NYU Stern School of Business Professor Emeritus & Hudson Bay Capital Senior Advisor Nouriel Roubini explains why he sees the disruption DeepSeek brings to AI as positive for the US economy and global stock markets over the medium term. Roubini also discusses the expectations for “massive amounts of job displacement” from AI and why the US will set the global rules on technology. Roubini spoke with Bloomberg's Jonathan Ferro and Annmarie Hordern.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Tech stocks leading gains this morning after a week of
mixed earnings and news of China's Deep Seek AI breakthrough.
Norie Rabini of NYU Stern and Hudson Bay Capital taking
a bullish stance posting on X earlier this week. In
my modest opinion, the Deep Seek surprise is counterintuitively over
time bullish for US and global stocks, as it is
another positive global aggregate supply shock that increases US and
(00:29):
global potential growth and makes exponential AI even more exponential.
Noria Jones is now for more, always going to see it.
Buddy John Most pick up on that theme. Why do
you think this is good news? And do you believe
it is the real deal? Export compliant only costs five
six million dollars.
Speaker 3 (00:46):
No, of course, in spite of their restrictions, probably got
more GPU Navidia and otherwise the INDUS five k probably
one hundred thousand are in the costs where much more
and so on and so on. It's still it's not
the twenty X improvement. Maybe it's two or three X.
But my point was that if this is true even
(01:06):
to a two three X extent, is one of the
biggest total factor productivity increases in human history literally and
should be increasing potential growth, not just in China. The
reinforce learning can be used by everybody's open source. It's
going to use it, and it's going to increase also
not only the productivity of those who are producer of eyes,
(01:27):
but more importantly of the consumers of the ice. So
if it's really true, and I think it's an iterative process,
we all learn from each other, we all distilled from
each other within the US, within China and US and others.
It increases the fact that the I is going to
change the world for the better. There will be a
significant increase in potential growth in the United States and
also globally. So over the medium term that should be
(01:50):
actually positive for US and global stock markets, not negatives.
So the reaction I think initially a Monday was totally excessive,
and the fact that now there's been some retracing over
the week as people are digesting the news and saying,
this is not the shock that we thought.
Speaker 2 (02:05):
It was positive stocks, positive for the economy, Yeah, for
economic growth. I think it's positive for society.
Speaker 3 (02:12):
Well, you know, there's been a huge debate about what
are the risks of AI as opposed to the benefits
of AI? I think, in part is a political and
philosophical question. We know the information, this information, the risk
of increase cyber warfare eventually is to humanity and so on.
But I would say on net AI, like any other
(02:34):
techological innovation, is going to lead to an increase in
both proditiviy growth, potential growth, and human welfare. We may
be able to live until not ninety hundred hundred and
twenty longevity helped you name it. So it's a benefit
to society overall. And there are side consequences and problems
and risk and where to manage them. And I think
that the regulation of the EYE is going to be
(02:56):
very complicated. Probably like the Internet, We're going to do
it little too late, and then we're going to realize
there are some mistakes.
Speaker 2 (03:02):
If I cliped what you just said and use some
AI and took out some words and replaced the I
with globalization, yeah, when we send the same thing a
few decades ago.
Speaker 3 (03:11):
Well, globalization that is being bashed right now by everybody
led to an increase in huge amounts of welfare for
business of people around the world. Two precisely on changeans
and others and so on, and even in advanced economies
so great and globalization and technology are the same. Thing
is the ways of increasing productivity growth. There'll be a backlash,
But I think that the backlash is going to come
(03:34):
on AI is that there will be massive amounts of
job displacement. Job augmentation will be initially, but then jobs well,
this is what is going to be, and then there'll
be UBI or other things to result it.
Speaker 2 (03:45):
AI do the services. What globalization did to manufacturing is
a question. I keep going back to how many people
are going to be satisfied with just UPI I don't
want to sit at home, do nothing and get paid
by the government. We aspire as human beings to be better,
to improve, to climb the social ladder.
Speaker 3 (04:04):
A lot of people, let's do it much In a
world of scarcity, of course, the dignity of life was
to provide for yourself and for your family and go
and look for water, food shelter every day. In a
world in which scarcity becomes less of a constraint, we
have to produce see less because the robots are going
to do it and we can consume more. You're right
that you guys saying what's the meaning of life in
(04:25):
that situation? It's a philosophical question. And John Manachizin at
thirty said, once we get this technology innovation, it's going
to work only ten hours than sixty hours, and we
all become poets, artists, creators and whatever not. Maybe the
nature of life is going to change. Maybe with AGI,
we have to merge with the machine, because if we
don't merge with the machine, become hyper intelligent and we
become obsolete, and then they's going to be a new species.
