Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, February 17, 2023

AI Summary. Pandemic-era government relief payments helped Americans, particularly lower-income Americans, strengthen their finances, and the rebounding job market let lower-paid workers command higher pay. Wages for many white-collar professionals have not outpaced inflation, while wages and wealth for lower-paid workers have risen more.

Justin Lahart, Spencer Jakab, et al Wall Street Journal
Date Posted:

Households earning under $50,000 a year expect to increase their spending by 8% next year, while households earning $100,000 a year are expecting their spending to increase by only 5%. @wsj

Are lower-paid workers gaining income and wealth faster than white-collar professionals?

Core argument: Wages for Americans in lower-paying work have outstripped inflation while many white-collar professionals' wages have not, and the lower-paid group's wealth has risen more as well.

Early in the pandemic, several rounds of government relief allowed Americans in general, and lower-income Americans in particular, to build up their finances. Then the job market came roaring back and poorer workers found they could get paid a lot more than they did before. Many white-collar professionals haven’t seen their wages outstrip inflation, but people doing lower-paying work have, and the latter group’s wealth has risen more, too.

Takeaways by Macro Roundup® AI

  1. Wages for Americans in lower-paying work have outstripped inflation while many white-collar professionals' wages have not, and the lower-paid group's wealth has risen more as well.
  2. Several rounds of pandemic-era government relief allowed Americans, and lower-income Americans in particular, to build up their finances before the job market rebounded strongly.
  3. Poorer workers found, after the job market came roaring back, that they could get paid a lot more than before, a pattern characterized as a richcession rather than a recession.

AI Summary. The median return on capital is 7.44% for US firms and 5.19% globally, with about 10% of all firms earning above 50% and 10% below -50%. Rising risk-free rates and higher equity risk premiums and default spreads raised the US cost of capital from 5.60% to 9.63%, leaving the median US firm below its cost of capital.

Aswath Damodaran Musings on Markets
Date Posted:
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The median return on capital for an American firm in January 2023 is 7.4%, which is above the 5.6% cost of capital at the start of 2022, but below the 9.6% cost of capital at the start of 2023. @AswathDamodaran

Do most firms earn returns above their cost of capital?

Core argument: The median after-tax return on capital was 7.44% for US firms and 5.19% for global firms, with about 10% of all firms exceeding 50% returns and 10% delivering returns worse than -50%.

The after-tax returns on capital, at least in the aggregate, are unimpressive, with the median return on capital of a US (global) firm being 7.44% (5.19%). There are a significant number of outliers in both directions, with about 10% of all firms having returns on capital that exceed 50% and 10% of all firms delivering returns that are worse than -50%. A combination of rising risk-free rates and surging risk premiums (equity risk premiums and default spreads) has conspired to push the cost of capital of both US and global companies more than any year in my recorded history (which goes back to 1960). A company generating a 7.44% return on capital (the median value at the start of 2023) in the US, would have comfortably cleared the 5.60% cost of capital that prevailed at the start of 2022, but not the 9.63% cost of capital at the start of 2023.

Takeaways by Macro Roundup® AI

  1. The median after-tax return on capital was 7.44% for US firms and 5.19% for global firms, with about 10% of all firms exceeding 50% returns and 10% delivering returns worse than -50%.
  2. The US cost of capital rose from 5.60% at the start of 2022 to 9.63% at the start of 2023, so a firm earning the 7.44% median return cleared its cost of capital in 2022 but not in 2023.
  3. Rising risk-free rates combined with surging equity risk premiums and default spreads pushed the cost of capital for US and global companies up more than in any year on record going back to 1960.

AI Summary. The author estimates China's population is now below 1.28bn, versus the United Nations' figure of 1.43bn, and projects it will fall to 1.08bn by 2050 and 440m by 2100 even if fertility rises to 1.1 births per woman. The share aged 65 and older is projected to rise from 14% to 35% by 2050, leaving 1.6 workers per senior.

Yi Fuxian Project Syndicate
Date Posted:
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.@fuxianyi estimates that the Chinese population is currently 1.28 billion (vs 1.43 billion estimated by World Population Prospects).

Is China's population already far smaller than official estimates?

