Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Nor Rubini.
Speaker 1: No, it joins these wonderful books, all that he's done
Speaker 1: for me over the years, going way way back pre
Speaker 1: crisis is well, let me just get bitcoined out of
Speaker 1: the way. I don't always time on it. We've had
Speaker 1: not one but two of our guests emphatically stayed Rubini's right,
Speaker 1: it's going to ten thousand. It's a bit dark going
Speaker 1: down from sixty thousand to ten thousand.
Speaker 3: I think it doesn't matter. I don't make predictions. It
Speaker 3: could go significantly low, where could stay where it is.
Speaker 3: But the point is that you know Bitcoin is down
Speaker 3: from his peak by fifty percent. The other top ten
Speaker 3: cryptocurrences are down between sixty to ninety percent. You know,
Speaker 3: millennia coin and the trump coiner are down ninety seven
Speaker 3: ninety nine percent, even worse than fart Coin is done
Speaker 3: only ninety five.
Speaker 2: Mean, well, you know it's a traded currency, so.
Speaker 3: And you know the NFT index is down ninety five
Speaker 3: percent from the peak. So it was a bubble as burst.
Speaker 3: Whether it be Coong goes much lower and out. Who cares?
Speaker 4: You were saying that you've just come off three weeks
Speaker 4: of travel A where were you and B what did
Speaker 4: you learn?
Speaker 2: Well?
Speaker 3: I spent a good amount of time between Saudi Arabia, Israel, Dubai,
Speaker 3: and Abu Dhabi. I would say that foremost on people's
Speaker 3: mind was the question of whether there will be another
Speaker 3: conflict between Israel, US on one side, and Iran, debated
Speaker 3: in Israel, in Saudi, throughout the Gulf. We don't know
Speaker 3: the negotiations. I would say the Israeli view is that
Speaker 3: probably it's not just a niche about nuclear bomb but
Speaker 3: also about the missiles, but stick missiles and the original proxies.
Speaker 3: While Trump may just cut the deal on the on
Speaker 3: the nuclear bomb alone, that will live israally in a
Speaker 3: weaker position. But we'll see what are going to be
Speaker 3: the results of those negotiations.
Speaker 4: Other than geopolitics, there's been a move just kind of
Speaker 4: feeling that the US maybe has lost a little bit
Speaker 4: of its exceptionalism. There are other opportunities to invest outside
Speaker 4: of the US. We've seen that over the last six
Speaker 4: to twelve months. Is that something you sense in your travels?
Speaker 2: Oh? Yes or no?
Speaker 3: What I feel is people say we don't like the
Speaker 3: US in public, and then they invest in the US.
Speaker 3: I mean throughout the Gulf, whether it's Saudis or Emiratis
Speaker 3: or Kataris, there's an alternative to the United States.
Speaker 2: And I think for a good reason.
Speaker 3: You know, I've argued that, actually I'm a techno optimist
Speaker 3: that US potential growth but at the end of this
Speaker 3: decade is going to be four percent, not two. And
Speaker 3: if you had American exceptionalism when growth was two percent
Speaker 3: and the SMP was returning to twelve percent including the
Speaker 3: dividends for twenty years and as like sixteen percent, if
Speaker 3: growth is even only three litt alone three and a
Speaker 3: half and four, then returns have to be even higher.
Speaker 3: So yeah, and the short term there is now volatility,
Speaker 3: but that's short time volatility. If you look in the
Speaker 3: medium term with three four percent growth and will be
Speaker 3: there because of technology in US is number one together
Speaker 3: with China in all of the indices of the future.
Speaker 3: It's not just say either about fifteen other ones. Then
Speaker 3: American exceptionally is not over actually is going to be
Speaker 3: reinforced over time. And there is no other place to
Speaker 3: invest in the United States because China is risky and
Speaker 3: uninvestable for a lot of good reasons.
Speaker 1: Nor Robini. I'm with this fossed bulletproof academics. Whatever your
Speaker 1: political view is, it's truly outstanding international economics. Nor Robini
Speaker 1: On tariffs, I'm reading the Morgan one volume, and William
Speaker 1: McKinley Trump is fixated on the gilded Age and the
Speaker 1: benefits of tariffs. I don't buy it for a minute.
