Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…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
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…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
  • “…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
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, April 14, 2023

AI Summary. The cost of insuring against a US government default has risen to its highest level in more than a decade amid the political impasse over the debt ceiling. Five-year credit default swaps priced at 46 basis points remain well below levels reached during the 2008-09 financial crisis.

Kate Duguid, Lauren Fedor and Colby Smith Financial Times
Date Posted:

The cost of insuring against a US default via credit default swaps is at its highest level since 2012 as traders position for a protracted debt ceiling fight. @ft

Has the cost of insuring against a US default risen?

Core argument: Five-year credit default swaps on US government debt have risen to 46 basis points, the highest level in more than a decade, an early sign of market concern over the debt ceiling impasse in Washington.

The cost of buying insurance against a US government default has shot to its highest level in more than a decade, in an early sign of market concerns about the political impasse in Washington over the debt ceiling. At 46 basis points, the price of five-year credit default swaps remains well below levels hit during the 2008-09 financial crisis, but the bond market has also indicated nerves about the possible default date.

Takeaways by Macro Roundup® AI

  1. Five-year credit default swaps on US government debt have risen to 46 basis points, the highest level in more than a decade, an early sign of market concern over the debt ceiling impasse in Washington.
  2. At 46 basis points, the cost of insuring against a US default remains well below levels reached during the 2008-09 financial crisis.
  3. The bond market has indicated nerves about the possible date of a US government default.

AI Summary. France's statistics agency finds a 71% correlation between individuals' positions on the national income scale over a roughly 15-year span, with the richest and poorest groups least likely to change bracket. The authors say this inertia is greater than in the US, where studies have shown a higher probability of moving up or down.

William Horobin Bloomberg
Date Posted:

The French government reported that France had much lower income mobility than the US btw 2003-2019, with little movement in the top and bottom quintiles. Among those in the top 1% in 2003, 41% were still there in 2019. @markets

Is income mobility in France lower than in the US?

Core argument: France's statistics agency Insee found a 71% correlation between French people's positions on the income scale in 2003 and 2019, with the richest and poorest groups least likely to change bracket.

According to the first long-term study by France’s statistics agency Insee, there was a 71% correlation between the position of French people on the income scale between 2003 and 2019, with the richest and poorest groups least likely to change bracket. That inertia is greater than in the US, where a deeper history of income mobility studies has shown a higher probability of ascending or descending, the authors of the French report said. Among the lowest 20% in terms of income in 2003, 62% were still in that group in 2019.  Only 2% of the group rose to the level of the 20% highest incomes.

Takeaways by Macro Roundup® AI

  1. France's statistics agency Insee found a 71% correlation between French people's positions on the income scale in 2003 and 2019, with the richest and poorest groups least likely to change bracket.
  2. Among French people in the lowest 20% of incomes in 2003, 62% remained in that group in 2019, and only 2% rose into the top 20%.
  3. The authors of the Insee report said France's income inertia is greater than in the US, where a deeper history of mobility studies has shown a higher probability of ascending or descending the income scale.

AI Summary. The US Chips Act committed $52bn in direct semiconductor manufacturing and research subsidies plus an estimated $24bn in tax credits over eight years, with Intel potentially receiving up to $12bn for new US facilities. Intel's planned plants in Arizona, Ohio and Germany have already reached around $60bn in first-phase costs.

Richard Waters Financial Times
Date Posted:

The US is about to deploy $52B in direct subsidies to arrest a slide in US semiconductor production from 37% in 1990 to 12% in 2022. @FinancialTimes

Can government subsidies turn a chipmaker into a domestic manufacturing champion?

Core argument: The US Chips Act committed $52bn in direct subsidies for semiconductor manufacturing and research and development, plus an estimated $24bn of tax credits over eight years.