Core argument: The author estimates China's population is now below 1.28 billion, against the 1.43 billion given in the United Nations' 2022 World Population Prospects.

While the United Nations’ 2022 World Population Prospects puts the Chinese population at 1.43 billion people, I estimate that it is now smaller than 1.28 billion. Even if China succeeds in increasing its fertility rate to 1.1 and prevents it from declining, its population will likely fall to 1.08 billion by 2050 and 440 million by 2100. The country’s share of the world’s population, which declined from 37% in 1820 to 22% in 1950-80, will fall to 11% in 2050 and 4% by 2100. The share of Chinese people aged 65 and older will rise from 14% in 2020 to 35% in 2050. Whereas five workers aged 20-64 supported every senior citizen aged 65 and older in 2020, the ratio will continue to decline to 2.4 workers in 2035 and 1.6 in 2050.

Takeaways by Macro Roundup® AI

  1. The author estimates China's population is now below 1.28 billion, against the 1.43 billion given in the United Nations' 2022 World Population Prospects.
  2. Even if China raises fertility to 1.1 and holds it there, the author projects its population falling to 1.08 billion by 2050 and 440 million by 2100, with its share of world population dropping from 22% in 1950-80 to 11% in 2050 and 4% by 2100.
  3. The share of Chinese people aged 65 and older is projected to rise from 14% in 2020 to 35% in 2050, while workers aged 20-64 per senior citizen fall from five in 2020 to 2.4 in 2035 and 1.6 in 2050.

AI Summary. The US Inflation Reduction Act provides $369bn in tax credits, grants, loans, and subsidies for clean technology, many guaranteed past 2030, and allows credits to be sold to investors with tax liability to channel capital to developers faster. Credit Suisse estimates the public spending could reach $800bn, or $1.7tn including induced private spending.

Derek Brower and Amanda Chu Financial Times
Date Posted:

Credit Suisse forecasts that the Inflation Reduction Act could generate investments of $800B in public spending and another $900B of private spending generated by loans and grants by 2031. @FinancialTimes

How much spending will clean technology subsidies ultimately generate?

Core argument: The Inflation Reduction Act offers $369bn in tax credits, grants, loans, and subsidies for cleantech, many guaranteed past 2030, designed to spur private-sector investment and accelerate US decarbonization.

Last year’s colossal Inflation Reduction Act [IRA] and its hundreds of billions of dollars in cleantech subsidies are designed to spur private-sector investment and accelerate the country’s decarbonization effort.  All told, the IRA offers $369bn of tax credits, grants, loans, and subsidies, many of them guaranteed past 2030. The credits can be sold, too, allowing deep-pocketed investors with enough tax liability to buy the credit — a way to get more capital to developers, quickly. Credit Suisse thinks the public spending enabled by the IRA could eventually reach $800bn, and $1.7tn once the private spending generated by the loans and grants is included.

Takeaways by Macro Roundup® AI

  1. The Inflation Reduction Act offers $369bn in tax credits, grants, loans, and subsidies for cleantech, many guaranteed past 2030, designed to spur private-sector investment and accelerate US decarbonization.
  2. Credit Suisse estimates public spending enabled by the Inflation Reduction Act could eventually reach $800bn, and $1.7tn once private spending generated by the loans and grants is included.
  3. The Inflation Reduction Act's credits can be sold, allowing investors with sufficient tax liability to buy them, a mechanism to channel more capital to developers quickly.

AI Summary. Researchers argue that water reacting with iron minerals deep underground continuously generates natural hydrogen, which rises through the crust and can accumulate in underground traps worldwide. A U.S. Geological Survey model estimates there may be enough natural hydrogen to meet growing global demand for thousands of years.

Eric Hand Science
Date Posted:

The US Geological Survey finds evidence of large stores of natural hydrogen, a source of carbon-free energy which might be enough to meet global demand for thousands of years. @erichand @ScienceMagazine

Can naturally generated underground hydrogen supply global demand for thousands of years?

Core argument: A U.S. Geological Survey model presented in October 2022 at a Geological Society of America meeting indicates there may be enough natural hydrogen to meet growing global demand for thousands of years.