Speaker 1: And I'm looking for McKinley's buffalo pivot where politicians walk
Speaker 1: back the talk. Are we going to see in twenty
Speaker 1: twenty six tariff reduction by the president in some manner
Speaker 1: like a buffalo pivot?
Speaker 3: Oh, it already happened in twenty and twenty five, and
Speaker 3: it's going to be more of it in twenty twenty six.
Speaker 3: You know, on April second, he announced average effective tariffs
Speaker 3: of thirty percent, as opposed to the pre April psycond
Speaker 3: liberation they three percent. But I said right away that
Speaker 3: market discipline is going to force him to check it
Speaker 3: out and back down. And two weeks into that announcement,
Speaker 3: NASDAK was done. Twenty percent, s MP fifteen ten, new
Speaker 3: treasure yieldware up eighty business points III spread up one
Speaker 3: hundred and fifty.
Speaker 2: The dollars had to go free fall and he.
Speaker 3: Panicked, and he panic it started to do trade deal,
Speaker 3: and he gave the job to Scott Besson. And guess
Speaker 3: what the average US started right now is not thirty percent.
Speaker 3: It's fourteen and falling. Because there is an inflation affordability crisis,
Speaker 3: and every day they cut back the tariffs on aluminum, on.
Speaker 2: Coffee, in hoko and whatever.
Speaker 3: They're desperate and therefore they already chickened out in twenty
Speaker 3: five because the market forced them do more of it
Speaker 3: this year because that of course mid them election and
Speaker 3: they need to try to boost the economy and reduced inflation,
Speaker 3: so taffies are going down, not up.
Speaker 4: Has the whole terror of discussion in ourial maybe permanently
Speaker 4: or at least an intermediate term negatively impact just trade
Speaker 4: the US between various partners or is this something that
Speaker 4: everybody can just get past?
Speaker 2: Do you think you.
Speaker 3: Know there's been some short and volatility, there's been some
Speaker 3: shrinkages of our inputs from the rest of the world.
Speaker 3: My view is actually the US trade and current account deficit,
Speaker 3: regardless of tariffs, it's going to widen because from a
Speaker 3: macro point of view, the trade balance is not Experts
Speaker 3: MANUS imports, it's savings MANUS investment in US is in
Speaker 3: the middle of an investment boom driven by I in
Speaker 3: techologes of the future. It's like an emerging market. Ifan
Speaker 3: oil or something where you have an investment boom and
Speaker 3: your domestic private and public savings are lower, then you
Speaker 3: have a current round deficit. So our current investment is
Speaker 3: going to become larger, not smaller. Even if you had
Speaker 3: thirty percent tariffs, that's a microvill and it doesn't matter
Speaker 3: because the info capital equity investment to finance it, FDIBC, startups,
Speaker 3: you name it, porfol investment is going to finance that.
Speaker 3: So not only American exception is not over. The exorbitant
Speaker 3: privilege of the US dollar is not over, and even
Speaker 3: the weakness of the dollar is only short term. Over
Speaker 3: the midium time we four percent growth, the dollar's going
Speaker 3: to be much stronger and the uros going to be
Speaker 3: much weaker.
Speaker 1: Are you predicting an advancing dollar from here? Does it
Speaker 1: have to weaken down and then we get a bit
Speaker 1: on the.
Speaker 3: Dollar listen in the next few months, weekend more depending
Speaker 3: on relative market policy. But I'm asking myself, I suppose
Speaker 3: you are twenty thirty. At the end of this decade,
Speaker 3: the US grow the four and euroson is stuck at
Speaker 3: one percent real interest rates real it depends on real
Speaker 3: growth rates just because the time the US to be
Speaker 3: well below party.
Speaker 1: This questionnaire was brilliant and I got this in Are
Speaker 1: we stealing investment from other parts of American enterprise with
Speaker 1: all this money going into aichechedlogy and data centers?
Speaker 2: No, I don't think so.
Speaker 3: I don't think so, because, first of all, to bel
Speaker 3: all AI data centers, there's supply chains of construction, of
Speaker 3: equipment of everything, cooling, heating system, you name it, the chips,
Speaker 3: supply chains and so on, and you know, and these
Speaker 3: booming capex is maintaining economic growth strong, and that's going
Speaker 3: to be good for the economy and for many other sectors.