Last year’s US Chips Act committed $52bn in direct subsidies to support semiconductor manufacturing and boost research and development, along with an estimated $24bn worth of tax credits over the next eight years. Intel has announced a spate of giant new manufacturing plants, known as fabs, with the economies of scale needed to justify the capital-intensive processes. There are two fabs planned outside Phoenix, two more in Ohio and a new €17bn mega plant in Germany that represents the country’s biggest investment since the second world war. The cost for the first phases of these developments has already reached around $60bn, and the German government is pushing Intel to expand its plans in exchange for the higher subsidies the company is seeking. Under the Chips Act, Intel could receive up to $12bn to support its new US facilities, with extra subsidies for an advanced chip packaging plant in New Mexico and further tax credits.

Takeaways by Macro Roundup® AI

  1. The US Chips Act committed $52bn in direct subsidies for semiconductor manufacturing and research and development, plus an estimated $24bn of tax credits over eight years.
  2. Intel's first phases of new fabs — two outside Phoenix, two in Ohio and a €17bn German mega plant described as Germany's biggest investment since the second world war — have already cost around $60bn.
  3. Intel could receive up to $12bn under the Chips Act for its new US facilities, with additional subsidies for an advanced chip packaging plant in New Mexico and further tax credits.

AI Summary. The Inflation Reduction Act directs at least $369bn in subsidies and tax credits toward decarbonisation-related sectors, following infrastructure legislation that also channels billions to clean infrastructure. Because some provisions cap no eligible spending, an investment rush could push public expenditure to $800bn over the next decade.

Economist Staff The Economist
Date Posted:

.@TheEconomist reports that, between the Inflation Reduction Act and the Infrastructure bill, the American government could spend $800B on decarbonization-related sectors, through a combination of direct spending and tax credits.

Do uncapped clean energy subsidies push public spending toward $800bn?

Core argument: The Inflation Reduction Act directs at least $369bn in direct subsidies and tax credits toward decarbonisation-related sectors, following the Bipartisan Infrastructure Law, which also channels billions in subsidies to clean infrastructure.

The Inflation Reduction Act funnels at least $369bn in direct subsidies and tax credits to decarbonisation-related sectors. It came on the heels of the Bipartisan Infrastructure Law, which also shovels billions in subsidies towards clean infrastructure. Some of the provisions offer generous tax credits, with no caps on the amount of spending eligible for the incentives. A mad investment rush, should it materialise, could lead to public expenditure of $800bn over the next decade. An official at a big utility says her firm has projects in the works across America that, if successful, will secure a staggering $2bn in funding from the two laws.

Takeaways by Macro Roundup® AI

  1. The Inflation Reduction Act directs at least $369bn in direct subsidies and tax credits toward decarbonisation-related sectors, following the Bipartisan Infrastructure Law, which also channels billions in subsidies to clean infrastructure.
  2. Some Inflation Reduction Act provisions cap no spending eligible for their tax credits, and an investment rush, should it materialise, could lead to public expenditure of $800bn over the next decade.
  3. An official at a big utility says her firm has projects in the works across America that, if successful, would secure $2bn in funding from the Inflation Reduction Act and the Bipartisan Infrastructure Law.

AI Summary. Leveraged loan default rates and bankruptcy filings indicate a default cycle has begun. The Federal Reserve's interest rate increases are intended to slow the economy to slow inflation, and tighter bank lending standards raise the risk that the slowdown arrives faster.

Torsten Sløk Apollo
Date Posted:

Noting an uptick in both leveraged loan default rates and bankruptcy filings, Torsten Sløk @apolloglobal argues that “a default cycle has started.”

Has a corporate default cycle begun?

Core argument: Leveraged loan default rates and bankruptcy filings indicate that a default cycle has started.

Data for leveraged loan default rates and bankruptcy filings show that a default cycle has started. This is not surprising. The entire goal of the Fed with raising interest rates is to slow the economy down to slow down inflation, and adding tighter bank lending standards increases the risk that the slowdown could come faster.

