Speaker 1: Bloomberg Audio Studios, podcasts, radio news all.
Speaker 2: Are you here for more, Nourreel Rubini, chairman and CEO
Speaker 2: of Verbini Macro Associates, who's also not psyching himself out, Noreel,
Speaker 2: are you on the positive camp here? And if so, how.
Speaker 3: Well I mean in the positive camp in the following sense.
Speaker 3: I've been arguing for weeks now that tech trum start
Speaker 3: because there's a revolution coming from AI and other does
Speaker 3: and industry of the future. It's an AI, robotic automation,
Speaker 3: a siliconductor, fintech, defence tech, green tech, act tech, you
Speaker 3: name its space exploration quantum. This thing is going to
Speaker 3: increase US potential growth from the current two percent to
Speaker 3: a level I expect by the end of this decade
Speaker 3: closer to four percent. So two hundred business points increasing
Speaker 3: productivity growth instead, even in the worst scenario on trade,
Speaker 3: domestiction to migration, and we're going to escalate the potential
Speaker 3: heat to potential growth could be maybe fifty business points.
Speaker 4: So the ratio between two hundred.
Speaker 3: Business points up because of technology and negative fifty basis
Speaker 3: points is four to one. So tech Trump studies and
Speaker 3: therefore the US American exceptionalist is going to remain in
Speaker 3: spite of bad trade policies, in spite of bad migration policies.
Speaker 3: So in that sense autistic that not just in the
Speaker 3: short run, those of the medium term. We're going to
Speaker 3: avoid the severe reception and you have to remain strong.
Speaker 2: And you know, so tech trumps tariffs and at the
Speaker 2: same time, like for health Ham, it was the regulation
Speaker 2: trumping tariffs as well. At this point, what about the
Speaker 2: issues with the dollar in the back end of the curve,
Speaker 2: so higher yields and weaker dollar, and if we move
Speaker 2: out of dollars a reserve currency, even on a margin,
Speaker 2: how do you factor that in?
Speaker 3: Well, regardless the dollar, there are different types of investors.
Speaker 3: There are those that are fixing investors, foreign reserve asset
Speaker 3: managers of the wealth funds where in fixed income some
Speaker 3: of them are worried about the dollar because of course
Speaker 3: we have undermined the credibility of the US dollar. If
Speaker 3: I'm right that we're going to go from a two
Speaker 3: to four percent growth in the US, there will be
Speaker 3: a massive capex an investment boom that's already occurring right now.
Speaker 3: It's a mac seven hyperscalers firms in a NASDAC but
Speaker 3: even nontech firms have to have an AI strategy and
Speaker 3: how they're going to do less investment because of because
Speaker 3: of trade restriction, No way. So we have massive tail
Speaker 3: winds imply larger investments shore GDP and capital inflows that
Speaker 3: are going to be FDI, green Field and brown Field,
Speaker 3: and portfolio investment into the equity market. So the dollar
Speaker 3: can weakend because fixed income folks are nervous about US
Speaker 3: meddling with the reserve currency role of the dollar. But
Speaker 3: that massive inflow of capital to finance this investment boom
Speaker 3: is going to imply get Any weakening of the dollar
Speaker 3: is going to be very gradual. I don't think there'll
Speaker 3: be a collapse in the value of the dollar, and
Speaker 3: I don't think that the US dollar is going to
Speaker 3: be undermined to any significant extent as a global reserve currency. Yes,
Speaker 3: the Chinese and our enemies are going to try to
Speaker 3: create alternative payment rails that are not based on the
Speaker 3: US dollar substitute for sweets and so on, but that'll
Speaker 3: be a very very gradual process.
Speaker 1: I am curious though, as we go through this process,
Speaker 1: Doctor Rubini, there's been a lot of talk because not
Speaker 1: just with the dollar, but when you talk about the
Speaker 1: technological advancements or the potential there. These two aren't necessarily
Speaker 1: divorced from one another. And someone was bringing up kind
Speaker 1: of you go back, you look at the other big
Speaker 1: sort of the Industrial Revolution, obviously the digital revolution a
Speaker 1: few decades ago, and this idea that it wasn't just
Speaker 1: about one country leading the charge. In fact, a lot
Speaker 1: of the countries that led the charge ended up not
Speaker 1: being the primary beneficiaries down the road, Great Britain.
Speaker 4: For example.
