Edward Conard

Top Ten New York Times Bestselling Author

  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
  • “…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
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, May 2, 2023

AI Summary. Using a Dutch database matching parents' and children's test scores at similar ages, the authors find that parents who were relatively stronger in math than language as children are significantly more likely to have children with the same math advantage. Parents' comparative skill advantage also predicts their own and their children's science and technology field choices.

Eric Hanushek, Babs Jacobs, Guido Schwerdt, Rolf van der Velden, Stan Vermeulen and Simon Wiederhold National Bureau of Economic Research
Date Posted:
Is Database:
Database

A new @NBERpubs paper shows that parents’ comparative skill advantage in math (vs. language) is significantly linked to the comparative skill advantage of their children. @EricHanushek @SimonWiederhold

Do parents pass their math-over-language skill advantage to children?

Core argument: Parents who were relatively better at math than language in childhood are significantly more likely to have children with the same comparative advantage in math, according to the authors' analysis of Dutch parent–child skill data.

Our analysis shows that comparative skill advantages are transferred across generations: Parents who were relatively better at math (vs. language) in childhood are more likely to have children with a similar comparative skill advantage in math. We also find that parents’ comparative skill advantage is a strong predictor of their own STEM choices and those of their children. The new Intergenerational Transmission of Skills (ITS) database that we develop permits matching skills of Dutch parents and children derived from similar tests taken at similar ages. We measure comparative skill advantage as the ordinal difference between math and language skills in the parent and child generation, respectively, each assessed by the percentile position in the nationwide skill distribution.  We find that parents with a comparative advantage in math skills are significantly more likely to have children with a similar math skill advantage.

Takeaways by Macro Roundup® AI

  1. Parents who were relatively better at math than language in childhood are significantly more likely to have children with the same comparative advantage in math, according to the authors' analysis of Dutch parent–child skill data.
  2. The authors find that a parent's comparative skill advantage strongly predicts both the parent's own STEM choices and those of their children.
  3. The Intergenerational Transmission of Skills database developed by the authors matches Dutch parents and children on similar tests taken at similar ages, measuring comparative advantage as the ordinal gap between math and language percentile positions in the nationwide skill distribution.

AI Summary. Regional bank shares continued to sell off after JPMorgan's takeover of troubled California lender First Republic, with a KBW index of regional bank stocks falling more than 5%. Investors have placed heavy bets against some mid-sized banks, with short interest in California-based PacWest particularly high though little changed over the past month.

Brooke Masters, Harriet Clarfelt, Nicholas Megaw and Stephen Gandel Financial Times
Date Posted:

A KBW index of regional bank stocks was down at least 5% in the aftermath of JPM’s rescue of First Republic. The level of short interest in regional banks hasn’t increased in the past month.

Does the rescue of a troubled lender halt regional bank share declines?

Core argument: A KBW index of regional bank stocks fell more than 5 percent in morning dealings as investors digested JPMorgan's takeover of First Republic alongside gloomy economic data.

The rescue of First Republic this week has failed to arrest a sell-off in regional bank shares, which plunged on Tuesday morning as investors digested JPMorgan’s takeover of the troubled Californian lender along with gloomy economic data. A KBW index of regional bank stocks slid more than 5 percent in morning dealings. Investors have been heavily betting on further share declines in some of the mid-sized banks, with short interest in California-based PacWest particularly high. However, the level of shorting activity is little changed over the past month, according to Markit data.

Takeaways by Macro Roundup® AI

  1. A KBW index of regional bank stocks fell more than 5 percent in morning dealings as investors digested JPMorgan's takeover of First Republic alongside gloomy economic data.
  2. Investors have placed heavy bets on further share declines in some mid-sized US banks, with short interest in California-based PacWest particularly high.
  3. Shorting activity is little changed over the past month, according to Markit data, even as the First Republic rescue failed to arrest the sell-off in regional bank shares.

AI Summary. Interest rates on 3-month certificates of deposit have diverged by bank size, increasing at small banks and declining at large banks.

