← Bloomberg Talks
Bloomberg Talks
Chairman & CEO at Roubini Macro Associates Nouriel Roubini Talks Geopolitics, AI Takeover
00:14:57
Loading summary
Transcript35 lines
- [00:00]
Host
Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R and D spend small cap stocks with improving operating margins or the S&P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on Public, you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index. You can even backtest it against the S&P 500. Then you can invest in a few clicks, go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by Public Holdings Brokerage Services by public investing member FINRA, SIPC advisory services by public advisors SEC registered advisor crypto services by ZeroHash sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures@public.com Disclosures.
- [01:15]
Nouriel Roubini
Bloomberg Audio Studios.
- [01:17]
Interviewer
Podcasts, Radio News nor Roubini now joins us. His wonderful books, all that he's done for me over the years, going way, way back pre crisis is, well, let me just get bitcoin out of the way. I don't waste time on it. We've had not one, but two of our guests emphatically state Roubini's right, it's going to 10,000. Is Bit Dog going down from 60,000 to 10,000?
- [01:45]
Nouriel Roubini
I think it doesn't matter. I don't make predictions. It could go significantly lower, could stay where it is. But the point is that, you know, bitcoin is down from its peak by 50%. The other top 10 cryptocurrencies are down between 60 to 90%. You know, Melania coin and the Trump coin are down 97, 99%. Even worse than fart coin is down only 95%.
- [02:13]
Interviewer
Should we say that here?
- [02:14]
Nouriel Roubini
Well, you know, it's a traded currency, so. And you know, the NFT index is down 95% from the peak. So was a bubble as far as whether Bitcoin goes much lower or not. Okay, who cares? Who cares?
- [02:29]
Host
Nouriel, you were saying that you've just come off three weeks of travel.
- [02:33]
Nouriel Roubini
Yeah.
- [02:34]
Host
A, where were you? And B, what did you learn?
- [02:37]
Nouriel Roubini
Well, I spent a good amount of time between Saudi Arabia, Israel, Dubai and Abu Dhabi. I would say that foremost on people's mind was the question of whether there will be another conflict between Israel and the US on one side and Iran debated in Israel, in Saudi throughout the Gulf. We don't know there are negotiations. I would say the Israeli view is that probably it's not just an issue about nuclear bomb, but also about the missiles, ballistic missiles and the regional proxies. While Trump might just cut a deal on the on the nuclear bomb alone, that will leave Israel in a weaker position. But we'll see what are going to be the results of those negotiations.
- [03:18]
Host
Other than geopolitics, there's been a move, just kind of feeling that the US Maybe has lost a little bit of its exceptionalism. There are other opportunities to invest outside of the U.S. we've seen that over the last six to 12 months. Is that something you sense in your travels?
- [03:35]
Nouriel Roubini
Oh, yes or no. What I feel is people say we don't like the U.S. in public and then they invest in the U.S. i mean, throughout the Gulf, whether it's Saudis or Emirates or Qataris, there's an alternative to the United States. And I think for a good reason. You know, I've argued that actually I'm a techno optimist. The US Potential growth by the end of this decade is going to be 4%, not 2. And if you had American exceptionalism when growth was 2% and the S&P was returning you 12% including dividends for 20 years and NASDAQ 16%, if growth is even only 3, let alone 3 and a half and 4, then returns have to be even higher. So yeah, in the short term there is now volatility, but that's short term volatility. If you look in the medium term with 3.4percent growth and will be there because of technology and US is number one together with China in all of the industries of the future is not just a there are about 15 other ones, then American exceptional is not over. Actually it's going to be reinforced over time and there is no other place to invest than the United States because China is risky and uninvestable for lots of good reasons.
- [04:40]
Interviewer
Nora Roubini with us Folks with bulletproof academics, whatever your political view is, it's truly outstanding. International economics. Noor Roubini on tariffs. I'm reading the Morgan one volume on William McKinley. Trump is fixated on the Gilded Age and the benefits of tariffs. I don't buy it for a minute and I'm looking for McKinley's Buffalo pivot where politicians walk back the talk. Are we going to see in 2026 tariff reduction by the President in some manner like a buffalo pivot?