Contrary to conventional wisdom, large stores of natural hydrogen may exist all over the world, like oil and gas—but not in the same places. These researchers say water-rock reactions deep within the Earth continuously generate hydrogen, which percolates up through the crust and sometimes accumulates in underground traps. Critically, natural hydrogen may be not only clean, but also renewable. It takes millions of years for buried and compressed organic deposits to turn into oil and gas. By contrast, natural hydrogen is always being made afresh, when underground water reacts with iron minerals at elevated temperatures and pressures. There might be enough natural hydrogen to meet burgeoning global demand for thousands of years, according to a U.S. Geological Survey (USGS) model that was presented in October 2022 at a meeting of the Geological Society of America.

Takeaways by Macro Roundup® AI

  1. A U.S. Geological Survey model presented in October 2022 at a Geological Society of America meeting indicates there may be enough natural hydrogen to meet growing global demand for thousands of years.
  2. Researchers argue that water-rock reactions deep within the Earth continuously generate hydrogen that percolates up through the crust and sometimes accumulates in underground traps, with large stores possible worldwide.
  3. Unlike oil and gas, which take millions of years to form from buried and compressed organic deposits, natural hydrogen is made afresh when underground water reacts with iron minerals at elevated temperatures and pressures.

AI Summary. Market-based measures of 5-year inflation expectations sit in the midrange consistent with the Federal Reserve's target and longer-run expectations remain below target, but the path to disinflation looks longer and bumpier. Seasonal-adjustment revisions made recent inflation data look stronger, nominal income and spending growth remain elevated, and markets have priced out nearly all previously expected rate cuts.

Joseph Politano Apricitas Economics
Date Posted:

.@JosephPolitano notes that short term inflationary expectations are still largely consistent with the Fed’s target despite the Intercontinental Exchange’s inflation expectations index rising to almost 3% relative to 2.5% at the start of the year.

Is the path to disinflation longer and bumpier than expected?

Core argument: Intercontinental Exchange's market-derived inflation expectations index now points to CPI inflation ending the year at nearly 3%, up from the 2.5% it projected in early January.

Market-based measures of 5-year inflation expectations are nearly square in the midrange of what would be consistent with the Fed’s target, and longer-run expectations actually remain below target. But the path to disinflation now looks longer and a bit bumpier than before. Revisions to seasonal adjustments have made recent inflation data look stronger than we thought, nominal income and spending growth remain elevated, and nearly all of the rate cuts previously expected for 2023 have been priced out by financial markets. Intercontinental Exchange’s inflation expectations index, derived from a variety of market data, now expects CPI inflation to end the year at nearly 3% instead of the 2.5% it expected in early January. Inflation may still not look permanent and structural, but it looks a bit more common and persistent.

Takeaways by Macro Roundup® AI

  1. Intercontinental Exchange's market-derived inflation expectations index now points to CPI inflation ending the year at nearly 3%, up from the 2.5% it projected in early January.
  2. Market-based five-year inflation expectations sit nearly square in the midrange consistent with the Fed's target, while longer-run expectations remain below target.
  3. Revisions to seasonal adjustments have made recent inflation data look stronger than previously thought, nominal income and spending growth remain elevated, and financial markets have priced out nearly all rate cuts previously expected for 2023.

AI Summary. The authors estimate that a monetary tightening equivalent to a 1 percentage point rise in the federal funds rate reduces rent inflation by about 3.2 percentage points, with the full effect taking roughly 2½ years. Given housing's share of consumer spending, that implies about a 0.5 percentage point reduction in overall inflation.

Zheng Liu and Mollie Pepper Federal Reserve Bank of San Francisco
Date Posted:
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The @sffed estimates that historically a 1pp increase in the federal funds rate reduced rent inflation by 3.2pp over two and a half years suggesting the current tightening will bring rent inflation down.

Does monetary tightening reduce rent inflation, and how long does it take?

Core argument: Estimates for 1988–2019 indicate that a policy tightening equivalent to a 1 percentage point increase in the federal funds rate reduces rent inflation, measured by 12-month changes in the PCE housing price index, by about 3.2 percentage points.