Torsten Sløk Apollo
Date Posted:

Torsten Sløk @apolloglobal notes in the aftermath of SVB’s collapse the interest rates on banks 3-month CDs has diverged with rates at small banks increasing and decreasing at large banks.

Are deposit rates diverging between small and large banks?

Core argument: Interest rates on 3-month certificates of deposit have diverged since the collapse of Silicon Valley Bank, rising at small banks while declining at large banks, according to Torsten Sløk of Apollo Global Management.

Since SVB collapsed, the interest rate on a 3-month CD has increased at small banks and declined at large banks.

Takeaways by Macro Roundup® AI

  1. Interest rates on 3-month certificates of deposit have diverged since the collapse of Silicon Valley Bank, rising at small banks while declining at large banks, according to Torsten Sløk of Apollo Global Management.

AI Summary. Education-technology company Chegg's shares fell more than 40% after it said OpenAI's ChatGPT is threatening growth in its homework-help services, while IBM said it will stop or slow hiring for roles it expects artificial intelligence to replace — about 30% of its 26,000 non-customer-facing workers over five years. Samsung Electronics banned chatbot use.

Amy Thomson Bloomberg
Date Posted:

IBM will stop or slow hiring for jobs that it thinks it can replace with AI driven systems; this impacts 30% of its 26,000 workers in non-customer facing roles over the next 5 years. @markets

IBM will stop or slow hiring for jobs that it thinks it can replace with AI driven systems; this impacts 30% of its 26,000...

Is AI already reshaping company valuations and hiring plans?

Core argument: Chegg shares plunged more than 40% in early trading after the education-technology company said OpenAI's ChatGPT is threatening the growth of its homework-help services.

The speed of disruption brought on by a worldwide rush into artificial intelligence was on full display this week, sending shares of education-technology company Chegg Inc. plunging, prompting IBM to halt some hiring and prompting a chatbot ban at Samsung Electronics Co. Chegg shares plunged more than 40% in early trading on Tuesday after the company said OpenAI’s ChatGPT is threatening the growth of its homework-help services. International Business Machines Corp. Chief Executive Officer Arvind Krishna said in an interview with Bloomberg on Monday that the company is going to stop or slow hiring for jobs it believes will be replaced by artificial intelligence. That amounts to about 30% of its 26,000 workers in non-customer facing roles over a 5-year period, he said.

Takeaways by Macro Roundup® AI

  1. Chegg shares plunged more than 40% in early trading after the education-technology company said OpenAI's ChatGPT is threatening the growth of its homework-help services.
  2. IBM Chief Executive Officer Arvind Krishna said the company will stop or slow hiring for roles it believes artificial intelligence will replace, about 30% of its 26,000 non-customer-facing workers over a five-year period.
  3. Samsung Electronics banned chatbot use, one of several corporate responses to the worldwide rush into artificial intelligence.

AI Summary. The US National Ignition Facility aims to raise fusion energy output from 3.15 megajoules to hundreds of megajoules, with physicists seeing a path to tens of megajoules partly by increasing the laser energy delivered to the target. Many scientists now put commercial fusion 20–30 years away, describing the constraint as funding.

Jeff Tollefson Nature
Date Posted:

Scientists are firing up the US National Ignition Facility for the first time since its net positive fusion breakthrough last year. @Nature

Scientists are firing up the US National Ignition Facility for the first time since its net positive fusion breakthrough...

Is commercial fusion power now mainly a question of funding?

Core argument: The US National Ignition Facility produced 3.15 megajoules from fusion reactions, with a long-term goal of reaching hundreds of megajoules.

In the long term, the goal is to increase the amount of energy generated by fusion reactions from the 3.15 megajoules created last year to hundreds of megajoules. Richard Town a physicist, sees a viable path to increasing US National Ignition Facility’ (NIF) energy yields to tens of megajoules by, among other things, further boosting the lasers’ energy going into the target.  The old joke about fusion energy is that it’s 50 years away, and always will be. Many scientists now say the front end of that equation is closer to 20–30 years, but it’s really just a matter of funding, says Pravesh Patel, a former scientist at Lawrence Livermore National Lab who currently serves as scientific director at Focused Energy in Austin, Texas, a private laser-fusion firm.