- [05:17]
Nouriel Roubini
Oh, it already happened in 2025 and it's going to be more of it in 2026. You know, on April 2nd he announced average effective tariffs of 30% as opposed to the pre April cycle liberation day 3%. But they said right away that market discipline is going to force him to chicken out and back down. And two weeks into that announcement Nasdaq was down 20% S&P 1510 year treasury yield were up 80 basis points, high yield spreads up 150. The dollar started to go free fall and he panicked and he panicked. He started to do trade deal and he gave the job to Scott Besson. And guess What? The average U.S. tariff right now is not 30%, it's 14 and falling because there is a inflation affordability crisis. And every day they cut back the tariffs on aluminum, on coffee, in cocoa and whatever. They're desperate and therefore they already chickened out in 25 because the market forced them. They'll do more of it this year because they're of course midterm election and they need to try to boost the economy and reduce inflation. So tariffs are going down, not up.
- [06:22]
Host
Has the whole tariff discussion Nouriel, maybe permanently or at least in the intermediate term negatively impact just trade the US between various partners? Or is this something that everybody can just get past, do you think?
- [06:37]
Nouriel Roubini
You know there's been some short term volatility, there's been some shrinkages of our inputs from the rest of the world. My view is actually the US trade and current account deficit regardless of tariffs is going to widen because from a macro point of view the trade balance is not exports minus imports, it's savings minus investment. And US is in the middle of an investment boom driven by a high technology of the future. It's like an emerging market fund oil or something where you have an investment boom and your domestic private and public savings are lower then you have a current deficit. So our current is going to become larger, not smaller even if you have 30% tariffs. That's a macro view and it doesn't matter because the inflow capital equity investment to finance it, fdi VC startups, you name for the investment is going to finance that. So not only American exception is not over, the exorbitant privilege of the US dollar is not over and even the weakness of the dollar is only short term over the medium term with 4% growth, the dollar is going to be much stronger and the Euro is going to be much weaker.
- [07:38]
Interviewer
Are you predicting an advancing dollar from here or does it have to weaken down and then we get a bit in the dollar?
- [07:43]
Nouriel Roubini
Listen, in the next few months it could weaken more depending on relative monetary policy. But I'm asking myself, suppose you are 2030 at the end of this decade the US growth is 4 and Eurozone is stuck at 1% real interest rates, real exchange rate depends on real growth rates.
- [07:58]
Interviewer
Just because the time the euro has.
- [08:00]
Nouriel Roubini
To be well below parity.
- [08:01]
Interviewer
Questionnaire was brilliant and I got this in Are we stealing investment from other parts of American enterprise with all this money going into AI technology and data centers?
- [08:15]
Nouriel Roubini
No, I don't think so. I don't think so. Because first of all to build AI data centers there's a supply chains of construction, of equipment, of everything, cooling, heating system, you name it, the chipset, supply chains and so on. And you know, and this booming CAPEX is maintaining economic growth strong and that's going to be good for the economy and for many other sectors. And secondly, it's not just the hyperscaler. Max 7 are doing investment AI. If you are any S&P 500 firm today and you don't have a strategy, you're dead because you could be disrupted by a competitor or by a tech firm or by whatever. So everybody's trying to play with AI now we're not yet seeing the significant increases in productivity growth. We see them at a macro level by the way, but we don't see them for every firm. But profit margins for every S&P 500 firm has increased. Real revenues for all S&P 500 firms have gone up since ChatGPT has been launched by 15% so 5% per year. So there are these signs that there is this increase in productivity growth across across the economy. So everybody has to have a AI strategy. So everybody's doing CapEx is not just a hyperscaler story.
- [09:27]
Host
Nouriel, can this economy grow at 4% as you suggest with no immigration? Do we need an immigration policy that allows population growth?
- [09:37]
Nouriel Roubini
Well, we need it because we have a bottleneck of skilled labor. You know, TSMC is building a factory in Arizona. I spoke with people in Taiwan, I said that we don't have the skilled worker in Arizona. So they have hundreds or thousands of engineers of TSMC going there initially for a few months. Now they'll have to be there for a few years. So you need a more intelligent immigration policy with more H1B visa so that skilled Workers can work in the United States. But even if we had net migration that was close to zero, I think the increases in productivity growth driven by the clouds of the future and is One of the 15 of them everybody's obsessed with AI is just one piece of the story. That are 15 other sectors where there is a productivity growth because of technology of the future. So that's going to lead to an increase in productivity growth regardless of job creation. That's why there is a gap between GDP and jobs, because there's a booming productivity growth. So that's what's already happening. We don't have the workers. We are cutting back on that migration. We are deporting people and growth is actually accelerating rather than decelerating.
- [10:39]
Interviewer
Nur Roubini with us folks who welcome all of you across the nation. We welcome you worldwide as well. From Istanbul to Tehran to Tel Aviv and then on to Italy, which is Nora Roubini out of a suitcase in his childhood. You have a perspective old world, new world like no one I know because of your tumultuous childhood and your superior brilliant academics at Baconian and others. Nor how do you see America after this second term of President Trump? Do we go back to the processes, for example, you had serving in the White House with Bill Clinton. Do we go on to a new populism? How do you see us after Trump?
