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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, will be available in all major bookshops from October 24th, 2024.
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 why China still needs to provide more fiscal and monetary stimulus to avert deflation
21 October 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss the “bipolar” behaviour exhibited by markets in the last few weeks.
11 October 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss the two conflicts in Ukraine and the Middle East continue, with no end in sight.
4 October 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss why the election in Brandenburg confirmed the AfD’s rise in East Germany
27 September 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss how the Harris-Trump TV debate has re-opened the race for the White House.
20 September 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss why the Cold War between US and China is intensifying.
13 September 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss the difference between defending the “freedom of speech” and spreading misinformation.
6 September 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss why the Israel-Hezbollah military exchanges re-open the risk of a further extension to the conflict in the Middle East
30 August 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss why the US Presidential race will remain heated until the very last minute.
23 August 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss why the recent market rout masks a healthy repricing of valuations
16 August 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss how major central banks are at a turning point, and its implication for global markets.
11 August 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss why the US elections are at a crossroads after the recent events.
2 August 2024
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
21 October 2024
World Liberty Financial, a crypto venture set up by Donald Trump, his three sons, and their long-time business partners start selling its token to qualified investors last week, with the aim of raising USD 300bn. According to press reports, the launch was not particularly successful, as only USD 12mn was raised, 4% of the initial offering.
The FT attributes this poor performance to the scepticism that accompanied this new venture from industry experts, for two reasons. On the one hand, the venture’s business proposition does not seem particularly enticing, as its token “gives holders voting rights on ‘certain WLF Protocol matters’, but confers ‘no economic rights’ in the company and cannot be traded or sold back to the business.” On the other hand, there is the widespread fear that aligning with one presidential candidate only may eventually hurt the crypto industry. As the FT says: “the Trump family’s project risks wrecking their painstaking efforts to rebuild crypto’s battered reputation after the market crash of 2022. Some executives have been sued by US authorities or sent to prison for their failure to protect investors.”
Political polarisation of the digital asset space has become evident since Trump made a 180 degree U-turn on crypto. Initially, he considered the industry a scam to be banned. “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” Trump wrote on Twitter in July 2019, warning investors about the risks of “unregulated crypto assets,” saying they could facilitate “unlawful behavior, including drug trade and other illegal activity.”
Subsequently, Trump has become crypto’s chief advocate, especially after joining forces with Elon Musk, a fervent supporter of the crypto space and the launcher of his own token, the Doge Coin. It was noted that DOGE Is also the acronym of “Department of Government Efficiency,” the government department that Trump would like to offer to Elon Musk, if re-elected in November. On October 15th, Trump wrote on X that “Crypto is the future.”
At the same time, Trump became the chief critic of Central Bank Digital Currencies, or CBDCs, the digital equivalent of cash that many central banks around the world are preparing to issue in coming years as an additional liability, along with banknotes and central bank reserves. As discussed in the book I wrote with Casey Larsen, “Smart Money: How digital currencies will win the new Cold War – and why the West needs to act now,” which will be published this week, Donald Trump said the following during a rally in New Hampshire on January 18th, 2024: “As your president, I will never allow the creation of a central bank digital currency...”
On the other hand, Kamala Harris, like the Democratic party in general, is much more cautious about developments in the crypto industry and is more in favour of CBDCs, although recent reports suggest that support for CBDCs will not necessarily translate into a policy push in their favour, even if she wins the election. In March of 2022, US President Biden signed an executive order on the “responsible development of digital assets,” putting the conditions in place for the development of a US CBDC, the digital dollar.
In any case, the already polarised US political landscape has yet another battlefield wherein the country’s wider divisions are replicated. This does not bode well for the digital asset industry, which will see the co-existence of CBDCs at the bottom of the industry (as the foundation of trust), stablecoins/tokenised deposits as the new form of commercial bank money, and crypto assets as the volatile assets for financial speculation. For these assets to deploy their positive impact on the economy, a coherent rather than balkanised regulatory system is required. But it is more likely that politics will prevail over reason in this field as well.
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by Brunello Rosa
22 October 2024
by Mirko Giordani
16 October 2024
by Lāsma Kokina
10 October 2024
by Shane Gravel
15 October 2024
by Brunello Rosa and Nato Balavadze
17 October 2024
Week: 21 - 27 October
The Week Ahead: PMIs To Decrease In UK, While Being Expected To Increase In EZ; Manufacturing PMI To Rise In US
In the US, in October, S&P Global Manufacturing PMI is expected to increase to 48.2 (p: 47.3), whereas Services PMI is likely to decrease to 54.9 (p: 55.2). In October, Michigan consumer sentiment is seen falling to 68.9 (p: 70.1).