Takeaways by Macro Roundup® AI

  1. Leveraged loan default rates and bankruptcy filings indicate that a default cycle has started.
  2. The Federal Reserve's aim in raising interest rates is to slow the economy in order to slow inflation, which makes the onset of a default cycle unsurprising.
  3. Tighter bank lending standards, added to higher interest rates, increase the risk that the economic slowdown arrives faster.

Monday, April 17, 2023

AI Summary. The United Nations projects India's population will surpass China's, reaching 1.429bn versus China's 1.426bn, with both far above the United States at a projected 340m. India's population is projected to keep growing for four decades, peaking near 1.7bn in 2063.

Shan Li and Liyan Qi Wall Street Journal
Date Posted:

According to the UN, India’s population will overtake China’s this year if it hasn’t already. India’s population isn’t expected to peak until 2063.

Is India set to become the world's most populous country?

Core argument: The U.N. projects India's population will reach 1.429 billion by the end of the year, surpassing China's 1.426 billion and pushing China into second place.

The United Nations has said India’s population is projected to surpass China’s sometime this year. Many demographers estimate it could happen this month, if it hasn’t already. India’s population is expected to reach 1.429 billion by the end of the year, according to the U.N. China will fall to second place, with 1.426 billion people. Both dwarf the U.S. at a projected 340 million. India’s population is expected to keep growing for the next four decades, peaking at nearly 1.7 billion in 2063.

Takeaways by Macro Roundup® AI

  1. The U.N. projects India's population will reach 1.429 billion by the end of the year, surpassing China's 1.426 billion and pushing China into second place.
  2. India and China each dwarf the United States, whose population is projected at 340 million.
  3. India's population is expected to keep growing for the next four decades, peaking at nearly 1.7 billion in 2063.

AI Summary. Apple assembled more than $7bn of iPhones in India in a fiscal year, tripling output and lifting India's share to almost 7% of global iPhone production from an estimated 1%, as the company expands assembly partners including Foxconn and Pegatron beyond China.

Sankalp Phartiyal Bloomberg
Date Posted:

Apple made almost 7% of its iPhones in India last fiscal year, up from 1% in 2021 as it moves production out of China.

Apple made almost 7% of its iPhones in India last fiscal year, up from 1% in 2021 as it moves production out of China.

Is iPhone assembly shifting from China to India?

Core argument: Apple assembled more than $7 billion of iPhones in India last fiscal year, tripling production there as the company accelerated a move beyond China, according to people familiar with the matter.

Apple assembled more than $7 billion of iPhones in India last fiscal year, tripling production in the world’s fastest-growing smartphone arena after accelerating a move beyond China. The US company now makes almost 7% of its iPhones in India through expanding partners from Foxconn Technology Group to Pegatron Corp., people familiar with the matter said. That’s a significant leap for India, which accounted for an estimated 1% of the world’s iPhones in 2021.

Takeaways by Macro Roundup® AI

  1. Apple assembled more than $7 billion of iPhones in India last fiscal year, tripling production there as the company accelerated a move beyond China, according to people familiar with the matter.
  2. India now accounts for almost 7% of iPhones Apple makes, up from an estimated 1% of the world's iPhones in 2021, according to people familiar with the matter.
  3. Apple's Indian iPhone assembly runs through expanding partners from Foxconn Technology Group to Pegatron Corp. in what is the world's fastest-growing smartphone market.

AI Summary. Financial Times research identified more than 75 large-scale US manufacturing announcements following the passage of American semiconductor and clean-energy subsidy laws, with companies committing roughly $204bn to boost semiconductor and clean-tech production and promising at least 82,000 jobs. That is almost double the capital spending commitments made in those sectors two years earlier.

Amanda Chu and Oliver Roeder Financial Times
Date Posted:

The @FT has identified more than 75 large-scale manufacturing projects announced in the US in the aftermath of the passage of the Chips and Inflation Reduction Acts. More than 75% of this investment is heading to GOP-held Congressional districts.

Are manufacturing subsidies driving a surge in US factory investment?

