Bloomberg, Audio studios, podcasts, radio news. US firms racing for cash to fund the AI build out. Big tech spending on artificial intelligence expected to pass seven hundred billion for the year from just a handful of companies. Noriaan Rabinia Rubini Macro Associates writing on this trajectory, UX exceptionalism strengthens rather than fades. Equity valuations need not rest on bubble dynamics and should deliver solid returns despite episodic volatility. No
real do you understand for more? Noriam, good morning, good morning, really beautiful moment was sending a bit Dave McCormick leaving the studio. You comeing in and he said, you're no longer doctor Doom any more. Your Doctor Boom was changed.
What change has been essentially the most important technological innovation in human history. While everybody's talking about AI and JENNYI, this is only one of the twelve or more industries of the future. You have AI, you have a semiconductors, you have robotic automation and human robots. You have fusion energy, you have quantum, you have defence tech, you have space exploration, fintech, art tech, you have new material science, New cryptography really
is the Cambrian explosion of innovations. Each one of them have to say powered by I. But there are separate verticals, very separate industry, space exploration, exploitation is separate from a I, even if it's fed by I. So I'm going to see US potential growth for the last two decades has been barely two percent. I expected that by the end of this decade is going to be at least four percent.
And the data already suggests that productivity since COVID has doubled in spite of COVID, is already closer to two percent plus, and we have potential growth higher. There will be a significant increase also in equity market returns.
How turn are you about bumps along the way? Christian Laguard are talking about the financial risk that comes along with the likes of Mythos or some of the technological advancements. They could potentially torpedo the financial system, the payment system as we know it. I mean, how much is that potentially a risk on the way to this much more prosperous future.
Well, there are two types of risks. Onto a book in twenty twenty two about megatrides. Where I spoke about circuflationary risk, things that reduce growth and increase inflation. What technology does the opposite, increases growth, reduces inflation. Of course, having tariffs, having restriction to migration, having large budget deficits, claim within pendents of the federal of law, you name it. All those things can be actually reducing growth and increasing inflation.
And the risk coming from a IE existential risk or is having financial attapt types of instability. You know, I've said since April last year that tech tramps stariffs because the impact on growth of tech is two hundred business points my view, going from two to four percent. And if you add in a realistic scenario where market discipline constrains bad policies, because it did constrain them, then the
downside from bad policies at b fifty business points. So is the ratio of two hundred to fifty four to one. So tech tramps Sariff, and I said also tech trams tramps temper tantrums two because all those things are constrained again by market discipline. Every time is in tallow mode flashes out, then the market punishes him and it goes back to chickening out. It happened after April. A second, it happened after Greenland. It has en after the war
with Iran. So market discipline is a very powerful force to considering that policies.
Do you think's appropriate for the FED to hike once or even twice?
It's possible. I would say the economy is going to ask strengthen. Inflation probably is going to slow down because now all prices and not one hundred are close to eighty, and for food prices, fertilizer, things going to gradually fall him and there'll be multilnecks. So it's kind of like a close call. But I would say it doesn't really matter very much because you know, the economy is powered by AI and technology and these massive tailwinds. They don't
depend very much on polystrates. A polystrate is a fifty business once high or lower. I don't think the tech woman is going to really matter very much. And were already saw doing the world we run then when all was at one hundred the stock markeroage old hamahis in spite of that, inspite of the words about what the FED does, So I would say people obsessed with the FED, whether it's fifty business points higher. Whether it's right now,
what's the difference. The key story is tech boom and that's going to be the most important first order impact of anything else.
That's the headline from this conversation. Narea always fantastic to catch up with this, just apect the obvious question, what is high? Can interest rates actually achieve well?
And right now stock markets seem to be moving on does it actually slow anything down? Ultimately, a task force will answer that question, John.
You want to run a task first? You fancy that?
Oh you know he wants to change things. But I would say one important point.
Yeah, twenty seconds and one very quick and okay point.
He argues that because of growth fed funds, it should be lower because the inflictions will be lower, but the potential growth is higher. They could live in a real rate what short and long is higher? So a bit of a wash on the policy rates and on a long rate.
Norean Web said, as always, it's going to say thank you everybody that every Pinny Macro associates