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“Smart Money: How digital currencies will win the New Cold War - and why the West needs to act now”, the book Brunello Rosa has written with Casey Larsen for Bloomsbury Publishing, is available in all major bookshops since October 24th, 2024. The book was named among the Best Economics Books in 2024 by the Financial Times.
This book discusses the fundamental theme of the “geopolitics of central bank digital currencies” in a non-technical manner, and is aimed at the general public. It does not shy away from discussing their most controversial implications, including the risks to privacy, the stability of the banking system as we know it, or the re-organisation of the global financial architecture around these new instruments.
Go to the book's webpage on brunellorosa.com
In their latest podcast Brunello Rosa and Manas Chawla discuss how Trump’s "Liberation Day" ended the globalisation era started by Nixon’s trip to China in 1970.
11 April 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss "liberation day" and the market reaction to it
4 April 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss the concept of "public goods" that Musk and Trump don't seem to understand.
28 March 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss whether Trump will tank the US economy and international financial markets?
22 March 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss the response by US friends and allies to Trump’s reckless policies on NATO.
21 March 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss why Trump with Russia is not a new “Nixon In China.”
7 March 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss how the latest elections make another bastion of Germany’s business model - i.e. political stability - collapse.
28 February 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss how Trump, Vance and Hegseth recently reset US-EU relationship after decades of cooperation.
21 February 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss the ongoing crypto hype, which is likely to be followed by a crypto winter later on.
14 February 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss the ongoing battle on LLMs between OpenAI, DeepSeek and Alibaba
7 February 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss the main takeaways from the recent World Economic Forum in Davos.
31 January 2025
In their latest podcast Brunello Rosa and Manas Chawla discuss the beginning of the second term of Donald Trump at the White House
24 January 2025
In June 2023, Rosa & Roubini Associates has been recognised for the second consecutive year as the best independent macroeconomic research & advisory firm by Corporate Vision Magazine
R&R provides independent research on the global economy
R&R provides independent advice on global issues
by Brunello Rosa
22 April 2025
Last week, we spoke about President Trump having faced his Liz Truss moment, when he had to confront the financial market implications of his tariff announcements on “Liberation Day,” i.e., the contemporaneous selloff in US Treasuries and the US dollar. These were clear signs of investors losing confidence in the US as safe-haven nation. We also spoke about the many similarities between the two episodes, and the recent news gave us reason to return to the Truss experience.
In our recount of the Liz Truss episode, we brought up a key event, namely when the LDI trade of pension funds was at risk of imploding given the sell-off in gilts, forcing the Bank of England to intervene to stabilise the market. Crucial in this episode was that Bank governor Andrew Bailey announced that he would not renew the emergency gilt-buying facility, as it was the government that would need to fundamentally address the causes of the sell-off, specifically the unsustainable nature of the mini budget. As Liz Truss refused to do address this, the only chance she had was to resign, and pass on the leadership to Rishi Sunak, the former Chancellor of the Exchequer.
But a key aspect of that episode was that she considered firing Andrew Bailey during these momentous days, something that luckily she decided not to do. If she had fired Bailey, the Bank of England, even under a different governor, would still have not renewed the facility on time, yet the signal sent to investors would have further destabilised the market.
Apparently, the same situation is happening in the US right now. There have been multiple press reports suggesting that Trump is mulling the idea of firing Jerome Powell as Fed Chair, given his refusal to lower interest rates, in spite of the deteriorating economic conditions caused by Trump’s reckless decisions.
Actually, at a recent event in Chicago, Powell said that the level of tariffs announced by Trump is much larger than had been anticipated by the Fed, and so too may be their economic consequences in terms of reduced growth and higher inflation. This defiant message has reportedly infuriated Trump, who wrote on social media “Powell’s termination cannot come fast enough.”
Now the question is: can Trump legally fire Powell? According to the law, and court interpretations of it, the answer is “no”; not without a cause such as criminal activity or malfeasance. Trump, who himself appointed Powell at the end of Janet Yellen’s term in 2018 (he was then confirmed by Biden in 2022), has previously tested the possibility of doing so in 2019, but did not do so once he realised that it was much harder than expected. (Also, because eventually the Fed did cut rates “preventively” three times in 2019).
The other question is: Will Trump fire Powell anyway, and what would be the effects of this? If Trump tried to force Powell’s hand and force him to resign, or if Trump were to adopt any other form of coercion in order to get rid of Powell, the market would respond very negatively. The Fed is the only credible institution remaining in the US: if it was perceived that Powell’s independence is gone, there would be little left to defend the US Treasuries and dollar.
The final question is: What else can Trump do to reduce Powell’s influence? One theory is that the process of appointing either an existing FOMC member (such as Kevin Warsh) or a new FOMC member as the new Fed chair will begin much sooner than Powell’s mandate’s natural end in May 2026. This way, this other person can always express his or her views after every FOMC meeting, and thereby overshadow Powell’s views and remarks. That is the reason why Treasury Secretary Scott Bessent said that they will begin the appointment process already in the fall, many months before the end of Powell’s term.