We estimate that, during the period from 1988 to 2019, a policy tightening equivalent to a 1 percentage point increase in the federal funds rate can reduce rent inflation—measured by 12-month percentage changes in the personal consumption expenditures (PCE) housing price index—by about 3.2 percentage points, but the full impact takes about 2½ years to materialize. Based on housing costs’ share in total PCE, this translates to a reduction in headline PCE inflation of about 0.5 percentage point over the same time horizon. Although average rents are slow to respond to policy changes, growth of asking rents on new leases has started to slow following recent monetary policy tightening. Our finding suggests that this tightening will gradually bring rent inflation down over time, thereby helping to reduce overall inflation.

Takeaways by Macro Roundup® AI

  1. Estimates for 1988–2019 indicate that a policy tightening equivalent to a 1 percentage point increase in the federal funds rate reduces rent inflation, measured by 12-month changes in the PCE housing price index, by about 3.2 percentage points.
  2. Based on housing costs' share of total personal consumption expenditures, the same tightening translates into a reduction in headline PCE inflation of about 0.5 percentage point, with the full impact taking about 2½ years to materialize.
  3. Average rents respond slowly to policy changes, but growth of asking rents on new leases has started to slow following recent monetary policy tightening, suggesting rent inflation will decline gradually.

Tuesday, February 21, 2023

AI Summary. US drug overdose deaths reached 107,000 over a one-year period, with about two-thirds caused by fentanyl, which has displaced legally prescribed painkillers as the main cause of American overdoses. According to Centers for Disease Control and Prevention data, overdoses have replaced suicide as the leading cause of death for Americans under 45.

Jamie Smyth and Oliver Roeder Financial Times
Date Posted:

Drug overdoses are now the leading cause of death for Americans under age 45, driven by illicit fentanyl. There is now one overdose fatality every five minutes in the US. @FinancialTimes

Has fentanyl become the leading driver of US overdose deaths?

Core argument: U.S. drug overdoses killed 107,000 people in the year to August 2022, with about two-thirds of those deaths caused by fentanyl, equivalent to one American overdosing every five minutes.

Tens of thousands of American parents are mourning the deaths of their children amid an unprecedented drugs crisis, which has claimed 107,000 lives in the year to August 2022. About two-thirds of those deaths were caused by fentanyl. Illicit fentanyl has displaced legally prescribed painkillers as the main cause of overdoses in the US. The skyrocketing death rate — equivalent to one American overdosing every five minutes alongside Covid-19, has helped drive US life expectancy down to a 25-year low of 76.4 years. Unintentional overdose deaths among 15- to 19-year-olds surged by 150% between 2018 and 2021. Overdoses have replaced suicide as the leading cause of death for Americans under 45 years of age, according to Centers for Disease Control and Prevention data.

Takeaways by Macro Roundup® AI

  1. U.S. drug overdoses killed 107,000 people in the year to August 2022, with about two-thirds of those deaths caused by fentanyl, equivalent to one American overdosing every five minutes.
  2. Illicit fentanyl has displaced legally prescribed painkillers as the main cause of U.S. overdoses, and the rising death rate alongside Covid-19 has helped drive U.S. life expectancy down to a 25-year low of 76.4 years.
  3. Unintentional overdose deaths among 15- to 19-year-olds surged 150% between 2018 and 2021, and overdoses have replaced suicide as the leading cause of death for Americans under 45, according to Centers for Disease Control and Prevention data.

AI Summary. Workers' average inflation-adjusted wages were lower than before the pandemic, and labor's share of economic output shrank in many advanced economies despite strong demand for workers and very low unemployment. In the United States, average hourly earnings for private-sector nonfarm workers rose 4.4% over 12 months while consumer prices rose 6.4%.

Tom Fairless Wall Street Journal
Date Posted:

Labor’s share of output is shrinking across advanced economies as inflation continues to outpace wage gains. US average hourly earnings growth in the 12 months ending January was 4.4% vs. consumer price inflation of 6.4%. @WSJecon

Have wages kept up with inflation in advanced economies?

Core argument: Average hourly earnings for private-sector nonfarm workers rose 4.4% in the 12 months through January, down from 5.6% the prior March and trailing the 6.4% rise in consumer prices over the same period.