- [11:25]
Nouriel Roubini
You know, I think that Trump is going to be more a temporary exception rather than radical change of the U.S. yes, there is a little bit more populism because there are plenty of people left behind. Some of them vote for the progressive, some of them vote maga. But there'll be this strong increasing growth. I think that after midterm election, if the GOP loses the House, Trump is going to be a lame duck. Anybody from J.D. vance to Marco Rubio to a bunch of other are going to say I want to run great job president for two terms. Even the Supreme Court is not going to allow him to run for a third term. And therefore, you know, he's going to be lame duck and we're going to whoever is going to be elected, maybe with the exception of J.D. vance, but even a Marco Rubio is going to be somehow in between the traditional, you know, George Bush Republican Party and more populist one. So. And with stronger economic growth, I think some of these backlash against liberal democracy and free market is going to shrink. There'll be some of the backlash, but I think with higher growth, some of these concerns about inequality and other things are going to be lessened over Time.
- [12:31]
Host
Noria, with all your travels and all your contacts around the world, is the US leadership position which it's held generally uninterrupted since the end of World War II, is that changed? Is that done? Is that, is that framework no longer in place, do you think?
- [12:49]
Nouriel Roubini
Well, you know, even our friends and allies in Europe, in the Middle east, in Asia are unhappy because the US is behaving like, like a bully. But NATO is still there. We're going to find deals on trade and other things. And think about the Europeans. Do they really want to use the defense tech of China and AI of China and be in the Chinese orbit? Of course not. So they have no option. And they'll have to essentially spend more on defense, be part of NATO, buy even more American weapons. And there are going to be two technological stocks are going to be completely the risk because there's the US stock and the Chinese stock. And if you are friends alive the US you don't to be subject to the spying and being within the firewall of of China. So you have Europe and friends and allies have no choice. They have to go. We are technology, we are defense. We have our own system with our economic channels. They'll do some trade with China, but nonsense stuff that is really sensitive. They have no option by going with the US.
- [13:51]
Interviewer
Noah Roubini and Richard Claire to have sat in this chair. Adam Posen sat in the chair and others to discuss the next chairman of the Fed. Are you comfortable with Mr. War? Should you particularly comfortable with him that he doesn't have the academic say of Richard Clarida? He wouldn't know DSG theory if it hit him over the head.
- [14:12]
Nouriel Roubini
That doesn't bother me as much. And he was at the Fed before and even Powell has done well while being a lawyer. I'm more concerned about these views. The view that you can because of I reduce the Fed funds rate is wrong. Because even if I will eventually reduce inflation is going to increase potential growth. So the equilibrium real our star is higher while the nominal because of inflation could be lower. And it's going to be a wash between the two. So on one side the real world implies high real rates. On the other side lower inflation implies lower nominal and it's a wash between the two. So that doesn't justify lower Fed funds rates.
- [14:51]
Interviewer
You could dynamics here, Waller, I asked him do we need two our stars because we got an American or flat in their back? That is not part of this AI productivity experiment. Are we living to our stars right now?
- [15:05]
Nouriel Roubini
Well, we live in what everybody refers to as a K shaped economy. The top 10 to 80% is doing very well. The bottom 50% struggles from paycheck to paycheck. Even if we're at full employment, these people have jobs. But even if you were to cut policy rates in an economy near full employment, you're going to fuel on inflation and inflation is going to hurt more the working class than otherwise. So the solution is not going to be reducing the policy rate. If you are worried about inequality, you have to do stuff like providing education, skills retraining and all the things we're not doing to make sure that those were left behind are not left behind is not the job of monetary policy.
- [15:44]
Interviewer
Your PhD advisor Jeff Sachs did the book 15 years ago, folks, predicting all of this educational failure in America. I got 20 seconds. When's the next Roubini book?
- [15:55]
Nouriel Roubini
I usually write one every decade. Crisis Economics was 2010. Megatron was 2022. So maybe something on AI and how the world is going to change, but it's going to be by the end of the decade, not not anytime soon.
- [16:13]
Advertisement Voice
With Bali from Ishares, you get access to both monthly income and growth potential in one simple etf. It's the best of both worlds. Discover Bali Ishares Large Cap Premium Income Active ETF iShares the market is yours. Visit www.ishares.com to view a perspective for investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Risks include principal loss and the use of derivatives, which could increase risks and volatility. Monthly income is not guaranteed. Prepared by BlackRock Investments, LLC.