Takeaways by Macro Roundup® AI

  1. The US National Ignition Facility produced 3.15 megajoules from fusion reactions, with a long-term goal of reaching hundreds of megajoules.
  2. Physicist Richard Town sees a viable path to raising National Ignition Facility yields to tens of megajoules, partly by further boosting the laser energy delivered to the target.
  3. Pravesh Patel, scientific director at laser-fusion firm Focused Energy and a former Lawrence Livermore National Lab scientist, says many scientists now put fusion energy 20–30 years away and that it is really just a matter of funding.

AI Summary. A bird flu infection in a Cambodian village took a week to reach the attention of the government health system, as villagers attributed dead chickens to hot weather and hospital doctors initially assumed a schoolgirl had seasonal flu. Health officials deemed the eventual response a success.

Michelle Fay Cortez and Suzi Ring Bloomberg
Date Posted:

Since 2021, 50mm birds have been killed in Europe, 58mm in the United States and 17mm in Japan, but, despite these large-scale culls, avian flu is endemic.

Since 2021, 50mm birds have been killed in Europe, 58mm in the United States and 17mm in Japan, but, despite these...

How quickly do bird flu infections reach government health systems?

Core argument: A full week elapsed between the infection in Rolaing and its detection by the government health system, even though health officials deemed the response a success.

Although the response in Rolaing has been deemed a success by health officials, the challenge is clear. It took a full week for the infection to come to the attention of the government health system. The villagers didn’t think anything was amiss when a handful of dead chickens were found along the river, blaming hot weather for the deaths. It was only as the schoolgirl’s condition deteriorated that the connection was made. When she arrived at hospital on Feb. 21, doctors — unaware that two of the family’s four chickens, which lived largely underneath the room where she slept, had died — assumed she had a seasonal flu.

Takeaways by Macro Roundup® AI

  1. A full week elapsed between the infection in Rolaing and its detection by the government health system, even though health officials deemed the response a success.
  2. Villagers in Rolaing attributed a handful of dead chickens found along the river to hot weather, and the link was made only as a schoolgirl's condition deteriorated.
  3. Doctors treating the schoolgirl when she arrived at hospital on Feb. 21 assumed she had seasonal flu, unaware that two of her family's four chickens, which lived largely beneath the room where she slept, had died.

AI Summary. China revised its military service regulations to allow retired personnel to reenlist and to prioritize recruiting science and engineering students for warfare in new domains such as space and cyber, as it builds military strength for possible all-out war in the Taiwan Strait.

Yukio Tajima Nikkei Asia
Date Posted:

China has revised its conscription law to allow the government to quickly draft science and engineering students, especially those trained in artificial intelligence and robotics. @NikkeiAsia

China has revised its conscription law to allow the government to quickly draft science and engineering students, especially...

Is China reshaping its conscription rules to prepare for war over Taiwan?

Core argument: China's revised military service law allows retired military personnel to be reenlisted to secure experienced soldiers, as the country builds military strength to prepare for possible all-out war in the Taiwan Strait.

China enacted revisions to its military service law that will allow retired military personnel to be reenlisted to secure experienced soldiers. The law also focuses on recruiting tech-savvy science and engineering students to prepare for warfare in new domains such as space and cyber, as the country tries to build its military strength to prepare for possible all-out war in the Taiwan Strait. The State Council and the Central Military Commission, the Chinese military's top decision-making body, approved the revised regulations on conscription, based on the Military Service Law. "We will build a military draft system that can respond, from peacetime to emergencies, swiftly and seamlessly," Tan Kefei, a spokesman at the Chinese defense ministry, said.