Workers’ purchasing power—their average inflation-adjusted wage—was lower last year than in 2019, before the pandemic, according to the report. So, despite strong demand for workers and ultralow unemployment, labor’s share of economic output shrank in many advanced economies. Average hourly earnings for private-sector nonfarm workers rose 4.4% in the 12 months through January, down from 5.6% last March and less than the 6.4% rise in consumer prices in the year through January.

Takeaways by Macro Roundup® AI

  1. Average hourly earnings for private-sector nonfarm workers rose 4.4% in the 12 months through January, down from 5.6% the prior March and trailing the 6.4% rise in consumer prices over the same period.
  2. Workers' average inflation-adjusted wage was lower last year than in 2019, before the pandemic, according to the report.
  3. Labor's share of economic output shrank in many advanced economies despite strong demand for workers and ultralow unemployment.

AI Summary. The U.S. economy is growing briskly, adding millions of jobs and producing more goods and services, but with inflation running about 1-2 percentage points faster than recent generations are used to. The author argues that outcome could persist if the Federal Reserve tolerates it, but probably not alongside the interest rates and asset price multiples of the 2010s.

Matt Klein The Overshoot
Date Posted:

.@M_C_Klein notes that, relative to pre-pandemic, there are more Americans in higher wage jobs and fewer in lower paid jobs. This helps explain strong wage growth, but “the puzzle is why productivity has not increased commensurately.”

Can fast growth with higher inflation persist at past interest rates?

Core argument: The U.S. economy is growing briskly, adding millions of jobs, and producing more goods and services, but with inflation running about 1–2pp faster than recent generations are used to.

In theory, the shifting mix of employment towards higher-value jobs and industries should be supporting more production and help attenuate the link between aggregate pay growth and inflation. But that has not happened yet, even if overall productivity growth remains broadly on trend, despite the volatility attributable to the pandemic. The net result is that the U.S. economy is growing briskly, adding millions of jobs, and producing more goods and services—but with persistently faster inflation (about 1-2pp) than recent generations are used to. That could be a sustainable outcome, if Fed officials are willing to tolerate it, but it is probably not sustainable with the set of interest rates and asset price multiples we became accustomed to in the 2010s.

Takeaways by Macro Roundup® AI

  1. The U.S. economy is growing briskly, adding millions of jobs, and producing more goods and services, but with inflation running about 1–2pp faster than recent generations are used to.
  2. The shifting mix of employment toward higher-value jobs and industries has not yet supported more production or weakened the link between aggregate pay growth and inflation, even as overall productivity growth remains broadly on trend despite pandemic volatility.
  3. Persistently faster inflation could be a sustainable outcome if Fed officials tolerate it, but probably is not sustainable with the interest rates and asset price multiples that prevailed in the 2010s.

AI Summary. Lake Powell, the second-largest US reservoir, fell to 3,522 feet above sea level, its lowest level since it was first filled in the 1960s, and is about 22% full. Hydropower generation at the dam may become impossible at 3,490 feet, and water can no longer pass through the dam by gravity at 3,370 feet.

Alex Hager Salt Lake Tribune
Date Posted:

Lake Powell, the second largest US reservoir, dropped to a new record low, raising the risk for 40M people who depend on the reservoir for water and 5M who depend on its hydroelectric power. @Sltrib

Lake Powell, the second largest US reservoir, dropped to a new record low, raising the risk for 40M people who depend on the...

Is falling water at a major US reservoir threatening hydropower generation?

Core argument: Lake Powell fell to 3,522 feet above sea level, its lowest level since the reservoir was first filled in the 1960s, just below the previous record set in April 2022.

Water levels in Lake Powell dropped to a record low last week, with continued pressure from climate change and steady demand pushing the nation’s second-largest reservoir to the lowest level since it was first filled in the 1960s. The lake fell to 3,522 feet above sea level, just below the previous record set in April 2022. The reservoir is currently about 22% full, and is expected to keep declining until around May, when mountain snowmelt rushes into the streams that flow into the lake. At 3,490 feet, the “minimum power pool” level, the bureau may be unable to generate hydropower from the dam. At 3,370 feet, the reservoir hits “dead pool,” at which point water is no longer able to pass through the dam through gravity.