Core argument: Companies have committed roughly $204bn to large-scale US semiconductor and clean-tech manufacturing projects as of April 14, promising to create at least 82,000 jobs, according to Financial Times research.

The US appears poised for a manufacturing boom as companies tap into Biden administration subsidies with pledges to spend tens of billions of dollars on new projects, according to Financial Times research.  The FT identified more than 75 large-scale manufacturing announcements in the US since the passage of the Chips Act and the Inflation Reduction Act. Companies have committed roughly $204bn in large-scale projects to boost US semiconductor and clean-tech production as of April 14, promising to create at least 82,000 jobs. While not all these projects were a direct result of the passage of these bills, they will probably be eligible for the tax credits. The amount is almost double the capital spending commitments made in the same sectors in 2021 and nearly 20 times the amount in 2019.

Takeaways by Macro Roundup® AI

  1. Companies have committed roughly $204bn to large-scale US semiconductor and clean-tech manufacturing projects as of April 14, promising to create at least 82,000 jobs, according to Financial Times research.
  2. The $204bn in commitments is almost double the capital spending pledged in the same sectors in 2021 and nearly 20 times the 2019 amount, according to Financial Times research.
  3. The Financial Times identified more than 75 large-scale US manufacturing announcements since passage of the Chips Act and the Inflation Reduction Act, noting not all resulted from the bills though they will probably be eligible for the tax credits.

AI Summary. Germany had 28 companies in the Fortune 500 in 2020, fewer than China's 134, America's 130, Japan's 62 and France's 40, but it has more than a thousand mid-sized firms ranking in the top three of their global niches. These "Mittelstand" companies account for the overwhelming majority of German businesses and about 60% of all jobs.

Adrian Wooldridge Bloomberg
Date Posted:

Germany’s Mittelstand are well positioned to continue to thrive as their relatively small global niches may help insulate them from new entrants. @markets

Can mid-sized niche leaders outweigh large corporations in an economy?

Core argument: Germany had only 28 Fortune 500 companies in 2020, against China's 134, America's 130, Japan's 62 and France's 40, yet more than 1,000 German firms rank in the top three of their respective markets.

The real engine of the German economy is not the big corporations but middle-sized companies that you’ve probably never heard of — companies that management gurus have dubbed “mighty minnows” (Tom Peters), or “hidden champions” (Herbert Simon) and the Germans call the “Mittelstand.” Germany only had 28 companies in the Fortune 500 in 2020 compared with China’s 134, America’s 130, Japan’s 62 and France’s 40. But it has more than a thousand companies that rank in the top three in their respective markets. Poeschl Tabak GmbH has 50% of the world market in snuff, for example; Flexi has 70% of the market for retractable dog leads. All told, the Mittelstand accounts for the overwhelming majority of businesses in Germany, and some 60% of all jobs. These companies are “hidden” in three senses: They dominate tiny global niches; they prefer to keep themselves to themselves and they are usually located in small towns.

Takeaways by Macro Roundup® AI

  1. Germany had only 28 Fortune 500 companies in 2020, against China's 134, America's 130, Japan's 62 and France's 40, yet more than 1,000 German firms rank in the top three of their respective markets.
  2. Germany's Mittelstand accounts for the overwhelming majority of the country's businesses and some 60% of all jobs, and serves as the real engine of the German economy rather than its big corporations.
  3. German niche leaders include Poeschl Tabak GmbH with 50% of the world snuff market and Flexi with 70% of the market for retractable dog leads, firms dubbed "mighty minnows" by Tom Peters and "hidden champions" by Herbert Simon.

AI Summary. France's constitutional council validated most of a law raising the minimum retirement age from 62 to 64, ruling it valid under the constitution and legally enacted. Turnout for labour-led marches and strikes against the reform has shrunk.

Akila Quinio and Leila Abboud Financial Times
Date Posted:

The French constitutional court approved Macron’s pension reform. Protests are still ongoing but have dissipated in recent weeks. @ft

The French constitutional court approved Macron’s pension reform. Protests are still ongoing but have dissipated in recent...

