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Speaker 1: For the entire half hour. Nora Rubini, Damian, I'm gonna

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Speaker 1: tell this story as quickly as I can. You brought

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Speaker 1: it up earlier, which is the idea of where doctor

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Speaker 1: Rubini was in two thousand and five. One night at Davos,

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Speaker 1: at the Belvedere Hotel, I sat in the old bar,

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Speaker 1: not before they they fancyized it. It was the old

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Speaker 1: wooden bar with dust, and you know, Velderie veldera and

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Speaker 1: doctor Rubini and I said there by ourselves, and just

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Speaker 1: around the corner of the bar was a guy named Geitner,

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Speaker 1: and Geidner just listened. He didn't participate in the conversation.

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Speaker 1: And Nora and I went through the excesses of two

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Speaker 1: thousand and five, two thousand and six, and within that, folks,

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Speaker 1: and forget about interviews and speeches and all that, over

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Speaker 1: a quiet beverage of our choice. He laid out the

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Speaker 1: next seventy two months like nobody I've ever seen.

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Speaker 2: That's right.

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Speaker 1: It was such a privilege to have Mike Bloomberg pick

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Speaker 1: up the bar. Tab I met with Nora Rabini in

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Speaker 1: two thousand and five or six.

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Speaker 2: Why don't you bring up the esteemed Dr Rubini probably

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Speaker 2: don't remember this, but in two thousand and seven when

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Speaker 2: I was at City Group, I was working for Mark

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Speaker 2: Borr and Chris Pask shout out to you Tube. We

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Speaker 2: had some traders in from Tutor, from Soros, and we

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Speaker 2: were at mister Childs downtown in Tribeca, and you were

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Speaker 2: talking about this. Now, fast forward, this is not two

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Speaker 2: thousand and five, this is two thousand and seven. You're

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Speaker 2: talking about the global financial crisis. Your call, and these

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Speaker 2: traders were all over you saying you've been calling the

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Speaker 2: news forever, you know whatever. So talk to us now,

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Speaker 2: you know, talk to us about where we are now

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Speaker 2: in the economy. Where's growth expectations now with disinflation, every

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Speaker 2: pressure is kind of bubbling up here. Where are we

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Speaker 2: in the cycle?

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Speaker 3: Uh? Well, we are in the cycle. Depends on whether

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Speaker 3: you're in the United States and Europe, in Japan or China.

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Speaker 3: Prob You cannot generalize it, but I would say if

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Speaker 3: we start with the US, there's been an interesting evolution

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Speaker 3: because about a year ago most e columns thought that

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Speaker 3: we have a heart landing. Then people said there'll be

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Speaker 3: a bump or softish landing with a short and shallow recession.

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Speaker 3: Now the baseline became one of a soft landing, but

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Speaker 3: the economic data on growth have a surprise on the upside.

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Speaker 3: And I would say that paradoxically, the biggest risk today

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Speaker 3: to the market is actually is a case of no

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Speaker 3: landing where growth could continue to be above potential. And

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Speaker 3: why it's going to be inactive for the markets because

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Speaker 3: if growth remains above potential, the FED is not going

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Speaker 3: to cut rates starting the middle of the year, is

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Speaker 3: not going to cut rates three times this year. They

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Speaker 3: could cut only two one, maybe even zero. And I

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Speaker 3: would say paradoxically, the best news for the economy may

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Speaker 3: be the worst use for the market. So we've gone

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Speaker 3: from hard landing to bumpy to soft to maybe no landing.

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Speaker 2: For our audience, let's just be clear here, this is

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Speaker 2: Professor Norio Rubini talking actually bush at growth expectations on

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Speaker 2: the US economy, on US exceptionalism, Let's talk about some

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Speaker 2: of these other.

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Speaker 3: Elements optimistic about growth. But paradoxy that opting is about

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Speaker 3: growth implies inflation. War was sticky and bad news for

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Speaker 3: the market. It's on a cyclical basis.

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Speaker 2: So you were just going to take me there, right,

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Speaker 2: I mean, seventy five pps priced in now three year

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Speaker 2: and during the US I mean, as the market got

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Speaker 2: it right, or I mean, should we expect perhaps the

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Speaker 2: risk in the pain trade markets being that the markets

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Speaker 2: are pricing in still a bit too much.

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Speaker 3: Yeah, the markets are always too douviish. You know. Last year,

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Speaker 3: as you remember that were expecting the Fed with cut

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Speaker 3: rates or even in the second half the year. The

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Speaker 3: Fed said no, and the markets were pushing the Fed.