(04:47):
It's not going to be almost appiens, but a more robot.
Because it's going to take decades. That's an important philosophical question.
But I would argue provocatively that twenty years from now,
potential growth probably could be eighty percent, sorry eight percent.
An unemployment rate could be eighty percent. We are going
in that direction over time, and then we have to
manage the council and UBI, by the way, cannot be
(05:09):
only national because the winners and losers are going to
be only internal, but so across countries. Does we innovate
get better off compared to those who don't innovate. Can
we have a system of global governance that has a
cross border UBI. I mean, those are big issues global governance, well,
a form of global governance cooperation actually, But if.
Speaker 1 (05:29):
You use deep sea today you can't even find out
things about the Chinese Communist Party, things like tenements square.
How are we supposed to have global governance with these
kinds of countries.
Speaker 3 (05:39):
I think what's going to happen is that over time,
given the geopolitical divisions within US and China, the Wall
is going to be divided in two. There'll be a
group of countries US with its friends and allies and
others in the global ceuth who prefer the economic, monetary, social,
political geopolical system of the US and the West. Someone
the globals are going to go with us, and there'll
(06:00):
be other going to go with the model of China,
but model economic trade in state, capitalist geopolitical security via
right technology and whatever not, and there'll be a split world.
But within the West, if there are and those friends
and allies, if there are winners and losers within countries
or across countries, we'll have a system of transfers. I mean,
we've been subsidizing the defense of our friends and allies
(06:24):
from Asia to Europe for now eighty years because it
was in the global interests of the United States. So
if we need to do global UBI across friends and
allies and others part of our system, we're going to
do it. But that's the world we're going. And China
is doing the same thing. We have to subsidize our
friends and they'll do the same.
Speaker 2 (06:39):
Unpatch a fund of the world to described nothing to
do with it.
Speaker 1 (06:42):
And this is not here, and it's essential. Lisa is
not even here, and it's gone very existential. This conversation
when it comes to this idea of our global regulation
on AI, do you think Trump will use AI right
now in the next four years as a bargaining chip
as you try to work on global realignment.
Speaker 3 (07:01):
When it comes to trade, it will actually buy them.
Right before he left in early January, this new AI
diffusion rule that divides essentially the world in the three
group of countries Tier one, Tier two, Tier three. If
you're part of the global technological order of the United
States and you accept all the rules and the security,
(07:24):
you have access to unlimited amounts of advanced chips of
Navidian others. You have access to all the AI models
you can have access to building the data center, and
you're part of our own technological sphere, and we set
the rule of essentially within that type of Tier one,
we are deciding utterly. It's not a question about regulating
(07:45):
AI but with our friend and ally and even within NATO.
There are only so far eighteen countries that qualify for tierue,
not all NATO countries. Of course, the countries in the
Big Big Five I are part of some of the
other NATO members, plenty of countries are not. Tier two
is mostly the Global South and everybody else. Of course,
(08:05):
China arrivals are three and so on. So the US
is going to set the rules of the global technological order,
and it's going to do it totally unilatterly. And it's
either you're with me, because I'm setting those technologies and
I'm the one who's advancing those technologies, and then you
can use the chips, you can develop the application, you
can do the data center with me, or otherwise you're
in the doghouse.
Speaker 2 (08:25):
I wanted to squeeze one more questions or pains would
be us we ever set it. Europeans would be deeply
upset with this conversation showing no, but.
Speaker 3 (08:32):
They already accepted it. The same thing happened with data centers,
right they tried to find an alternative, they were not successful.
And the hyper scalers are providing those data centers in Europe,
and maybe they are technically in Europe, but they are
controlled by WUS and Microsoft and you name it. That's
already the world we're in.
Speaker 2 (08:51):
I wanted to squeeze in a word on Stephen Moran
just quickly worked alongside the Hudson By Capital who you represent?
This morning published a really interesting pay for the end
of last year activist treasury issuance ITI. Now he's in
power now in the White House, working alongside Donald Trump,
is an incomp adviser. What's going to happen now if
you believe that yan In the former Treasury secretary with
(09:12):
issuing treasuries actively at the front end to have different objectives,
how do we unwind that this time around to even
try well.
Speaker 3 (09:20):
Scott Bsingt in his confirmation hearing was asked about this
and he already said that effectively, given the impact on
long term interest rates, if you phase it out right away,
it's going to be a shock to long bond yials
already going higher. In our paper estimated the shock could
be for the next two or three years or at
least fifty business points. So then all that so they're
(09:42):
going to have to wait and phase it out one
gradually and two interview when bond yields are going lower,
either going lower because maybe growth is slower or because
inflation is lower. So they'll have to opportunistically gradually phase
it out over time. But it's not going to happen overnight.
There already, said Noriel.