Has a legal challenge stopped a higher retirement age?

Core argument: France's nine-member constitutional council validated most of Emmanuel Macron's pension law, whose central measure raises the minimum retirement age from 62 to 64, ruling it valid under the constitution and enacted legally.

Emmanuel Macron’s plan to raise France’s retirement age cleared a final hurdle on Friday after the highest constitutional authority validated most of the draft law, marking a political victory for the president after months of protests over his unpopular reform. France’s nine-member constitutional council ruled that most of the proposed law, whose central measure is to raise the minimum retirement age from 62 to 64, was valid under the constitution and enacted legally. Some of the clashes have since dissipated, and turnout for the labour-led marches and strikes has shrunk in recent weeks, fuelling the government’s hopes that they could wait out the anger.

Takeaways by Macro Roundup® AI

  1. France's nine-member constitutional council validated most of Emmanuel Macron's pension law, whose central measure raises the minimum retirement age from 62 to 64, ruling it valid under the constitution and enacted legally.
  2. The ruling clears the final hurdle for Macron's retirement plan, marking a political victory after months of protests over his unpopular reform.
  3. Turnout for labour-led marches and strikes has shrunk and some clashes have dissipated, fuelling the French government's hopes that it could wait out the anger.

AI Summary. The United Nations refugee agency counted 116,868 Chinese asylum seekers worldwide at a point in mid-2022, up from 15,362 at the end of 2012. Panama migration data show 3,855 Chinese migrants crossed the Darién Gap in one quarter, versus 2,005 in all of 2022 and 376 total from 2010 to 2021.

Wenxin Fan and Shen Lu Wall Street Journal
Date Posted:

The number of Chinese citizens attempting to enter the United States illegally hit an all-time high, with 2,410 apprehensions along the southwest boarder through February 2023. @WSJ

How many Chinese are seeking asylum abroad now?

Core argument: The U.N. refugee agency counted 116,868 Chinese seeking asylum worldwide at a point measured in mid-2022, up from 15,362 at the end of 2012, the year Xi Jinping took power; China's population is around 1.4 billion.

The United Nations refugee agency counted 116,868 Chinese seeking asylum around the world at a point measured in mid-2022, up from 15,362 at the end of 2012, the year Mr. Xi took power. The U.N. numbers don’t include Chinese who enter other countries using work, tourist or other types of visas—often people with more assets and education—which have also increased in the past decade. China has a population of around 1.4 billion. In the first three months of this year, 3,855 Chinese migrants crossed the Darién Gap, the 60 miles or so of treacherous terrain connecting South and Central America. That compares with 2,005 for the full year in 2022, and just 376 Chinese total in the years from 2010 to 2021, according to Panama migration data. Chinese nationals were the fourth-largest group making the Darién crossing from Colombia in the three months, the data showed. The Chinese taking the Latin America route are generally those with low incomes, education levels and skills, who have little to no chance of securing a U.S. visa.

Takeaways by Macro Roundup® AI

  1. The U.N. refugee agency counted 116,868 Chinese seeking asylum worldwide at a point measured in mid-2022, up from 15,362 at the end of 2012, the year Xi Jinping took power; China's population is around 1.4 billion.
  2. Panama migration data show 3,855 Chinese migrants crossed the Darién Gap in the first three months of this year, compared with 2,005 for all of 2022 and 376 in total from 2010 to 2021.
  3. Chinese nationals were the fourth-largest group crossing the Darién Gap from Colombia in those three months, and those taking the Latin America route generally have low incomes, education levels and skills, with little to no chance of securing a U.S. visa.

AI Summary. Singapore's central bank has asked major banks to minimize public discussion of the origins of large inflows of money into the city-state, much of it from wealthy Chinese, an issue that has become politically sensitive domestically. Lawyers and industry groups estimate Singapore hosts roughly 1,500 family offices, a large share of them Chinese.