Takeaways by Macro Roundup® AI

  1. Lake Powell fell to 3,522 feet above sea level, its lowest level since the reservoir was first filled in the 1960s, just below the previous record set in April 2022.
  2. Lake Powell, the nation's second-largest reservoir, is about 22% full and is expected to keep declining until around May, when mountain snowmelt rushes into the streams feeding the lake.

AI Summary. The Federal Reserve Bank of New York's Global Supply Chain Pressure Index isolates supply-side disruptions, while an auxiliary "Net" version captures stress from both supply and demand forces. A mix of supply and demand factors is driving an easing of net global supply chain pressure.

Gianluca Benigno, Hunter L. Clark, et al Federal Reserve Bank of New York
Date Posted:

The @NewYorkFed introduces the Net Global Supply Chain Pressure Index (Net GSPCI), which shows that global supply chain pressure is now lower than pre-pandemic levels.

Are supply and demand forces both easing global supply chain pressure?

Core argument: The Global Supply Chain Pressure Index, introduced in a January 2022 post, is a parsimonious global measure that uses a range of indicators to isolate supply factors, such as pandemic shutdowns, that pressure global supply chains.

In a January 2022 post, we first presented the Global Supply Chain Pressure Index (GSCPI), a parsimonious global measure designed to capture supply chain disruptions using a range of indicators. The spirit of our index was to isolate supply factors, such as shutdowns in response to the pandemic, that put pressure on the global supply chain. Here we describe an auxiliary index, the Net GSCPI, which differs from the GSCPI by not filtering out demand factors. This “net” index is meant to capture global supply chain stress from both the supply and demand sides. Currently, a mix of supply and demand forces is driving the easing of net pressure at the level of the global supply chain.

Takeaways by Macro Roundup® AI

  1. The Global Supply Chain Pressure Index, introduced in a January 2022 post, is a parsimonious global measure that uses a range of indicators to isolate supply factors, such as pandemic shutdowns, that pressure global supply chains.
  2. The Net GSCPI differs from the GSCPI by not filtering out demand factors, capturing global supply chain stress from both the supply and demand sides.
  3. A mix of supply and demand forces is driving the easing of net pressure at the level of the global supply chain.

AI Summary. The Biden re-election agenda echoes Trump-style economic nationalism: "buy American" rules for government contracts, support for domestic manufacturing workers, border enforcement touting 8,000 human-smuggler arrests and over 23,000 pounds of fentanyl seized, and a hawkish posture toward China. It also casts Biden as the defender of Medicare and Social Security against Republican spending cuts.

Michael Strain Project Syndicate
Date Posted:

.@MichaelRStrain argues that if Biden’s reelection campaign follows the roadmap laid out in his State of the Union address his campaign will share “much, in both contour and tone, with Trump’s brand of economic nationalism.”

.@MichaelRStrain argues that if Biden’s reelection campaign follows the roadmap laid out in his State of the Union address...

Is the Democratic re-election agenda embracing economic nationalism?

Core argument: Biden touted a record number of personnel securing the border, citing the arrest of 8,000 human smugglers and seizure of over 23,000 pounds of fentanyl in the preceding several months.

Biden’s re-election roadmap shares much, in both contour and tone, with Trump’s brand of economic nationalism. First, he advocated “buy American” policies for government contracts, championed domestic manufacturing workers, and criticized previous administrations for not doing enough on this front. Second, Biden championed the “record number of personnel working to secure the border, arresting 8,000 human smugglers and seizing over 23,000 pounds of fentanyl in just the last several months.” Third, he took a hawkish tone on China, arguing that the US is now “in the strongest position in decades to compete with” the Chinese. Lastly, Biden criticized Republicans for allegedly wanting to cut spending on Medicare and Social Security, thus positioning himself as the protector of those programs.

Takeaways by Macro Roundup® AI

  1. Biden touted a record number of personnel securing the border, citing the arrest of 8,000 human smugglers and seizure of over 23,000 pounds of fentanyl in the preceding several months.
  2. Biden's re-election roadmap echoes Trump's economic nationalism in contour and tone, advocating "buy American" policies for government contracts, championing domestic manufacturing workers, and faulting previous administrations for insufficient action.
  3. Biden took a hawkish tone on China, arguing the US is "in the strongest position in decades to compete," and cast himself as protector of Medicare and Social Security against alleged Republican spending cuts.