Takeaways by Macro Roundup® AI

  1. China's revised military service law allows retired military personnel to be reenlisted to secure experienced soldiers, as the country builds military strength to prepare for possible all-out war in the Taiwan Strait.
  2. The revised Chinese conscription regulations, approved by the State Council and the Central Military Commission, focus on recruiting science and engineering students for warfare in new domains such as space and cyber.
  3. Chinese defense ministry spokesman Tan Kefei said China will build a military draft system that can respond "from peacetime to emergencies, swiftly and seamlessly.".

Wednesday, May 3, 2023

AI Summary. The shale boom turned the United States into a net exporter of natural gas and of oil, altering how commodity prices relate to US trade. Where higher oil prices were historically associated with a deterioration in US terms of trade, they now correspond to an improvement.

Boris Hofmann, Deniz Igan and Daniel Rees Bank for International Settlements
Date Posted:

Higher oil prices are now a tailwind for the American trade deficit as the US is a net energy exporter. Since June 2021, the dollar has been moving in the same direction as the oil price, which is a reversal of the long-term relationship. @BIS_org

Has energy export status flipped how oil prices affect US trade?

Core argument: The United States became a net exporter of natural gas in 2017 and of oil in late 2019, following the shale oil boom that began in the early 2010s and substantially expanded US energy production.

A more structural determinant of the change in the commodity price-dollar nexus is the changing composition of US trade. Historically, the United States has been a net oil and gas importer. This pattern has changed recently. The shale oil boom that began in the early 2010s expanded US energy production substantially. The country became a net exporter of natural gas in 2017 and of oil in late 2019 (Graph 2.B).  These changing trade patterns have altered the relationship between commodity prices and the US terms of trade (ie the ratio of US export prices to US import prices). Historically, higher oil prices were associated with a deterioration in the US terms of trade. But as US oil production rose, the relationship between the two series flipped, so that higher oil prices now correspond to an improvement in the US terms of trade.

Takeaways by Macro Roundup® AI

  1. The United States became a net exporter of natural gas in 2017 and of oil in late 2019, following the shale oil boom that began in the early 2010s and substantially expanded US energy production.
  2. Higher oil prices were historically associated with a deterioration in the US terms of trade, but as US oil production rose that relationship flipped, so higher oil prices now correspond to an improvement in US terms of trade.
  3. The changing composition of US trade, from net oil and gas importer toward exporter, is a structural determinant of the change in the commodity price–dollar nexus.

AI Summary. Brent crude fell below $75 a barrel, down from as high as $87 after several OPEC+ members announced output cuts of more than 1m barrels a day. A softening US economy, fragility among US banks, and weak Chinese manufacturing data have turned investors bearish and slumped refining margins.

Paul Wallace Bloomberg
Date Posted:

Oil has fallen almost 14% since OPEC+ surprise production cuts on April 2, as investors bet on a slowing global economy. @markets

Are oil prices falling despite OPEC+ production cuts?

Core argument: Brent crude fell below $75 a barrel for the first time since March, down from as high as $87 in mid-April, as traders worry about the health of the global economy.

Brent crude futures fell below $75 a barrel for the first time since March as traders fret about the health of the global economy. The benchmark was as high at $87 a barrel as recently as mid-April, shortly after several members of the OPEC+ producers group said they’d cut production by more than 1 million barrels a day. But a softening US economy and continued fragility among its banks, as well as weak manufacturing data in China, have turned investors much more bearish and caused refining margins to slump.

Takeaways by Macro Roundup® AI

  1. Brent crude fell below $75 a barrel for the first time since March, down from as high as $87 in mid-April, as traders worry about the health of the global economy.
  2. Brent traded as high as $87 a barrel in mid-April, shortly after several OPEC+ members said they would cut production by more than 1 million barrels a day.
  3. A softening US economy, continued fragility among US banks, and weak Chinese manufacturing data have turned oil investors much more bearish and caused refining margins to slump.

AI Summary. Analysts at Wood Mackenzie estimate a greener world will be short about 6m tons of copper by next decade, requiring a dozen new mines on the scale of Rio Tinto's Oyu Tolgoi in Mongolia. BloombergNEF projects demand for refined copper will grow 53% by 2040 while mine supply rises only 16%.

