WEBVTT - Nouriel Roubini Talks Fed Policy

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<v Speaker 1>Bloomberg, Audio studios, podcasts, radio news. US firms racing for

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<v Speaker 1>cash to fund the AI build out. Big tech spending

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<v Speaker 1>on artificial intelligence expected to pass seven hundred billion for

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<v Speaker 1>the year from just a handful of companies. Noriaan Rabinia

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<v Speaker 1>Rubini Macro Associates writing on this trajectory, UX exceptionalism strengthens

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<v Speaker 1>rather than fades. Equity valuations need not rest on bubble

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<v Speaker 1>dynamics and should deliver solid returns despite episodic volatility. No

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<v Speaker 1>real do you understand for more? Noriam, good morning, good morning,

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<v Speaker 1>really beautiful moment was sending a bit Dave McCormick leaving

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<v Speaker 1>the studio. You comeing in and he said, you're no

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<v Speaker 1>longer doctor Doom any more. Your Doctor Boom was changed.

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<v Speaker 2>What change has been essentially the most important technological innovation

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<v Speaker 2>in human history. While everybody's talking about AI and JENNYI,

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<v Speaker 2>this is only one of the twelve or more industries

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<v Speaker 2>of the future. You have AI, you have a semiconductors,

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<v Speaker 2>you have robotic automation and human robots. You have fusion energy,

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<v Speaker 2>you have quantum, you have defence tech, you have space exploration, fintech,

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<v Speaker 2>art tech, you have new material science, New cryptography really

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<v Speaker 2>is the Cambrian explosion of innovations. Each one of them

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<v Speaker 2>have to say powered by I. But there are separate verticals,

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<v Speaker 2>very separate industry, space exploration, exploitation is separate from a I,

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<v Speaker 2>even if it's fed by I. So I'm going to

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<v Speaker 2>see US potential growth for the last two decades has

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<v Speaker 2>been barely two percent. I expected that by the end

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<v Speaker 2>of this decade is going to be at least four percent.

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<v Speaker 2>And the data already suggests that productivity since COVID has

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<v Speaker 2>doubled in spite of COVID, is already closer to two

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<v Speaker 2>percent plus, and we have potential growth higher. There will

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<v Speaker 2>be a significant increase also in equity market returns.

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<v Speaker 3>How turn are you about bumps along the way? Christian

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<v Speaker 3>Laguard are talking about the financial risk that comes along

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<v Speaker 3>with the likes of Mythos or some of the technological advancements.

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<v Speaker 3>They could potentially torpedo the financial system, the payment system

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<v Speaker 3>as we know it. I mean, how much is that

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<v Speaker 3>potentially a risk on the way to this much more

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<v Speaker 3>prosperous future.

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<v Speaker 2>Well, there are two types of risks. Onto a book

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<v Speaker 2>in twenty twenty two about megatrides. Where I spoke about

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<v Speaker 2>circuflationary risk, things that reduce growth and increase inflation. What

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<v Speaker 2>technology does the opposite, increases growth, reduces inflation. Of course,

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<v Speaker 2>having tariffs, having restriction to migration, having large budget deficits,

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<v Speaker 2>claim within pendents of the federal of law, you name it.

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<v Speaker 2>All those things can be actually reducing growth and increasing inflation.

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<v Speaker 2>And the risk coming from a IE existential risk or

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<v Speaker 2>is having financial attapt types of instability. You know, I've

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<v Speaker 2>said since April last year that tech tramps stariffs because

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<v Speaker 2>the impact on growth of tech is two hundred business

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<v Speaker 2>points my view, going from two to four percent. And

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<v Speaker 2>if you add in a realistic scenario where market discipline

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<v Speaker 2>constrains bad policies, because it did constrain them, then the

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<v Speaker 2>downside from bad policies at b fifty business points. So

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<v Speaker 2>is the ratio of two hundred to fifty four to one.

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<v Speaker 2>So tech tramps Sariff, and I said also tech trams

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<v Speaker 2>tramps temper tantrums two because all those things are constrained

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<v Speaker 2>again by market discipline. Every time is in tallow mode

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<v Speaker 2>flashes out, then the market punishes him and it goes

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<v Speaker 2>back to chickening out. It happened after April. A second,

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<v Speaker 2>it happened after Greenland. It has en after the war

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<v Speaker 2>with Iran. So market discipline is a very powerful force

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<v Speaker 2>to considering that policies.

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<v Speaker 3>Do you think's appropriate for the FED to hike once

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<v Speaker 3>or even twice?

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<v Speaker 2>It's possible. I would say the economy is going to

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<v Speaker 2>ask strengthen. Inflation probably is going to slow down because

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<v Speaker 2>now all prices and not one hundred are close to eighty,

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<v Speaker 2>and for food prices, fertilizer, things going to gradually fall

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<v Speaker 2>him and there'll be multilnecks. So it's kind of like

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<v Speaker 2>a close call. But I would say it doesn't really

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<v Speaker 2>matter very much because you know, the economy is powered

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<v Speaker 2>by AI and technology and these massive tailwinds. They don't

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<v Speaker 2>depend very much on polystrates. A polystrate is a fifty

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<v Speaker 2>business once high or lower. I don't think the tech

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<v Speaker 2>woman is going to really matter very much. And were

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<v Speaker 2>already saw doing the world we run then when all

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<v Speaker 2>was at one hundred the stock markeroage old hamahis in

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<v Speaker 2>spite of that, inspite of the words about what the

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<v Speaker 2>FED does, So I would say people obsessed with the FED,

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<v Speaker 2>whether it's fifty business points higher. Whether it's right now,

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<v Speaker 2>what's the difference. The key story is tech boom and

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<v Speaker 2>that's going to be the most important first order impact

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<v Speaker 2>of anything else.

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<v Speaker 1>That's the headline from this conversation. Narea always fantastic to

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<v Speaker 1>catch up with this, just apect the obvious question, what

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<v Speaker 1>is high? Can interest rates actually achieve well?

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<v Speaker 3>And right now stock markets seem to be moving on

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<v Speaker 3>does it actually slow anything down? Ultimately, a task force

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<v Speaker 3>will answer that question, John.

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<v Speaker 1>You want to run a task first? You fancy that?

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<v Speaker 2>Oh you know he wants to change things. But I

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<v Speaker 2>would say one important point.

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<v Speaker 1>Yeah, twenty seconds and one very quick and okay point.

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<v Speaker 2>He argues that because of growth fed funds, it should

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<v Speaker 2>be lower because the inflictions will be lower, but the

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<v Speaker 2>potential growth is higher. They could live in a real

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<v Speaker 2>rate what short and long is higher? So a bit

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<v Speaker 2>of a wash on the policy rates and on a

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<v Speaker 2>long rate.

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<v Speaker 1>Norean Web said, as always, it's going to say thank

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<v Speaker 1>you everybody that every Pinny Macro associates