Speaker 3: And secondly, it's not just the hyper skilled mark seven
Speaker 3: and doing investment AI. If you have any SMP five
Speaker 3: hundred firm today and you don't have an AI strategy,
Speaker 3: you're dead because you could be disrupted by a competitor,
Speaker 3: or by tech firm, or by whatever. So everybody's trying
Speaker 3: to play with AI. Now we're not yet seeing the
Speaker 3: significant increases in productivity growth. We see them at the
Speaker 3: macro level, by the way, but we don't see them.
Speaker 2: For every firm.
Speaker 3: But profit margins for every SMP five underd firm has increased.
Speaker 3: The real revenues for all SMP five hundred firms have
Speaker 3: gone up since ACTIVET has been launched by fifteen percent,
Speaker 3: so five percent per year. So there are these signs
Speaker 3: that there is this increasing productivity growth across the economy.
Speaker 3: So everybody has to have an AI strategy. So everybody's
Speaker 3: doing capecs. It's not just a mayoproscalar story.
Speaker 4: No real can this economy grow at four percent as
Speaker 4: you suggest, with no immigration?
Speaker 2: Do we need an immigration policy that allows population growth?
Speaker 3: Well, we need it because we have a bottleneck of
Speaker 3: skill labor. You know, TSMC is building a factory in Arizona.
Speaker 3: I spoke with people in Taiwana. I said, we don't
Speaker 3: have the skilled worker in Arizona. So that hundreds or
Speaker 3: thousands of engineers of TSMC going there initially for a
Speaker 3: few months.
Speaker 2: Now they left to be there for a few years.
Speaker 3: So you need a more intelligent immigration policy with more
Speaker 3: H one B visa so that skill workers can work
Speaker 3: in the United States. But even if we had net
Speaker 3: migration that was closed to zero. I think they increases
Speaker 3: in productivity growth driven. But the clouds of the future,
Speaker 3: and AI is one of the fifteen of them. Everybody's
Speaker 3: obsessed with. AII is just one piece of the story.
Speaker 3: That are fifteen other sectors where there's a PRODUCTI growth
Speaker 3: because of the technology of the future. So that's going
Speaker 3: to lead to an increasing producty growth regardless of job grades.
Speaker 3: That's why there is a gap between GDP and jobs
Speaker 3: because there's a booming productivity growth. So that's what's already happening.
Speaker 3: We don't have the workers who are cutting back on
Speaker 3: that migration. We are deporting people, and growth is actually
Speaker 3: accelerating rather than necelerating.
Speaker 1: Nor Rabini with the folks who welcome all of you
Speaker 1: across the nation, we welcome you worldwide as well, from
Speaker 1: Istanbul to Tehran to Tel Aviv and then on Italy,
Speaker 1: which is normal. Rubini out of a suitcase in his childhood,
Speaker 1: you have a perspective over world new world like no
Speaker 1: one I know because of your tumultuous childhood, and you're superior,
Speaker 1: brilliant academics and Piconian.
Speaker 2: And others.
Speaker 1: How do you see America after this second term of
Speaker 1: President Trump, do we go back to the processes for
Speaker 1: example you had serving in the White House with Bill Clinton?
Speaker 1: Do we go on to a new populism? How do
Speaker 1: you see us after Trump?
Speaker 3: You know, I think that Trump is going to be
Speaker 3: more a temporary exception rather than a radical change of
Speaker 3: the US. Yes, there is a little bit more popularism
Speaker 3: because there are plenty of people left behind. Some of
Speaker 3: them vote for the Progressive, some of them vote MAGA,
Speaker 3: but there'll be the strong increasing growth. I think that
Speaker 3: after midimal election, if the GOP loses the House, Trump
Speaker 3: is going to be a lim duck. Anybody from Jed
Speaker 3: Evans to Marco Rubio to a bunch of others going
Speaker 3: to say, I want to run, great job president for
Speaker 3: two terms, even in Supreme Court. It's not going to
Speaker 3: allow him to run for a third term. And therefore,
Speaker 3: you know, is it going to be lin duck and
Speaker 3: we're going to whoever is going to be elected, maybe
Speaker 3: the exception of Jed Evans, but even a Mark Ruby
Speaker 3: is going to be somehow in between the traditional you know,
Speaker 3: George Bush publican party and more populous one. So and
Speaker 3: we have stronger economic growth. I think some of these
Speaker 3: backlash against liberal democracy and free market is gonna shrink.