Speaker 2 (10:01):
It's always going to see a sir lost to think
about scaring me about the future. Noriel Rabini off NYU
Stern in Hudson Bay Capital. I want absolutely nothing to
do with that.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Tech stocks leading gains this morning after a week of
mixed earnings and news of China's Deep Seek AI breakthrough.
Norie Rabini of NYU Stern and Hudson Bay Capital taking
a bullish stance posting on X earlier this week. In
my modest opinion, the Deep Seek surprise is counterintuitively over
time bullish for US and global stocks, as it is
another positive global aggregate supply shock that increases US and
(00:29):
global potential growth and makes exponential AI even more exponential.
Noria Jones is now for more, always going to see it.
Buddy John Most pick up on that theme. Why do
you think this is good news? And do you believe
it is the real deal? Export compliant only costs five
six million dollars.
Speaker 3 (00:46):
No, of course, in spite of their restrictions, probably got
more GPU Navidia and otherwise the INDUS five k probably
one hundred thousand are in the costs where much more
and so on and so on. It's still it's not
the twenty X improvement. Maybe it's two or three X.
But my point was that if this is true even
(01:06):
to a two three X extent, is one of the
biggest total factor productivity increases in human history literally and
should be increasing potential growth, not just in China. The
reinforce learning can be used by everybody's open source. It's
going to use it, and it's going to increase also
not only the productivity of those who are producer of eyes,
(01:27):
but more importantly of the consumers of the ice. So
if it's really true, and I think it's an iterative process,
we all learn from each other, we all distilled from
each other within the US, within China and US and others.
It increases the fact that the I is going to
change the world for the better. There will be a
significant increase in potential growth in the United States and
also globally. So over the medium term that should be
(01:50):
actually positive for US and global stock markets, not negatives.
So the reaction I think initially a Monday was totally excessive,
and the fact that now there's been some retracing over
the week as people are digesting the news and saying,
this is not the shock that we thought.
Speaker 2 (02:05):
It was positive stocks, positive for the economy, Yeah, for
economic growth. I think it's positive for society.
Speaker 3 (02:12):
Well, you know, there's been a huge debate about what
are the risks of AI as opposed to the benefits
of AI? I think, in part is a political and
philosophical question. We know the information, this information, the risk
of increase cyber warfare eventually is to humanity and so on.
But I would say on net AI, like any other
(02:34):
techological innovation, is going to lead to an increase in
both proditiviy growth, potential growth, and human welfare. We may
be able to live until not ninety hundred hundred and
twenty longevity helped you name it. So it's a benefit
to society overall. And there are side consequences and problems
and risk and where to manage them. And I think
that the regulation of the EYE is going to be
(02:56):
very complicated. Probably like the Internet, We're going to do
it little too late, and then we're going to realize
there are some mistakes.
Speaker 2 (03:02):
If I cliped what you just said and use some
AI and took out some words and replaced the I
with globalization, yeah, when we send the same thing a
few decades ago.
Speaker 3 (03:11):
Well, globalization that is being bashed right now by everybody
led to an increase in huge amounts of welfare for
business of people around the world. Two precisely on changeans
and others and so on, and even in advanced economies
so great and globalization and technology are the same. Thing
is the ways of increasing productivity growth. There'll be a backlash,
But I think that the backlash is going to come
(03:34):
on AI is that there will be massive amounts of
job displacement. Job augmentation will be initially, but then jobs well,
this is what is going to be, and then there'll
be UBI or other things to result it.
Speaker 2 (03:45):
AI do the services. What globalization did to manufacturing is
a question. I keep going back to how many people
are going to be satisfied with just UPI I don't
want to sit at home, do nothing and get paid
by the government. We aspire as human beings to be better,
to improve, to climb the social ladder.
Speaker 3 (04:04):
A lot of people, let's do it much In a
world of scarcity, of course, the dignity of life was
to provide for yourself and for your family and go
and look for water, food shelter every day. In a
world in which scarcity becomes less of a constraint, we
have to produce see less because the robots are going
to do it and we can consume more. You're right
that you guys saying what's the meaning of life in
(04:25):
that situation? It's a philosophical question. And John Manachizin at
thirty said, once we get this technology innovation, it's going
to work only ten hours than sixty hours, and we
all become poets, artists, creators and whatever not. Maybe the
nature of life is going to change. Maybe with AGI,
we have to merge with the machine, because if we
don't merge with the machine, become hyper intelligent and we
become obsolete, and then they's going to be a new species.
(04:47):
It's not going to be almost appiens, but a more robot.
Because it's going to take decades. That's an important philosophical question.
But I would argue provocatively that twenty years from now,
potential growth probably could be eighty percent, sorry eight percent.