James Fernyhough Bloomberg
Date Posted:

Bloomberg estimates demand for refined copper with grow by 53% in the next 17 years, but supply is on pace to grow by only 16% as greenfield investment in mining has declined. @markets

Will copper supply fall short of the demand from greener energy?

Core argument: Wood Mackenzie analysts estimate a greener world will be short about six million tons of copper by next decade, equivalent to needing 12 new mines the size of Rio Tinto's expanded Oyu Tolgoi in Mongolia's Gobi Desert.

Analysts at Wood Mackenzie estimate a greener world will be short about six million tons of copper by next decade, meaning 12 new Oyu Tolgois [an expanded Rio Tinto copper mine in Mongolia's Gobi Desert] need to come online within that period. But they aren’t — there are simply not enough new mines, much less enough large ones. The result is a gap: BloombergNEF estimates appetite for refined copper will grow by 53% by 2040, but mine supply will climb only 16%.

Takeaways by Macro Roundup® AI

  1. Wood Mackenzie analysts estimate a greener world will be short about six million tons of copper by next decade, equivalent to needing 12 new mines the size of Rio Tinto's expanded Oyu Tolgoi in Mongolia's Gobi Desert.
  2. BloombergNEF estimates appetite for refined copper will grow 53% by 2040 while mine supply climbs only 16%, leaving a gap.
  3. Too few new copper mines, and too few large ones, are coming online to close the projected shortfall.

AI Summary. Chile has moved to take state control of key lithium projects, and the combined market value of its two incumbent lithium producers has fallen by $8.5bn. Mining executives and analysts argue the strategy will erode the appeal of the world's second-largest lithium producer as an investment destination, benefiting Australia, Argentina and several African countries.

Harry Dempsey and Edward Financial Times
Date Posted:

Chile has moved to take substantial state control of key lithium projects, which own the largest lithium reserves in the world. New supply is coming online in Australia, Canada, the US, and Argentina.

Does state control of lithium projects reduce a country's investment appeal?

Core argument: Chile's two incumbent lithium producers have lost a combined $8.5bn in value since the government announced its move to take state control of key lithium projects.

Chile has moved to take state control of key lithium projects in an attempt to develop its vast resources of the key electric car battery metal after decades of two industry leaders dominating production. The value of the country’s two lithium incumbents has slumped by a collective $8.5bn since the announcement. But mining executives and analysts believe the strategy unveiled last month will have the opposite effect, further eroding the attractiveness of the world’s second-largest lithium producer as an investment destination, to the benefit of Australia, Argentina and several African countries. With alternative supply set to flourish in Australia, Canada, the US and Argentina, and uncertainty over the longevity of lithium’s boom as work proceeds on alternatives like sodium-ion batteries, the west’s need for Chile’s supplies is not assured.

Takeaways by Macro Roundup® AI

  1. Chile's two incumbent lithium producers have lost a combined $8.5bn in value since the government announced its move to take state control of key lithium projects.
  2. Mining executives and analysts argue Chile's state-control strategy will erode the attractiveness of the world's second-largest lithium producer as an investment destination, benefiting Australia, Argentina and several African countries.
  3. With alternative lithium supply set to flourish in Australia, Canada, the US and Argentina and work proceeding on alternatives such as sodium-ion batteries, the west's need for Chile's lithium is not assured.

AI Summary. US age-adjusted drug overdose death rates involving fentanyl more than tripled, from 5.7 to 21.6 per 100,000, while rates involving methamphetamine more than quadrupled (2.1 to 9.6) and cocaine more than doubled (3.5 to 7.9). Rates involving heroin fell 40.8% (not statistically significant) and oxycodone fell 21.0%.

