens to your EM? Well?
Speaker 4: The good news for EM is that this time around
Speaker 4: the trade shock have not led to a strengthening of
Speaker 4: the dollar, but rather a weakening of the dollar. With
Speaker 4: the dollar weekends, EM currencies tend to appreciate.
Speaker 2: It's also true.
Speaker 4: That some of these Asian nations are sitting on trillions
Speaker 4: of dollars of US treasuries, Their foreigners are very high,
Speaker 4: and there's been some diversification. And because we're dented, how
Speaker 4: to say, the dollar as a major global reserve currency,
Speaker 4: given our unstable policies, so people move out of US
Speaker 4: treasurer and sell them and then go back to their
Speaker 4: own local currency. There has been some appreciation and that
Speaker 4: has taken some momentum. There's also hope in Asia. I
Speaker 4: think that there'll be trade deals and then answer reciprocal TIFFs.
Speaker 4: They're going to be much smaller than an on April second.
Speaker 4: That's also strengthening some of these currencies because some of
Speaker 4: them were weakening because of the risk of a trade
Speaker 4: war and so on. So the thing is a variety
Speaker 4: of factors leading to that happening.
Speaker 1: How concerned are you, if at all, about the US
Speaker 1: economy in the face of the uncertainty of all this
Speaker 1: trade discussion back and forth and back and forth. It
Speaker 1: seems like consumers might be pulling back. It seems like
Speaker 1: corporate executives are pulling back on guidance. So I'm not
Speaker 1: sure how it's can impact their businesses. How do you
Speaker 1: think that's going to affect the US economy?
Speaker 4: Well, there are some headwinds coming from trade and it's uncertainty,
Speaker 4: and there are some tailwinds coming from strong cappacks, especially
Speaker 4: aid riven and still good income growth creation and so on.
Speaker 4: I would say that over the medium term. Actually, I'm
Speaker 4: quite bullish about US economy. I think that because of technology,
Speaker 4: US potential growth by the end of the decad it
Speaker 4: could be four percent, an increase of two hundred business points,
Speaker 4: and even poor tray and migration policy can reduce growth
Speaker 4: only by fifty business points. So the ratio within the
Speaker 4: good stuff to hundred business points to the mad fifties
Speaker 4: four to one, So I think we'll be on the
Speaker 4: verge of a secular boom over the next few years.
Speaker 4: So I'm quite optimistic. But then in the short run
Speaker 4: we'll have probably any recession by your end. There is
Speaker 4: an increasing job You.
Speaker 3: Mentioned a medium term. You got from Europe to mention
Speaker 3: the medium term. We don't do that in America. My
Speaker 3: basic conundrum, ur Rabini yep, is we've got the short
Speaker 3: term reality within an American political system which you live
Speaker 3: with President Clinton, out to the long term view of
Speaker 3: whatever economics is and maybe a more optimistic future. How
Speaker 3: do we get is they would say up in Maine,
Speaker 3: or you don't know this up in Maine, or Lisa
Speaker 3: collects black flies, they get from here to there? How
Speaker 3: do we get from short term to long term success?
Speaker 4: The way we get it is this year there will
Speaker 4: be a massive slowdown of growth. As you point out,
Speaker 4: consumer and business confidence is down. Inflation is going to
Speaker 4: go corpus to four percent by your end, and that's
Speaker 4: going to be a significant eat on real disposal income.
Speaker 4: So by Q four we're going to be in a
Speaker 4: near recession. The good news is that the FAT is
Speaker 4: now credibly committed to fight inflation, they're not cutting rates. Therefore,
Speaker 4: inflection expctitions are anchored. Therefore, once inflation is higher but
Speaker 4: growth is lower and you have beginning of increasing unemployment rate,
Speaker 4: the FAT is going to be able to cut rates.
Speaker 4: But think it's going to be a short and shallow recession,
Speaker 4: maybe a couple of quarters Q one, Q four, and
Speaker 4: Q one of next year, and then all have a
Speaker 4: strong recovery because the tail winds coming from the technology
Speaker 4: are massive. Guys is leading in all the technology of
Speaker 4: the future.
Speaker 3: Claims are out there on plan unit labor costs and productivity.
Speaker 2: We're elevated.