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Speaker 3: And then the economic data remains strong and actually you

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Speaker 3: got the correction ten percent in August September. Then this

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Speaker 3: year they start of the year saying six rate cuts,

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Speaker 3: the Fed all those three. Now they moved to three

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Speaker 3: rate cuts like the Fed does. But as I said,

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Speaker 3: the possibility is that if economy remains stronger, general data

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Speaker 3: on inflation were strong, that then the Fed doesn't cut

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Speaker 3: in June, doesn't cut in July or later. It doesn't

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Speaker 3: cut three times. This year could be less than three times,

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Speaker 3: and that could be the negative surprise for the markets.

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Speaker 1: Are going to go to some of the GLOOMA is

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Speaker 1: out there and there's a build up and are position

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Speaker 1: you advise Bill Clinton in another time or we measure billions,

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Speaker 1: we now measure Doctor Rabini in trillions. We have American exceptionalism,

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Speaker 1: we have our technology. I've got the IMF with a

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Speaker 1: growth view out three years. That looks Roubini like to

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Speaker 1: be honest, But the elephant in the room is the

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Speaker 1: debt build up in America. Miami guinnis, among others expert.

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Speaker 2: Honest.

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Speaker 1: Do you study the debt and say it well, upset

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Speaker 1: the apple cart? Or can the debt be tolerated by

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Speaker 1: American productivity and growth?

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Speaker 3: Well, the first two chapters of my new Mega Threads

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Speaker 3: are about debt and that crisis. Actually, the first chapter

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Speaker 3: is called the Model of All that crisis, and I

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Speaker 3: point out that not just the US, but also globally,

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Speaker 3: there's been a rising private and public debt as a

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Speaker 3: short GDP and U as the sum of the two

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Speaker 3: is four hundred and twenty percent of GDP. And while

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Speaker 3: they average that race for the public sector as one

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Speaker 3: hundred percent of GDP in Adman's econom that's the official

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Speaker 3: debt on top of the implicit liability coming from aging

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Speaker 3: of population and social security pays you go systems or

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Speaker 3: healthcare systems also pays you go, So that implicit DAD

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Speaker 3: is another one hundred percent of GDP. Now, the paradox

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Speaker 3: for the US is the following one. If you're another

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Speaker 3: country Greece, Italy, then UK and you're fiscally deviant, you

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Speaker 3: have right away market punishing you. Your spreads go higher

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Speaker 3: if you have exchanges.

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Speaker 1: Why don't we face that discipline?

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Speaker 3: We don't face it because you have the exorbitant privilege

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Speaker 3: of being the largest reserve currency in the world, and

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Speaker 3: that paradoxically means that we can borrow longer and cheaper

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Speaker 3: to finance our fiscal and external deficits. That means that

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Speaker 3: eventually the markets giving us enough rope to hang ourselves

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Speaker 3: even longer.

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Speaker 1: Okay, I want to.

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Speaker 3: I want to. Eventually, once the shop occurs, it'll be true.

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Speaker 1: We're going to finish with that, doctor Obinion and come back.

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Speaker 1: Damien's got a loaded in the next hour. Doctor Ebini,

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Speaker 1: you just talk about exorbitant privilege, which is just started

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Speaker 1: the staying of old word France. It's very I can

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Speaker 1: green out at Perkeley and critically it's a laureate. It's

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Speaker 1: stigletz where there's an implied assumption our growth rate will

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Speaker 1: stay ahead of our real rate. However you want to

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Speaker 1: measure it that the growthiness will be there, do you

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Speaker 1: suggest our American growthiness will still be there.

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Speaker 3: It's a mixed bag because on one side I think

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Speaker 3: that technology AI innovation could increase potential growth. But in

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Speaker 3: my book Mega Threats, I talk about ten medium long

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Speaker 3: term negative aggregate supplies, shocks that can reduce growth and

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Speaker 3: increase inflation that are tackflationary, and whether technology is going

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Speaker 3: to dominate probably over the medium long term, yes, but

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Speaker 3: for the next decade. I think these mega threats, whether

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Speaker 3: it's global rivalries, the globalization, climate change, pandemics, high private

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Speaker 3: and public debts, the return of inflation, those are all

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Speaker 3: risk to economic growth.

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Speaker 1: Neural Beini quote the Lunitune Roadrunner could sniff out dynamics

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Speaker 1: and gift wrapping. Why can't we? Noial Obedia there starting

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Speaker 1: a mega threat strong with the Looney Tune as well?

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Speaker 1: What about the road runner in China? With these two

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Speaker 1: meetings coming up, Damian Sasara, you wonder what our intelligences

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Speaker 1: are knowledge of present in future China?

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Speaker 2: Well, I mean, you know, Tommy like to reference dollar

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Speaker 2: you on which is trading seven twenty one on the offshore.