In the EZ, in October, HCOB Manufacturing and Services PMIs are likely to rise to 45.1 (p: 45.0) and 51.6 (p: 51.4). HCOB Composite PMIs seen increasing marginally to 49.7 (p: 49.6). In October, consumer confidence is expected to rise to -12.7 (p: -12.9).
In the UK, in October, S&P Global Manufacturing and Services PMIs are likely to decrease to 51.4 (p: 51.5) and 52.2 (p: 52.4). In October Gfk Consumer Confidence is seen staying at -20.
The Quarter Ahead: Tentative Deal Reached On Boeing; US Budget Deficit Widens, Third Highest On Record
Boeing strike. Boeing and its machinists' union have proposed a deal to end a month-long strike, including a 35% wage increase, $7,000 signing bonus, annual bonuses, and higher 401(k) contributions. Boeing is also addressing cash losses and safety issues, including a 737 Max door plug failure.
US budget deficit widens. The U.S. budget deficit grew to $1.833 trillion in fiscal 2024, up 8% from 2023, driven by rising interest on debt, Social Security, healthcare, and military spending, marking the third-largest deficit in U.S. history.
Real Economy: Inflation Fell In EZ And UK; QoQ GDP Advanced In China; ECB Cut Rates
In the US, in September, retail sales decelerated by 1.7% y-o-y (p: 2.2%).
In the EZ, in September, headline and core inflation rate eased off to 1.7% y-o-y (c: 1.8%; p: 2.2%) and 2.7% y-o-y (c: 2.7%; p: 2.8%). In October ZEW economic sentiment index increased to 20.1 (c: 16.9; p: 9.3). Still in October, industrial production rose to -0.1% y-o-y (c: -1.0%; p: -2.2%). Among the largest EZ economies, in September, headline inflation rate: i) eased off to 1.1% y-o-y (c: 1.2%; p: 1.8%) in France; and ii) fell to 0.7% y-o-y (p: 1.1%) as expected in Italy.
In the UK, in September, headline and core inflation rates eased off to 1.7% y-o-y (c: 1.9%; p: 2.2%) and 3.2% y-o-y (c: 3.4%; p: 3.6%). In August, unemployment edged down to 4.1% (c: 4.1%; p: 4.1%). In September, retail price index decelerated by 2.7% y-o-y (c: 3.1%; p: 3.5%).
In China, in Q3, GDP growth rate advanced by 4.6% y-o-y (c: 4.5%; p: 4.7%). In September, industrial production increased by 5.4% y-o-y (c: 4.6%; p: 4.5%).
CBs cut rates. In the EZ, the ECB cut its main policy rates by 25 bps, i.e. itsi) interest rate on the ‘main refinancing operations’ to 3.40%; ii)interest rate on the ‘marginal lending facility’ to 3.65%; and iii) ‘deposit facility’ to 3.25%.
Financial Markets: Stock Prices Decreased, Except S&P500; UST Yields Edged Up; Dollar And Gold Prices Increased; Oil Decreased
Market Drivers: The S&P 500, Dow, and NASDAQ each gained about 1%, continuing the recovery from early September losses. The 10Y UST yield climbed for the fourth week, as inflation data tempered expectations for rapid interest-rate cuts. Meanwhile, European shares were boosted by the ECB’s second consecutive rate cut, with the press conference fueling hopes for further monetary easing.
Global Equities: Decreased w-o-w (MSCI ACWI, -0.5%, to 856.71). The US S&P 500 index rose (+0.9% w-o-w, to 5,864.67). In the EZ, share prices decreased (Eurostoxx 50, -0.4% w-o-w, to 4,985.45). In EMs, equity decreased (MSCI EMs, -0.4%, to 1,155.12). Volatility decreased fell to 18.26 (VIX S&P 500, 52w avg.: 14.6; 10y avg.: 18.1).
Fixed Income: w-o-w, the 10-year US Treasury yields rose (+1 bps to 4.08%). The 2-year US Treasury yields are virtually unchanged (+0 bps to 3.95%). The German 10-year bund yields edged down (-9 bps to 2.18%).
FX: w-o-w, the US Dollar Index increased (DXY, +0.6%, to 103.49; EUR/USD -0.6%, to 1.09). In EMs, currencies declined (MSCI EM Currency Index, -0.2% w-o-w, to 1,767.04).
Commodities: w-o-w, oil prices decreased (Brent, -7.6% to 73.06 USD/b). Gold prices increased w-o-w (+2.2% to 2,736.40 USD/Oz).
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