Speaker 3: We'll talk about your unit labor costs jump from a
Speaker 3: revised two percent up to five point seven percent. I
Speaker 3: got a terraf regime of three percent. You arguably were
Speaker 3: one of the people that set up coming off the
Speaker 3: Atlantic Charter, the global trade, the globalization mantra of a
Speaker 3: lower Terra regime. Even if we pop from one hundred
Speaker 3: and forty five percent drama in China and we come
Speaker 3: back down to like a blended thirteen percent, I don't
Speaker 3: get it is in the gap from a three percent
Speaker 3: blended tariff up to a ten percent or thirteen percent
Speaker 3: blended tariff.
Speaker 2: Isn't that insurmountable.
Speaker 4: Probably the blend is going to be more than thirteen
Speaker 4: because my baseline is ten to fifteen percent for all
Speaker 4: the world and sixty percent for China. So the blend
Speaker 4: that could be in the high teens. It's a bad world.
Speaker 4: But let's put its way. I suppose that is an
Speaker 4: OVI stariff's a reciprocal and Europe of ten percent as
Speaker 4: opposed to twenty big deal. The Europe can go up
Speaker 4: and down ten percent in a matter of months. So
Speaker 4: is it good?
Speaker 1: Now?
Speaker 2: Is it terrible?
Speaker 4: It's going to something? Is that to destroy the world?
Speaker 4: Probably not, because currency can move more than ten percent
Speaker 4: in a matter of months. So of course is the
Speaker 4: world it is fragmented. The world is the globalize. But
Speaker 4: if the average startft were being say ten to fifteen
Speaker 4: percent rather than on the three, the impact on growth
Speaker 4: is going to be how to say moderate, I would
Speaker 4: say this is will be moderate. Of course with Chinese
Speaker 4: a different story. With China at sixty percent, we're going
Speaker 4: to do couple from China and the shock on their
Speaker 4: growth and the shock around inflation is going to be significant.
Speaker 4: So I'm more worried about the fact we're not going
Speaker 4: to de escalate with China.
Speaker 2: To be an extent, with all of your.
Speaker 3: Political economics neural revealing, do you believe.
Speaker 2: Common sense will come to the rescue in Washington? Well
Speaker 2: more than common sense.
Speaker 4: I said, there'll be four guard raids against stupid policy
Speaker 4: like tariffs, market discipline, good economic advisors, fed discipline, and
Speaker 4: thin majority in Congress. Guess what when the stock market crashed,
Speaker 4: bonding were higher, credit spreads are higher to always hire,
Speaker 4: they blinked and they started to de escalate. Two in
Speaker 4: that game of Chicken between Trump and Powell, Trump blinked
Speaker 4: because he knew it was a ground fire. Powell, There'll
Speaker 4: be a shock to the market, so e blain. Therefore
Speaker 4: feed fed independence was a binding constraint. Eventually, the Peter
Speaker 4: Navarro of the world were sidelines and the Scott Passings
Speaker 4: of the world at the upper end, good economic advisors
Speaker 4: and already, I mean.
Speaker 2: It was boxing by four guard raids.
Speaker 4: That's exactly what I said in the same other.
Speaker 2: Times I got.
Speaker 3: I got goose bumps because I got normal obinion. Richard
Speaker 3: Porters back to back. I mean, talk, it's an academic
Speaker 3: monk fest here right now. Have you ever done a
Speaker 3: panel with Peter Navarro.
Speaker 4: I've not done a panel. I met him doing the
Speaker 4: Trump one administration in the White House a couple of times.
Speaker 4: So it's a strange economics from much.
Speaker 3: Did you teach Navarro economics at New York University?
Speaker 2: No?
Speaker 4: No, he was at PhD at Harvard, So but we
Speaker 4: didn't overlap. Yeah, surprising a PhD economics of Harvard. But
Speaker 4: Steve Mian is also PhD in economics of Harvard.
Speaker 3: So do I How does I got twenty seconds? How
Speaker 3: does inter Milan be PSG?
Speaker 2: What? How does inter Milan be PSG?
Speaker 3: I don't know you're going to be there?
Speaker 2: You spend twenty eight dollars? Thank you, Thanks for the
Speaker 2: interesting listen. Wants to know when's a new book out.
Speaker 4: I don't have any one. Mega Threats came out two
Speaker 4: years ago, still going and all the themes of the
Speaker 4: book Mega Threats are still very important today. All the
Speaker 4: threats I talked about are materializing.
Speaker 3: Okay, So, Manorial, thank you so much, greatly appreciate it.
Speaker 2: Nourro Rabini