WEBVTT - Nouriel Roubini Talks Tariffs, Dollar, and Global Relations

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news all.

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<v Speaker 2>Are you here for more, Nourreel Rubini, chairman and CEO

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<v Speaker 2>of Verbini Macro Associates, who's also not psyching himself out, Noreel,

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<v Speaker 2>are you on the positive camp here? And if so, how.

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<v Speaker 3>Well I mean in the positive camp in the following sense.

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<v Speaker 3>I've been arguing for weeks now that tech trum start

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<v Speaker 3>because there's a revolution coming from AI and other does

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<v Speaker 3>and industry of the future. It's an AI, robotic automation,

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<v Speaker 3>a siliconductor, fintech, defence tech, green tech, act tech, you

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<v Speaker 3>name its space exploration quantum. This thing is going to

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<v Speaker 3>increase US potential growth from the current two percent to

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<v Speaker 3>a level I expect by the end of this decade

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<v Speaker 3>closer to four percent. So two hundred business points increasing

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<v Speaker 3>productivity growth instead, even in the worst scenario on trade,

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<v Speaker 3>domestiction to migration, and we're going to escalate the potential

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<v Speaker 3>heat to potential growth could be maybe fifty business points.

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<v Speaker 4>So the ratio between two hundred.

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<v Speaker 3>Business points up because of technology and negative fifty basis

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<v Speaker 3>points is four to one. So tech Trump studies and

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<v Speaker 3>therefore the US American exceptionalist is going to remain in

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<v Speaker 3>spite of bad trade policies, in spite of bad migration policies.

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<v Speaker 3>So in that sense autistic that not just in the

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<v Speaker 3>short run, those of the medium term. We're going to

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<v Speaker 3>avoid the severe reception and you have to remain strong.

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<v Speaker 2>And you know, so tech trumps tariffs and at the

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<v Speaker 2>same time, like for health Ham, it was the regulation

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<v Speaker 2>trumping tariffs as well. At this point, what about the

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<v Speaker 2>issues with the dollar in the back end of the curve,

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<v Speaker 2>so higher yields and weaker dollar, and if we move

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<v Speaker 2>out of dollars a reserve currency, even on a margin,

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<v Speaker 2>how do you factor that in?

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<v Speaker 3>Well, regardless the dollar, there are different types of investors.

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<v Speaker 3>There are those that are fixing investors, foreign reserve asset

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<v Speaker 3>managers of the wealth funds where in fixed income some

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<v Speaker 3>of them are worried about the dollar because of course

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<v Speaker 3>we have undermined the credibility of the US dollar. If

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<v Speaker 3>I'm right that we're going to go from a two

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<v Speaker 3>to four percent growth in the US, there will be

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<v Speaker 3>a massive capex an investment boom that's already occurring right now.

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<v Speaker 3>It's a mac seven hyperscalers firms in a NASDAC but

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<v Speaker 3>even nontech firms have to have an AI strategy and

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<v Speaker 3>how they're going to do less investment because of because

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<v Speaker 3>of trade restriction, No way. So we have massive tail

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<v Speaker 3>winds imply larger investments shore GDP and capital inflows that

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<v Speaker 3>are going to be FDI, green Field and brown Field,

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<v Speaker 3>and portfolio investment into the equity market. So the dollar

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<v Speaker 3>can weakend because fixed income folks are nervous about US

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<v Speaker 3>meddling with the reserve currency role of the dollar. But

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<v Speaker 3>that massive inflow of capital to finance this investment boom

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<v Speaker 3>is going to imply get Any weakening of the dollar

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<v Speaker 3>is going to be very gradual. I don't think there'll

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<v Speaker 3>be a collapse in the value of the dollar, and

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<v Speaker 3>I don't think that the US dollar is going to

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<v Speaker 3>be undermined to any significant extent as a global reserve currency. Yes,

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<v Speaker 3>the Chinese and our enemies are going to try to

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<v Speaker 3>create alternative payment rails that are not based on the

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<v Speaker 3>US dollar substitute for sweets and so on, but that'll

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<v Speaker 3>be a very very gradual process.

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<v Speaker 1>I am curious though, as we go through this process,

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<v Speaker 1>Doctor Rubini, there's been a lot of talk because not

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<v Speaker 1>just with the dollar, but when you talk about the

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<v Speaker 1>technological advancements or the potential there. These two aren't necessarily

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<v Speaker 1>divorced from one another. And someone was bringing up kind

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<v Speaker 1>of you go back, you look at the other big

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<v Speaker 1>sort of the Industrial Revolution, obviously the digital revolution a

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<v Speaker 1>few decades ago, and this idea that it wasn't just

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<v Speaker 1>about one country leading the charge. In fact, a lot

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<v Speaker 1>of the countries that led the charge ended up not

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<v Speaker 1>being the primary beneficiaries down the road, Great Britain.

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<v Speaker 4>For example.