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Speaker 2: But what I like to look at in China is

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Speaker 2: the ten yere yield. The tenure yield is a two

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Speaker 2: thirty five two point three five percent. It's one of

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Speaker 2: the lowest yielders the world, in the world, and so

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Speaker 2: Norriol I want to ask you about that. I mean,

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Speaker 2: talk to us about Chinese deflation. What does that mean

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Speaker 2: for somebody sitting here in New York City or more importantly,

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Speaker 2: somebody sitting you know, elsewhere in this country, because New

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Speaker 2: York is very unimportant at this point in time. Talk

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Speaker 2: to us a little bit about what it means for

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Speaker 2: your average, everyday American deflation coming out of China.

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Speaker 3: Well, it means a few things. There's deflection in China

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Speaker 3: because there is excess supply of good services, real estate

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Speaker 3: compared to the mend. An implication for both Chinese inflation

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Speaker 3: and global inflation or deflationary through three channels. Channel number

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Speaker 3: one is that China is going to unquote dump this

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Speaker 3: excess capacity of goods in global markets, and that puts

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Speaker 3: a dumber pressure on global prices. Secondly, the Chinese currency

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Speaker 3: is weakening, means that dollar and another currencies are strengthening.

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Speaker 3: You import less inflation from China. And three Chinese growth

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Speaker 3: is two three percent effectively implies less demand for commodities

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Speaker 3: that put downward pressure on commodity prices. So weakness of

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Speaker 3: Chinese growth is this inflationary not just for China, but

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Speaker 3: there's also this inflationary for the global economy. Now you

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Speaker 3: could say it's good news, but the bad news is

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Speaker 3: that this excess capacity is being unquote dumped in global market.

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Speaker 3: There is already protection is pressures, and the protection pressure

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Speaker 3: are going to become more severe because the last thing

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Speaker 3: that the US Europe are going to be accepting is

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Speaker 3: China is exporting their excess capacity by ever widening trade

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Speaker 3: deficits with these countries.

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Speaker 2: Well, docter 'bini, I mean take me through this. I mean,

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Speaker 2: is disinflation enough. I mean you've pretty much said it.

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Speaker 2: I mean it's disinflation enough to move to your Powell's hand,

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Speaker 2: to move the Fed's hand here in the US and

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Speaker 2: get them to start cutting rates, say by the middle

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Speaker 2: of the year, which is what markets are sort of

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Speaker 2: projecting right now.

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Speaker 3: Well, the channels through China don't have a huge impact

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Speaker 3: yet because we're not important as much. I think what

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Speaker 3: matters for the US is going to be headline inflation.

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Speaker 3: And as I pointed out, if we're going to be

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Speaker 3: in no landing scenarios opposed to soft landing. Growth is

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Speaker 3: going to remain above potential. Inflations are going to be sticky,

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Speaker 3: and the Genuary number confirm that. And that means that

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Speaker 3: the Fed may not cut traits even in June, and

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Speaker 3: may not cut trade three times this year. And if

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Speaker 3: that happens, actually the stock market is going to correct.

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Speaker 3: That's the biggest risk in the market.

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Speaker 2: Actually, no land trade.

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Speaker 1: We had globalization with a few people discontented. I would

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Speaker 1: suggest many more discontented, including the leadership in Beijing. What's

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Speaker 1: the next globalization look like for you?

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Speaker 3: Well, I think we're in a process of gradually less globalization.

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Speaker 3: We went to hyperglobalization. Now, even if we don't have

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Speaker 3: real de globalization, we're going to have French shoring. We'll

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Speaker 3: have reshorting. We'll talk more about a fair trade and

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Speaker 3: security trade rather than a free trade. We'll have some

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Speaker 3: fragmentation of the global economy. We'll have just in case

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Speaker 3: rather than just in time global supply chains. We'll have

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Speaker 3: reshoring and French shoring rather than of shorting. We'll have

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Speaker 3: emphasis on economics security rather than efficiency. So the process

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Speaker 3: called it off the risking of decoupling, but this ongoing,

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Speaker 3: It's going to continue over time.

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Speaker 1: Just just because of the huge response. Are particularly a

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Speaker 1: YouTube live chat Nora Abini right now on the dash

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Speaker 1: of bitcoin. The idea of it's in ETFs we can

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Speaker 1: put in our retirement accounts. I believe it's a limited

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Speaker 1: scare resource. Obviously the price is going up. What's the

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Speaker 1: quality of the price increase in bitcoin right now? The

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Speaker 1: nature of it.

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Speaker 3: Listen, Bitcoin used to be ten thousand, when to a

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Speaker 3: pick of sixty nine thousand late in twenty twenty one,

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Speaker 3: then fell to fifteen thousand. Now it's above sixty thousand.