Mercedes Ruehl, Kaye Wiggins and Leo Lewis Financial Times
Date Posted:

The Monetary Authority of Singapore is trying to limit public discussion of Chinese capital flight as it increasingly becomes a domestic political issue in the city-state. @ft

The Monetary Authority of Singapore is trying to limit public discussion of Chinese capital flight as it increasingly...

Are regulators asking banks to stay quiet about foreign wealth inflows?

Core argument: Singapore had an estimated 1,500 family offices by the end of last year, with a large chunk of them from China, according to lawyers and industry groups.

Singapore has asked the world’s biggest banks to avoid discussing the origins of the significant sums of money flowing into the city over the past year, as wealthy Chinese funnel billions into the Asian financial hub. The tacit directive from the Monetary Authority of Singapore was given during a February 20 meeting of an industry group made up of bankers and regulators, according to multiple people who attended. The flow from China into Singapore has become a politically sensitive issue domestically, and the MAS wants banks to keep public discussion of the phenomenon to a minimum, said three people with knowledge of the talks. Lawyers and industry groups estimate Singapore had 1,500 family offices by the end of last year, with a large chunk of them from China.

Takeaways by Macro Roundup® AI

  1. Singapore had an estimated 1,500 family offices by the end of last year, with a large chunk of them from China, according to lawyers and industry groups.
  2. The Monetary Authority of Singapore gave banks a tacit directive at a February 20 industry group meeting of bankers and regulators to avoid discussing the origins of the large sums flowing into the city, according to multiple attendees.
  3. The flow of money from China into Singapore has become a politically sensitive issue domestically, and the Monetary Authority of Singapore wants banks to keep public discussion of it to a minimum, said three people with knowledge of the talks.

AI Summary. The authors find that the shift of US economic activity away from manufacturing, where sales and employment concentration is higher on average than in other sectors, pushes measured concentration down, with a modest effect nationally and a large one locally. Using Economic Census data, they document that local employment concentration at the county-by-industry level fell while local sales concentration rose.

David Autor, Christina Patterson and John Van Reenen National Bureau of Economic Research
Date Posted:

Between 1992 and 2017 the shift from manufacturing to the service sector reduced local employment concentration, even as national concentration rose. @davidautor @johnvanreenen

How does the shift away from manufacturing affect measured business concentration?

Core argument: Using near-population data from the Economic Censuses, the authors document that the Herfindahl index of local employment concentration, measured at the county by six-digit NAICS industry cell level, fell between 1992 and 2017 even as local sales concentration rose.

The structural transformation of economic activity in the US and other advanced economies is well known. What has potentially escaped attention is that this force pushes concentration downward due to the simple fact that both sales and employment concentration are greater in manufacturing on average than other sectors. At the national level, this de-concentrating effect is modest. It looms large at the local level, however, offsetting by half the effect of rising sales concentration within sectors and more than fully offsetting the effect of rising employment concentration within county by industry cells. National industrial concentration in the U.S. has risen sharply since the early 1980s, but there remains dispute over whether local geographic concentration has followed a similar trend. Using near population data from the Economic Censuses, we confirm and extend existing evidence on national U.S. industrial concentration while providing novel evidence on local concentration. We document that the Herfindhahl index of local employment concentration, measured at the county by- NAICS six-digit-industry cell level, fell between 1992 and 2017 even as local sales concentration rose.

Takeaways by Macro Roundup® AI

  1. Using near-population data from the Economic Censuses, the authors document that the Herfindahl index of local employment concentration, measured at the county by six-digit NAICS industry cell level, fell between 1992 and 2017 even as local sales concentration rose.
  2. Structural transformation pushes concentration down because sales and employment concentration are on average greater in manufacturing than in other sectors, an effect that is modest nationally but large locally.
  3. At the local level, the de-concentrating effect of structural transformation offsets half of rising within-sector sales concentration and more than fully offsets rising employment concentration within county-by-industry cells.