AI Summary. The White House is holding private talks with Taiwan's foreign minister and national security adviser through a special diplomatic channel kept confidential to avoid provoking China. The meeting follows a visit to Taiwan by the Pentagon's top China official, only the second by a senior US defense policymaker since Washington shifted diplomatic recognition from Taipei to Beijing in 1979.

Demetri Sevastopulo and Kathrin Hille Financial Times
Date Posted:

.@Dimi reports that senior Taiwanese security officials are in Washington this week holding secret talks with American officials. @ft

.@Dimi reports that senior Taiwanese security officials are in Washington this week holding secret talks with American...

Is the US deepening security ties with Taiwan through confidential channels?

Core argument: The White House will hold secret talks in Washington with Taiwan's foreign minister Joseph Wu and national security adviser Wellington Koo under a special diplomatic dialogue kept private to avoid provoking an angry reaction from China.

The White House will hold secret talks this week with Taiwan’s foreign minister Joseph Wu and national security adviser Wellington Koo as part of a special diplomatic dialogue intended to remain private to avoid sparking an angry reaction from China. The special channel meeting also comes just days after Michael Chase, the top Pentagon China official, traveled to Taiwan in what was only the second visit to the country by a senior US defense policymaker since 1979 when Washington switched its diplomatic recognition for China from Taipei to Beijing.

Takeaways by Macro Roundup® AI

  1. The White House will hold secret talks in Washington with Taiwan's foreign minister Joseph Wu and national security adviser Wellington Koo under a special diplomatic dialogue kept private to avoid provoking an angry reaction from China.
  2. Michael Chase, the Pentagon's top China official, traveled to Taiwan days before the Washington talks in only the second visit there by a senior US defense policymaker since 1979.
  3. Washington switched its diplomatic recognition from Taipei to Beijing in 1979.

AI Summary. Revised historical data that adds more stocks, cap-weights returns, and corrects survivorship bias in pre-1871 records puts long-run real stock returns at 5.9% rather than 6.6%, and real bond returns at 4.1% rather than 3.6%. The author argues earlier sources omitted failed banks, canals, and railroads, overstating early US stock returns.

Greg Obenshain Verdad
Date Posted:

.@GregObenshain highlights Edward McQuarrie research showing that, after a full account of survivorship bias, stocks only modestly outperform bonds, with most of the outperformance concentrated in 1943-1982 (where stocks outperformed bonds by 8.4%/yr).

Does corrected historical data narrow the gap between stock and bond returns?

Core argument: McQuarrie's revised data put geometric real stock returns at 5.9% versus Jeremy Siegel's 6.6%, and real bond returns at 4.1% versus Siegel's 3.6%.

For stocks, McQuarrie made major revisions to the pre-1871 data by including more stocks, cap-weighting returns, and, most importantly, correcting significant survivorship bias in the original data. According to McQuarrie, “Banks failed during panics, turnpikes and canals succumbed to railroads, and struggling railroads went bust in the 1840s and 1850s to an extent not previously understood. In short, Jeremy Siegel’s sources had left out the bad parts, producing an overly rosy picture of antebellum stock returns.” For bonds, McQuarrie engages in an impressive forensic effort to build a new and more accurate data set of investment-grade bonds available to the public. The first observation is that [geometric real] stock returns are lower (5.9% versus Siegel’s 6.6%) and bond returns are higher (4.1% versus 3.6%) in the revised data.

Takeaways by Macro Roundup® AI

  1. McQuarrie's revised data put geometric real stock returns at 5.9% versus Jeremy Siegel's 6.6%, and real bond returns at 4.1% versus Siegel's 3.6%.
  2. McQuarrie revised pre-1871 stock data by adding more stocks, cap-weighting returns, and correcting significant survivorship bias, arguing that Siegel's sources "had left out the bad parts, producing an overly rosy picture of antebellum stock returns.".
  3. McQuarrie attributes the overly rosy picture of antebellum stock returns to omitted failures: banks failing during panics, turnpikes and canals succumbing to railroads, and struggling railroads going bust in the 1840s and 1850s.