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Speaker 3: It's so volatile you can go higher, it can go lower.

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Speaker 3: And by the way, not just Bitcoin, but the entire

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Speaker 3: crypto space. They call them cryptocurrencies, but anybody who knows

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Speaker 3: anything about currencies, money, monetary policy knows these are not currencies.

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Speaker 3: For some TB currency, there's to be a unit of account.

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Speaker 3: Nothing is price in bitcoin. There's to be a scalable

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Speaker 3: means of payment. You can do only six transactions per

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Speaker 3: second with bitcoin, you can do fifty thousand with Divisa network.

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Speaker 3: There's to be a stable store of value. Can go

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Speaker 3: up by ten percent one day can go down to twenty

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Speaker 3: percent another day, and there's to be a single numeror

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Speaker 3: so we can compare prices of different goods and services.

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Speaker 3: It's not the unit of account, it's not the skill

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Speaker 3: means of payment, it's not the stable store of value.

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Speaker 3: It's not the same numer So whatever they are, you

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Speaker 3: cannot call them currencies. They are not currencies. No, I

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Speaker 3: agree with that, So that that's a fact. And even

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Speaker 3: the supporters of bitcoin don't anymore believe that's going to

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Speaker 3: become a means of payment. Nobody's using it as a

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Speaker 3: means of payment nowhere around the world. Even El Salvador,

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Speaker 3: where bitcoin was made legal tender, the amount of transactions

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Speaker 3: and goods and services that are using bitcoin is less

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Speaker 3: than one percent. This is a legal tender. People are

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Speaker 3: not going to use it for transactions periods.

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Speaker 2: Yeah, I mean, doctor Rabini, you said El salvad Or,

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Speaker 2: you're taking me exactly where I want to go. I

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Speaker 2: want to talk about the geopolitical risk premium that is

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Speaker 2: or is not embedded in market, specifically as it relates

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Speaker 2: to these elections we're seeing, right. I mean, we've seen

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Speaker 2: quite a few elections already here to date, and We're

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Speaker 2: going to see some big ones coming through. I'm thinking India,

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Speaker 2: I'm thinking South Africa. I mean, talk to us a

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Speaker 2: little bit about election risk in the market. Should industrors

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Speaker 2: be concerned about that?

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Speaker 3: Well, there are tons of elections, even in important countries.

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Speaker 3: But let's say in India, Mode is going to get

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Speaker 3: re elected. The only issues by which margin? And I

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Speaker 3: think that the global impact, even of stuff happening in

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Speaker 3: South Africa is going to be minimum, Then seem I

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Speaker 3: have less power or more power. We don't know. The

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Speaker 3: only election that matters for the global economy and markets

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Speaker 3: is the US election. And it matters not just because

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Speaker 3: of geopolitics of what are going to be the foreign

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Speaker 3: policy of Trump related by them on China, Russia, Ukraine,

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Speaker 3: on Europe, on the Middle East, but most importantly is

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Speaker 3: his economic policy. Yes said, I'm going to impose a

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Speaker 3: ten percent tariff on all imports come in the US

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Speaker 3: when the average tarf is two percent. He said, I'm

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Speaker 3: going to impose tariffs on China of up to sixty percent.

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Speaker 3: And he said, well, I'm going to also renew the

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Speaker 3: tax cuts that pass to another one point five three

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Speaker 3: dollars deficits over the next decade when the deficits are

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Speaker 3: out of control. So I think the fiscal risk and

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Speaker 3: the trade protection risk could really derail the market and

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Speaker 3: slow down economic growth and increase inflation. That's the biggest

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Speaker 3: sort is coming from Trump.

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Speaker 1: I got forty two seconds. Was a book when you

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Speaker 1: were a kid that got you going in economics and

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Speaker 1: international finance? What was the book that changed or Rubini

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Speaker 1: when you were a kid.

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Speaker 3: Well, there was a book by Jeffrey Sachs that was

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Speaker 3: on this tackflation of the nineteen seventies where we had

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Speaker 3: the old shock of seventy three seventy nine. Was the

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Speaker 3: first book that spoke about the terms tacklation and was

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Speaker 3: the period of time exactly where you had lower growth

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Speaker 3: procession and inflation. And now we're facing fifty years later

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Speaker 3: similar stackflation impression.

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Speaker 1: And I put that book out on Twitter and LinkedIn,

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Speaker 1: and I've got another jeff six book where he was

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Speaker 1: way out front on the dumbing down of America. Nor Rubini,

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Speaker 1: thank you way too long. Now that you're professor emeritis

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Speaker 1: hold in court, he's over the same Regius breakfast or

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Speaker 1: the Regency Hotel breakfast. He's very Emeritus