Speaker 1: With the Industrial Revolution, of course, most of the benefit
Speaker 1: it ended up being to what within a burgeon in
Speaker 1: the United States of America. Is there a chance that
Speaker 1: we could see that play out again where China and
Speaker 1: deep seek and everything else affiliated with that becomes the
Speaker 1: real beneficiary.
Speaker 4: I don't think so. For the following reason.
Speaker 3: In these twelve Industries of the future, US currently is
Speaker 3: number one, China is number two in all of them
Speaker 3: but green tech and electric vehicles, the mobility revolution. Secondly,
Speaker 3: in the past innovations, where loger itmay, they've spurt of growth,
Speaker 3: say after the first Internet revolution in the nineties, US
Speaker 3: god goes from one to three, then it flattens out
Speaker 3: and goes back to two. Instead, the nature of this
Speaker 3: revolution in technology lead by eye is exponential. US growth
Speaker 3: today two percent, four percent by the end of this decade,
Speaker 3: six percent by the end of the next decade. When
Speaker 3: it's exponential, you have a first mover advantage, and whether
Speaker 3: it's first because of economy of scale and net remains
Speaker 3: first and whoever is second remains a second.
Speaker 4: China is going to do well, but.
Speaker 3: The idea they're going to catch up with US, I
Speaker 3: think is totally far fetched.
Speaker 4: And everybody else is not even number three or four.
Speaker 3: There are some pockets of excellence in Europe, in Israel,
Speaker 3: in India, in Japan, in Taiwan, in South Korea, and
Speaker 3: so on and so on. So in this game about
Speaker 3: the technology of the future, US remains number one, China's
Speaker 3: going to be number two, and everybody else is going
Speaker 3: to be adopting this new technology. And by the way,
Speaker 3: you don't need to be innovating. Even if you adopt
Speaker 3: the technology, you'll have some productivity growth. You know, after all,
Speaker 3: in sub soual And Africa there has never been any
Speaker 3: iPhone or smartphone produced, but even a poor farmer using
Speaker 3: a smartphone can do lots of business transaction, selling the crop, ensuring, financial,
Speaker 3: and so so upon. In the US is going to
Speaker 3: remain number one, Chinese number two, and everybody is going
Speaker 3: to be behind but adopting either the technology of the
Speaker 3: US or those of China and innovating either with US
Speaker 3: or with China. But you're going to get first mover advantage.
Speaker 3: The second ones are not going to catch.
Speaker 1: Ups in terms of global economic conditions and whatever structural
Speaker 1: changes are taking place in Norriel. Do you get a
Speaker 1: sense here that the lack of international cooperation, at least
Speaker 1: as it stands right now visa these what we saw
Speaker 1: over the last few decades, that that might actually be
Speaker 1: a benefit to the United States or could it actually
Speaker 1: hamper us?
Speaker 3: Well, the reality is that the global system is going
Speaker 3: to be divided in two areas. One with US is
Speaker 3: friends and allies, and some of the countries in the
Speaker 3: global South, said the Indians of the world are going
Speaker 3: to be following the economic, monetary, trading, financial, technological, and
Speaker 3: I would say even the military and security system of
Speaker 3: the United States. Instead, China, Russia, North Korea, Iran, Cambodia,
Speaker 3: Pakistan and a few others are going to be in
Speaker 3: the technological and economic and trading area.
Speaker 4: Of China.
Speaker 3: Now, if we reach an agreement on China to partially
Speaker 3: escalate with the risk the relationship on what's strategic, high
Speaker 3: tech and related critical things like rare earth medals and
Speaker 3: things are critical to us and to them, but we
Speaker 3: still do business on the stuff is law value added
Speaker 3: or media value added? After all, we don't need to
Speaker 3: produce in US t shirts or cheap toys, right, that
Speaker 3: doesn't make any sense. So we could have a ground
Speaker 3: bargain in which we decouple fully on technology and that's
Speaker 3: the risking and still we do some trade and then
Speaker 3: everybody else Europe, Asia, the Global CEU can do business
Speaker 3: with the US, with the China apart from technology, in
Speaker 3: which led to choose either American AI or Chinese EE.
Speaker 4: That's going to be a full decappening and.
Speaker 1: You're already starting to see those choices being made. Doctor Rabini,
Speaker 1: really appreciate you taking time for us. Neurial Rabini, of course,
Speaker 1: the chairman and CEO over at Rubini Macro Associates