Merianne Rose Spencer, Margaret Warner, Jodi Cisewski, Arialdi Miniño, David Dodds, Janaka Perera, and Farida Ahmad National Center for Health Statistics
Date Posted:

Between 2016 and 2021, drug overdose deaths involving fentanyl went from 5.7 per 100,000 to 21.6 per 100,000. During the same period drug overdose deaths involving methamphetamine more than quadrupled and cocaine deaths more than doubled.

How have US overdose death rates shifted across different drugs?

Core argument: The age-adjusted U.S. rate of drug overdose deaths involving fentanyl more than tripled from 5.7 per 100,000 in 2016 to 21.6 in 2021, rising 55.0% from 2019 to 2020 and 24.1% from 2020 to 2021.

The age-adjusted rate of drug overdose deaths involving fentanyl more than tripled over the study period, from 5.7 per 100,000 standard population in 2016 to 21.6 in 2021, with a 55.0% increase from 2019 (11.2) to 2020 (17.4), and a 24.1% increase from 2020 to 2021 (21.6). The rate of drug overdose deaths involving methamphetamine more than quadrupled, from 2.1 in 2016 to 9.6 in 2021. The rate of drug overdose deaths involving cocaine more than doubled, from 3.5 in 2016 to 7.9 per 100,000 in 2021. The rate of drug overdose deaths involving heroin decreased by 40.8%, from 4.9 in 2016 to 2.9 in 2021, although this decrease was not statistically significant. The rate of drug overdose deaths involving oxycodone decreased 21.0%, from 1.9 in 2016 to 1.5 in 2021.

Takeaways by Macro Roundup® AI

  1. The age-adjusted U.S. rate of drug overdose deaths involving fentanyl more than tripled from 5.7 per 100,000 in 2016 to 21.6 in 2021, rising 55.0% from 2019 to 2020 and 24.1% from 2020 to 2021.
  2. U.S. overdose death rates involving methamphetamine more than quadrupled from 2.1 per 100,000 in 2016 to 9.6 in 2021, while cocaine-involved rates more than doubled from 3.5 to 7.9.
  3. U.S. overdose death rates involving oxycodone fell 21.0% from 1.9 per 100,000 in 2016 to 1.5 in 2021, and heroin-involved rates fell 40.8% from 4.9 to 2.9, a decrease that was not statistically significant.

AI Summary. Americans broadly support abortion access and oppose onerous restrictions, but that does not mean such voters will back the party sharing that view. Democrats' wins in the three "Blue Wall" states partly reflect Republicans nominating candidates outside the mainstream on abortion, while some governors who signed strict abortion laws still won re-election.

Michael Baharaeen The Liberal Patriot
Date Posted:

Democratic success may have more to do with the Republican nominees than abortion as mainstream GOP governors who signed restrictive abortion laws were reelected last year in Ohio and Georgia. @mbaharaeen

Democratic success may have more to do with the Republican nominees than abortion as mainstream GOP governors who signed...

Does support for abortion access translate into votes for Democrats?

Core argument: Americans broadly support abortion access and oppose onerous restrictions, yet holding that view does not mean those voters will support the party that mostly shares it.

While Americans are fairly supportive of abortion access and largely oppose onerous restrictions on the procedure (and encroachments on their personal rights more broadly), it does not follow that all voters who hold this view will turn around and vote for the party that mostly shares it. Overall, Democrats have found success in their three Blue Wall states in part because Republicans have nominated candidates whose views on abortion fall way outside the mainstream. Yet, some GOP governors who signed strict abortion laws managed to successfully fashion themselves as moderates and secured re-election in 2022, signaling that while abortion may work to the advantage of Democratic candidates under the right circumstances, they should not view the issue as a silver bullet.

Takeaways by Macro Roundup® AI

  1. Americans broadly support abortion access and oppose onerous restrictions, yet holding that view does not mean those voters will support the party that mostly shares it.
  2. Democrats' success in the three Blue Wall states came in part from Republicans nominating candidates whose abortion views fall far outside the mainstream.
  3. Some Republican governors who signed strict abortion laws fashioned themselves as moderates and won re-election in 2022, suggesting abortion is not a silver bullet for Democratic candidates.