Dollar Dominance, Tariffs, and an Equity Rebound

29 snips

May 14, 2025

Guest

Wei Li

Guest

Ken Rogoff

Ken Rogoff, a Harvard professor and former IMF chief economist, discusses the precarious status of the dollar as a global reserve currency and the potential repercussions of U.S. policies on its strength. Wei Li, BlackRock's Chief Global Investment Strategist, dives into the impact of recent tariff cuts on U.S.-China relations, stock market rebounds, and ongoing concerns about persistent inflation. Together, they analyze the intricate interplay between economic strategies, investor sentiment, and the shifting landscape of global finance.

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INSIGHT

Globalization in Retreat

Globalization has shifted from hyperglobalization to slowbalization and retreat.
Political factors, trade wars, and supply chain constraints are reshaping global economics.

INSIGHT

Higher Interest Rates Threaten Debt

Normalization of interest rates threatens the US heavily indebted system.
Rogoff predicts real 10-year yields will settle near 1.5%, higher than recent lows, raising debt servicing costs.

ADVICE

Prepare for Inflation and Debt Costs

Rising interest rates mean markets are demanding more compensation for US debt.
Rogoff warns inflation acts like a partial default on US debt and expects more inflation ahead.

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Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyMay 14th, 2025
Featuring:
1) Ken Rogoff, professor at Harvard University and former IMF Chief economist, joins for a two block, extended discussion on his new book, "Our Dollar, Your Problem," the "exorbitant privilege" of the dollar as the global reserve currency, and how the Trump administration is expediting the unseating of the dollar's position on the global stage. Ccurrency-centric headlines out of South Korea suggest that the dollar’s consolidation this month may be imperiled if signs grow that the US administration is now shifting focus from trade to exchange rates. At the heart of the Dollar Index’s immediate decline is a lingering concern that the Trump administration may pursue policies that involve countries selling the dollar to cure perceived economic imbalances stemming from a strong currency.
2) Wei Li, Chief Global Investment Strategist at BlackRock, joins for an extended discussion on tariffs causing further contractions, a US stock rally, and the fear of sticky US inflation. The stock recovery in stocks got an extra boost this week after the US and China cut trade tariffs, US inflation slowed, and earnings came in better than expected. Wall Street strategists are skeptical about how much further stocks can run.
3) Lindsay Rosner, Head: Multi-Sector Investing Goldman Sachs Asset Management, talks about signs of bottoms up in the credit world, upside inflation risks, and consumer strength's effects on economic growth. The yield on 10-year Treasuries advanced one basis point yesterday and the Bloomberg Dollar Spot Index fell as the Federal Reserve is expected to stay put in evaluating potential implications of tariffs.
4) David Bailin, CEO at CIO Capital and former Chief Investment Strategist at Citi, brings us into the market open and talks about his belief the US could enter a "Compression Recession" that could blindside everyone. Tensions around President Trump's trade war cooled and inflation data showed limited impacts, but there could be underlying risks to the economy.
5) Lisa Mateo joins with the latest headlines in newspapers across the US, including an NYT story on rival nations recruiting talent cast aside by American universities and a WSJ story on workers feeling overpaid.

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