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By Charles Brauman
16 April 2025
by Marco Lucchin
15 April 2025
by Brunello Rosa and Nato Balavadze
14 April 2025
by Nouriel Roubini
9 April 2025
by Nato Balavadze
10 April 2025
by Brunello Rosa and Nato Balavadze
11 April 2025
Week: 21-28 April 2025
The Week Ahead: PMIs To Fall In DMs; Consumer Confidence And Sentiment To Decrease In EZ And US
In the US, in April, S&P Global Manufacturing and Services PMIs are expected to decrease to 49.4 (p: 50.2) and to 2.8 (p: 54.4). In April, Michigan Consumer Sentiment is seen falling to 50.8 (p: 57.0).
In the EZ, in April, consumer confidence is seen deteriorating to -15.6 (p: -14.5). In April, HCOB Manufacturing and Services PMIs are expected to decrease to 47.5 (p: 48.6) and to 50.5 (p: 51.0). Composite PMI is likely to fall too to 50.3 (p: 50.9).
In the UK, in April, S&P Global Manufacturing and Services PMIs are expected to decrease to 44 (p: 44.9) and to 51.3 (p: 52.5). Composite PMI is likely to fall too to 50.4 (p: 51.5). In March, retail sales are expected to rise by 1.8% y-o-y (p: 2.2%).
The Quarter Ahead: China Threatens Retaliation Against U.S. Allies; Markets React to Trump's Threat Against Fed Chair Powell
China has warned it will retaliate against any country that sides with U.S. efforts to curb Chinese interests, as the Trump administration uses tariff talks to pressure allies. China’s warning follows reports that Trump plans to use tariffs to pressure U.S. allies to cut ties with Beijing. While pausing tariff hikes on other countries for 90 days, he raised duties on Chinese goods to 145%.
The dollar and U.S. stock futures fell Monday amid fears Trump may fire Fed Chair Jerome Powell, raising concerns over the Fed’s credibility. The drop followed comments from economic adviser Kevin Hassett that Trump is still considering Powell’s dismissal.
Real Economy: Inflation To Ease Off In EZ And UK; Retail Prices To Shrink In US; ECB Delivered 25Bps Cut
In the US, in March, retail sales rose by 4.6% y-o-y (p: 3.5%). IP contracted by 0.3% m-o-m (c: -0.2%; p: 0.7%) and rose by 1.3% y-o-y (p: 1.5%).
In the EZ, in March, headline and core inflation eased off to 2.2% y-o-y (p: 2.3%) and 2.4% y-o-y (p: 2.6%) as expected. In April, IP is rose by 1.1% m-o-m (c: 0.3%: p: 0.6%) and 1.2% y-o-y (c: -0.8%; p: -0.5%). In April, ZEW Economic Sentiment Index contracted by -18.5 (c: 14.2; p: 39.8). Particularly, in Germany, ZEW Economic Sentiment shrank by -14.0 (c: 9.5; p: 51.6).
In the UK, in March, headline and core inflation rates eased off to 2.6% y-o-y (c: 2.7%; p: 2.8%) and 3.4% y-o-y (c: 3.4%; p: 3.5%). In February, unemployment rate remained at 4.4%. In March, retail price index rose by 3.2% y-o-y (p: 3.4%) as expected.
CBs Delivered More Cuts. The ECB cut its main policy rates by 25 bps, i.e i) interest rate on the ‘main refinancing operations’ to 2.40%; ii) interest rate on the ‘marginal lending facility’ to 2.65%; and the key iii) ‘deposit facility’ to 2.25%.
Financial Markets: Stock Prices Increased, Except for US Stocks; US Yields Declined; Dollar Fell; Gold And Oil Prices Were Up
Market Drivers: Fed Chair Powell added to market caution, warning that tariff hikes were larger than expected and would likely lead to higher inflation and slower growth. He signaled no immediate rate cuts, saying the Fed would wait for more clarity. In the eurozone, markets rebounded as Trump delayed new tariffs and the ECB delivered a cut and hinted at further easing.
Global Equities: Increased w-o-w (MSCI ACWI, +0.4%, to 793.42). The US S&P 500 index edged down (-1.5% w-o-w, to 5,282.70). In the EZ, share prices increased (Eurostoxx 50, +3.1% w-o-w, to 4,935.34). In EMs, equity edged up (MSCI EMs, +2.2%, to 1,068.59). Volatility stand around to 27 (VIX S&P 500, 52w avg.: 15.6; 10y avg.: 18.8).
Fixed Income: w-o-w, the 10-year US Treasury yields fell (-17 bps to 4.34%). The 2-year US Treasury yields declined (-20 bps to 3.77%). The German 10-year bund yields edged down (-7 bp to 2.53%).
FX: w-o-w, the US Dollar Index decreased (DXY, -1.4%, to 98.5; EUR/USD +0.8%, to 1.1). In EMs, currencies increased (MSCI EM Currency Index, +1.0% w-o-w, to 1,756.67).
Commodities: w-o-w, oil prices increased (Brent, +3.5% to 67.05 USD/b). Gold prices increased w-o-w (+4.3% to 3,361.87 USD/Oz).
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