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SMART MONEY
Best Economics Book 2024 - Financial Times
“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
PODCAST
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
News
Best Independent MacroEconomic Research & Advisory Firm-2023
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
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R&R Weekly Column
Trump Faces “Liz Truss” Moment and Backs Down On Tariffs
by Brunello Rosa
14 April 2025
Last week we witnessed one of the most spectacular U-turns in recent policymaking history, with the Art-of-The-Dealmaker-in-Chief Donald Trump backing down from the bombastic announcements on tariffs he made on Liberation Day, on April 2nd. President Trump announced a 90-day moratorium on the application of tariffs for those countries that did not retaliate, while increasing tariffs on China to 145%. He made an exemption for smartphones and other consumer electronics from these so-called “reciprocal tariffs.”
What convinced him to carry out such a spectacular change of direction? Behind-the-scenes reconstructions abound, but the key is that Trump had his first true reality check since the beginning of his second term in office, something that clearly his closest advisors and collaborators are unable to provide him with on a daily basis.
Trump and his administration, which live in a sort of “cult of personality” (as evidenced by the mandate to wear a pin shaped as a golden bust of the boss), believe that they can bully everybody and everything (countries, institutions, rules, etc..) because Trump is at the helm of the strongest country that has ever existed, the only true worthy descendent of the Roman empire, which justifies the so-called “American exceptionalism.”
But last week, Trump was reminded that something bigger than him and his administration exists, which can dictate the rules even to the most powerful country on earth: the market. Until a few years ago, politicians around the globe thought that this was true only for the weaker countries, such as emerging markets, or weak developed economies such as Italy, which live day in and day out with the fear of market discipline and bond vigilantes – the “dictatorship of the spread”, they call it.
But in 2022, the UK learnt that this was true also for the richest and most advanced economies such as the British one. The prime minister Liz Truss presented a “mini budget” comprised of unfunded tax cuts, which was supposed to realise the post-Brexit pipe dream of transforming the economy into a sort of “Singapore on Thames.” The market instead thought that this mini budget would have soon led to a debt crisis. UK gilts sold off while also the British pound lost ground.
The speed of these market movements caused the liability-driven investments (LDIs) by pension funds to become unsustainable. Within hours, the Bank of England had to step in with an emergency facility to purchase gilts and restore calm in the market. The BOE governor, Andrew Bailey, said that the facility was temporary and would not be renewed: politicians needed to back down from their unfounded promises, or else the system would have collapse. Liz Truss had little choice but to resign, and make room for Rishi Sunak, the former Chancellor, a much safer pairs of hands to manage the economy. Actually, in a recent interview Truss admitted that she mulled the idea of sacking Bailey over that weekend. Fortunately, she decided otherwise.
In the US, the situation was similar: the raft of fire-sales triggered by Trump’s announcement on April 2nd had led to the destabilisation of the delicate arbitrage mechanism between cash bonds and the futures on Treasuries (the so-called “basis trade”). Similar to the UK episode, only two options became possible: the Fed stepping in to purchase US Treasuries and the USD (or equivalently, cutting rates with an emergency inter-meeting move), or Trump blinking and backing down.
Fed Chair Powell did well in resisting the pressure to cut rates coming from the White House. At the time in which the Fed has remained the only credible economic institution in the US, with the White House and the Department of Treasury perceived to be the cause of the market turmoil, if Powell had ceded to Trump’s pressures he would have served the country very poorly. He would even have been serving Trump poorly by doing so, as Trump would then have had to deal with a systemic crisis of epic proportions.
What’s the difference with the UK case? In the UK, as was the case of Italy in November 2011, when Berlusconi was forced to resign after bringing Italy to the brink of default the mechanisms existed to force the Prime Minister to resign. In the US, such a mechanism does not exist, which explains why on Friday 11 April markets sold off again. The authors of the disaster are still at the helm of the ship, and the war continues.
LATEST RESEARCH
Turkey’s Geopolitical Expansion: Strategic Ambitions, Balancing Acts, and Multipolar Realities
by Marco Lucchin
15 April 2025
Global 2025 Outlook After “Liberation Day” - Rising Risks of A Global Recession and a Market Collapse
By Brunello Rosa and Nato Balavadze
11 April 2025
Preview: ECB To Cut Rates in April, Amid US Tariffs and A Stronger Euro
by Brunello Rosa and Nato Balavadze
14 April 2025
The Impact of the “Liberation” Day Tariffs on the US and Global Economy and Markets
by Nouriel Roubini
9 April 2025
A Cyclical Review of the US Economy Amid Trump’s Economic Shocks
by Nato Balavadze
10 April 2025
Looking Ahead
The Week Ahead
The Quarter Ahead
The Quarter Ahead
Week: 14-2 April 2025
The Week Ahead: Inflation To Ease Off In EZ And UK; Retail Prices To Shrink In US; ECB To Deliver 25Bps Cut
In the US, in March, retail sales are likely to rise b 1.3% m-o-m (p: 0.2%). IP is expected to contract by 0.3% m-o-m (p: 0.7%).
In the EZ, in March, headline and core inflation are seen easing off to 2.2% y-o-y (p: 2.3%) and 2.4% y-o-y (p: 2.6%). In April, IP is likely to contract by 0.4% m-o-m (p: 0.8%). In April, ZEW Economic Sentiment Index is expected to drop to 14.2 (p: 39.8). Particularly, in Germany, ZEW Economic Sentiment is seen falling to 5 (p: 51.6).
In the UK, in March, headline and core inflation rates are likely to ease off to 2.7% y-o-y (p: 2.8%) and 3.4% y-o-y (p: 3.5%). In February, unemployment rate is expected to remain at 4.4%. In March, retail price index is seen rising by 3.2% y-o-y (p: 3.4%).
CBs To Deliver More Cuts. The ECB is seen cutting 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%.
The Quarter Ahead
The Quarter Ahead
The Quarter Ahead
The Quarter Ahead: Trump Exempts Smartphones And Computers From New Tariffs; Trump Envoy Meets Putin
Trump Tariffs. President Trump has exempted smartphones, computers, and various tech components from his new 145% tariffs on Chinese imports. The exemptions aim to ease pressure on companies like Apple and allow time for shifting production to the U.S., according to the White House.
Witkoff meets Putin in Russia. President Trump’s envoy, Steve Witkoff, met with Russian President Vladimir Putin in Saint Petersburg to discuss the war in Ukraine. Despite multiple rounds of talks, Trump’s push for a ceasefire has yielded no major concessions from Moscow. During the weekend, Russia delivered a massive attack on the Ukrainian city of Sumy.