An unemployment rate could be eighty percent. We are going
in that direction over time, and then we have to
manage the council and UBI, by the way, cannot be
(05:09):
only national because the winners and losers are going to
be only internal, but so across countries. Does we innovate
get better off compared to those who don't innovate. Can
we have a system of global governance that has a
cross border UBI. I mean, those are big issues global governance, well,
a form of global governance cooperation actually, But if.
Speaker 1 (05:29):
You use deep sea today you can't even find out
things about the Chinese Communist Party, things like tenements square.
How are we supposed to have global governance with these
kinds of countries.
Speaker 3 (05:39):
I think what's going to happen is that over time,
given the geopolitical divisions within US and China, the Wall
is going to be divided in two. There'll be a
group of countries US with its friends and allies and
others in the global ceuth who prefer the economic, monetary, social,
political geopolical system of the US and the West. Someone
the globals are going to go with us, and there'll
(06:00):
be other going to go with the model of China,
but model economic trade in state, capitalist geopolitical security via
right technology and whatever not, and there'll be a split world.
But within the West, if there are and those friends
and allies, if there are winners and losers within countries
or across countries, we'll have a system of transfers. I mean,
we've been subsidizing the defense of our friends and allies
(06:24):
from Asia to Europe for now eighty years because it
was in the global interests of the United States. So
if we need to do global UBI across friends and
allies and others part of our system, we're going to
do it. But that's the world we're going. And China
is doing the same thing. We have to subsidize our
friends and they'll do the same.
Speaker 2 (06:39):
Unpatch a fund of the world to described nothing to
do with it.
Speaker 1 (06:42):
And this is not here, and it's essential. Lisa is
not even here, and it's gone very existential. This conversation
when it comes to this idea of our global regulation
on AI, do you think Trump will use AI right
now in the next four years as a bargaining chip
as you try to work on global realignment.
Speaker 3 (07:01):
When it comes to trade, it will actually buy them.
Right before he left in early January, this new AI
diffusion rule that divides essentially the world in the three
group of countries Tier one, Tier two, Tier three. If
you're part of the global technological order of the United
States and you accept all the rules and the security,
(07:24):
you have access to unlimited amounts of advanced chips of
Navidian others. You have access to all the AI models
you can have access to building the data center, and
you're part of our own technological sphere, and we set
the rule of essentially within that type of Tier one,
we are deciding utterly. It's not a question about regulating
(07:45):
AI but with our friend and ally and even within NATO.
There are only so far eighteen countries that qualify for tierue,
not all NATO countries. Of course, the countries in the
Big Big Five I are part of some of the
other NATO members, plenty of countries are not. Tier two
is mostly the Global South and everybody else. Of course,
(08:05):
China arrivals are three and so on. So the US
is going to set the rules of the global technological order,
and it's going to do it totally unilatterly. And it's
either you're with me, because I'm setting those technologies and
I'm the one who's advancing those technologies, and then you
can use the chips, you can develop the application, you
can do the data center with me, or otherwise you're
in the doghouse.
Speaker 2 (08:25):
I wanted to squeeze one more questions or pains would
be us we ever set it. Europeans would be deeply
upset with this conversation showing no, but.
Speaker 3 (08:32):
They already accepted it. The same thing happened with data centers,
right they tried to find an alternative, they were not successful.
And the hyper scalers are providing those data centers in Europe,
and maybe they are technically in Europe, but they are
controlled by WUS and Microsoft and you name it. That's
already the world we're in.
Speaker 2 (08:51):
I wanted to squeeze in a word on Stephen Moran
just quickly worked alongside the Hudson By Capital who you represent?
This morning published a really interesting pay for the end
of last year activist treasury issuance ITI. Now he's in
power now in the White House, working alongside Donald Trump,
is an incomp adviser. What's going to happen now if
you believe that yan In the former Treasury secretary with
(09:12):
issuing treasuries actively at the front end to have different objectives,
how do we unwind that this time around to even
try well.
Speaker 3 (09:20):
Scott Bsingt in his confirmation hearing was asked about this
and he already said that effectively, given the impact on
long term interest rates, if you phase it out right away,
it's going to be a shock to long bond yials
already going higher. In our paper estimated the shock could
be for the next two or three years or at
least fifty business points. So then all that so they're
(09:42):
going to have to wait and phase it out one
gradually and two interview when bond yields are going lower,
either going lower because maybe growth is slower or because
inflation is lower. So they'll have to opportunistically gradually phase
it out over time. But it's not going to happen overnight.
There already, said Noriel.
Speaker 2 (10:01):
It's always going to see a sir lost to think
about scaring me about the future. Noriel Rabini off NYU
Stern in Hudson Bay Capital. I want absolutely nothing to
do with that.
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