Speaker 3: There will be some of the backlash, but I think
Speaker 3: we've hired growth. Some of these concerns about in a
Speaker 3: quality and other things are going to be lessened over time.
Speaker 4: Nauria, with all your travels and all your contacts around
Speaker 4: the world. Is the US leadership position, which it's held
Speaker 4: generally interrupted since the end of World War two?
Speaker 2: Is that changed?
Speaker 4: Is that done?
Speaker 1: Is that.
Speaker 4: Is that framework no longer in place?
Speaker 3: Do you think, well, you know, even our friends and
Speaker 3: allies in Europe, in the Middle East, in Asia are
Speaker 3: unhappy because the US is behaving like a bully, but
Speaker 3: your NATO is still there. We're going to find deals
Speaker 3: on trade and other things. And think about the Europeans.
Speaker 3: Do they really want to use the fans tag of
Speaker 3: China and AI of China and being the Chinese or
Speaker 3: a bit of course not, so they have a non
Speaker 3: option and they have to essentially spend more on the fence,
Speaker 3: be part of NATO, buy even more American weapons. And
Speaker 3: there are going to be two technological stacks are going
Speaker 3: to be completely the risk because there's the a US
Speaker 3: stack and a Chinese stack. And if you are friends
Speaker 3: of life the US. They don't to be subject to
Speaker 3: the spying and being within the firewall of China. So
Speaker 3: you have Europe and friends and analyies have no choice. They
Speaker 3: have to go with our technology. We are defens we're
Speaker 3: on system, we are economic channels. They'll do some trade
Speaker 3: with China, but not stuff that is really sensitive. They
Speaker 3: have an option by going with the US.
Speaker 1: Nora Rabini and Richard Clareday have sat in this chair
Speaker 1: and imposing sat in the chair and others to discuss
Speaker 1: the next chairman of the FED. Are you comfortable with
Speaker 1: mister warrisher? Are you particularly comfortable with him that he
Speaker 1: doesn't have the academics say of Richard Clareda, he wouldn't
Speaker 1: know DSGE theory over the.
Speaker 3: Head and that doesn't bother me as much. And he
Speaker 3: wasn't a fat before and even powerless done well while
Speaker 3: being a lawyer. I'm more concerned about these views. The
Speaker 3: view that you can because of AI reduce the FED
Speaker 3: funds or it is wrong because even if AI will
Speaker 3: eventually reduce inflation, is going to increase potential growth. So
Speaker 3: the equilibrium real our star is higher, while the nominal
Speaker 3: because of inflation could be lower. And it's going to
Speaker 3: be a wash between the two. So on one side,
Speaker 3: the real growth implies high real rates. On the other side,
Speaker 3: lower inflation implies lower nominal and it's a wash between
Speaker 3: the two. So that doesn't justify it or fed function.
Speaker 1: Once you included the dynamics here, I asked, do we
Speaker 1: need two our stars because we got an American and
Speaker 1: Oriel flat in their back. There's not part of this
Speaker 1: AI productivity experiment. Are we living to our stars right now?
Speaker 3: Well, we live in what everybody refers to as a
Speaker 3: case shaped economy. The top ten twenty percent is doing
Speaker 3: very well. About on fifty percent struggles from paycheck to paycheck.
Speaker 3: Even if we were at full employment, at least people
Speaker 3: have jobs. But even if you were to cut policy
Speaker 3: rate in an economy is near full employment, you're going
Speaker 3: to fuel only inflation and if it is gonna hold
Speaker 3: more the working class than otherwise. So the solution is
Speaker 3: not going to be reducing the policy rate. If you're
Speaker 3: worried about inequality, you have to do stuff like providing
Speaker 3: educational skills and retraining and all the things we're not
Speaker 3: doing to make sure that those were left behind are
Speaker 3: not left The band it's not the job of monetary body.
Speaker 1: Your PhD advisor Jeff Say exited the book fifteen years ago,
Speaker 1: folks predicting all of this educational failure in America. I
Speaker 1: got twenty seconds.
Speaker 2: When's the next Rubini book?
Speaker 3: I usually write one every decade. Crisis Economics was twenty ten,
Speaker 3: Mega Tread was twenty twenty two. So maybe something on
Speaker 3: AI and how the world is going to change. But
Speaker 3: it's going to be by the end of the decade,
Speaker 3: not anytime soon.