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<v Speaker 1>With the Industrial Revolution, of course, most of the benefit

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<v Speaker 1>it ended up being to what within a burgeon in

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<v Speaker 1>the United States of America. Is there a chance that

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<v Speaker 1>we could see that play out again where China and

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<v Speaker 1>deep seek and everything else affiliated with that becomes the

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<v Speaker 1>real beneficiary.

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<v Speaker 4>I don't think so. For the following reason.

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<v Speaker 3>In these twelve Industries of the future, US currently is

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<v Speaker 3>number one, China is number two in all of them

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<v Speaker 3>but green tech and electric vehicles, the mobility revolution. Secondly,

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<v Speaker 3>in the past innovations, where loger itmay, they've spurt of growth,

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<v Speaker 3>say after the first Internet revolution in the nineties, US

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<v Speaker 3>god goes from one to three, then it flattens out

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<v Speaker 3>and goes back to two. Instead, the nature of this

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<v Speaker 3>revolution in technology lead by eye is exponential. US growth

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<v Speaker 3>today two percent, four percent by the end of this decade,

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<v Speaker 3>six percent by the end of the next decade. When

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<v Speaker 3>it's exponential, you have a first mover advantage, and whether

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<v Speaker 3>it's first because of economy of scale and net remains

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<v Speaker 3>first and whoever is second remains a second.

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<v Speaker 4>China is going to do well, but.

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<v Speaker 3>The idea they're going to catch up with US, I

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<v Speaker 3>think is totally far fetched.

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<v Speaker 4>And everybody else is not even number three or four.

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<v Speaker 3>There are some pockets of excellence in Europe, in Israel,

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<v Speaker 3>in India, in Japan, in Taiwan, in South Korea, and

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<v Speaker 3>so on and so on. So in this game about

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<v Speaker 3>the technology of the future, US remains number one, China's

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<v Speaker 3>going to be number two, and everybody else is going

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<v Speaker 3>to be adopting this new technology. And by the way,

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<v Speaker 3>you don't need to be innovating. Even if you adopt

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<v Speaker 3>the technology, you'll have some productivity growth. You know, after all,

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<v Speaker 3>in sub soual And Africa there has never been any

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<v Speaker 3>iPhone or smartphone produced, but even a poor farmer using

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<v Speaker 3>a smartphone can do lots of business transaction, selling the crop, ensuring, financial,

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<v Speaker 3>and so so upon. In the US is going to

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<v Speaker 3>remain number one, Chinese number two, and everybody is going

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<v Speaker 3>to be behind but adopting either the technology of the

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<v Speaker 3>US or those of China and innovating either with US

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<v Speaker 3>or with China. But you're going to get first mover advantage.

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<v Speaker 3>The second ones are not going to catch.

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<v Speaker 1>Ups in terms of global economic conditions and whatever structural

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<v Speaker 1>changes are taking place in Norriel. Do you get a

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<v Speaker 1>sense here that the lack of international cooperation, at least

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<v Speaker 1>as it stands right now visa these what we saw

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<v Speaker 1>over the last few decades, that that might actually be

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<v Speaker 1>a benefit to the United States or could it actually

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<v Speaker 1>hamper us?

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<v Speaker 3>Well, the reality is that the global system is going

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<v Speaker 3>to be divided in two areas. One with US is

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<v Speaker 3>friends and allies, and some of the countries in the

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<v Speaker 3>global South, said the Indians of the world are going

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<v Speaker 3>to be following the economic, monetary, trading, financial, technological, and

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<v Speaker 3>I would say even the military and security system of

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<v Speaker 3>the United States. Instead, China, Russia, North Korea, Iran, Cambodia,

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<v Speaker 3>Pakistan and a few others are going to be in

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<v Speaker 3>the technological and economic and trading area.

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<v Speaker 4>Of China.

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<v Speaker 3>Now, if we reach an agreement on China to partially

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<v Speaker 3>escalate with the risk the relationship on what's strategic, high

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<v Speaker 3>tech and related critical things like rare earth medals and

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<v Speaker 3>things are critical to us and to them, but we

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<v Speaker 3>still do business on the stuff is law value added

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<v Speaker 3>or media value added? After all, we don't need to

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<v Speaker 3>produce in US t shirts or cheap toys, right, that

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<v Speaker 3>doesn't make any sense. So we could have a ground

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<v Speaker 3>bargain in which we decouple fully on technology and that's

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<v Speaker 3>the risking and still we do some trade and then

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<v Speaker 3>everybody else Europe, Asia, the Global CEU can do business

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<v Speaker 3>with the US, with the China apart from technology, in

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<v Speaker 3>which led to choose either American AI or Chinese EE.

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<v Speaker 4>That's going to be a full decappening and.

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<v Speaker 1>You're already starting to see those choices being made. Doctor Rabini,

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<v Speaker 1>really appreciate you taking time for us. Neurial Rabini, of course,

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<v Speaker 1>the chairman and CEO over at Rubini Macro Associates