Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “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
  • “…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 full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, October 24, 2024

AI Summary. Tight monetary policy paired with relatively loose fiscal policy, especially in the United States, may be a key factor behind dollar appreciation, but the baseline outlook assumes a rotation in that policy mix. Necessary fiscal consolidation in many economies is expected to slow growth and calls for looser monetary policy, which should make deficit reduction easier.

IMF Staff International Monetary Fund
Date Posted:

The IMF notes that American interest payments relative to revenues are on par with the interest payments of low-income developing countries. Hat tip to @Brad_Setser.

Does the monetary-fiscal policy mix drive dollar appreciation?

Core argument: Tight monetary policy combined with relatively loose fiscal policy, particularly in the United States, may be one of the key factors behind dollar appreciation in 2024, a combination expected to change.

Tight monetary policy combined with relatively loose fiscal policy, particularly relevant in the United States, may be one of the key factors that has led to dollar appreciation in 2024. This is expected to change. With public-debt-servicing costs on an upward trend in emerging market and developing economies and a recent jump in the United States [AEs = advanced economies; EMMIEs = emerging market and middle-income economies; LIDCs = low-income developing countries] the baseline assumes a rotation of the policy mix. Necessary fiscal consolidation in many economies is expected to slow down growth and calls for looser monetary policy, which should in turn help governments trim deficits more easily.

Takeaways by Macro Roundup® AI

  1. Tight monetary policy combined with relatively loose fiscal policy, particularly in the United States, may be one of the key factors behind dollar appreciation in 2024, a combination expected to change.
  2. The World Economic Outlook baseline assumes a rotation of the policy mix, with public-debt-servicing costs trending upward in emerging market and developing economies and jumping recently in the United States.
  3. Necessary fiscal consolidation in many economies is expected to slow growth and calls for looser monetary policy, which should in turn help governments trim deficits more easily.

Related Articles:

  • US Interest Burden Hits 28-Year High, Escalating Political Risk — US Treasury net interest payments reached $882bn in a fiscal year, equal to 3.06% of gross domestic product — the highest ratio since 1996 — and about 18% of federal revenues. The net interest bill exceeded Defense Department spending on military programs for the first time.
  • When Does Federal Debt Reach Unsustainable Levels? — The authors estimate that U.S. debt held by the public cannot exceed roughly 200% of GDP even under favorable market conditions, and that under current policy the ratio reaches 175–200% within about 20 years. After that point, they argue, no tax increases or spending cuts could avert default or inflationary debt monetization.
  • Larry Summers and Bob Rubin Join Our CIOs to Discuss the Surprising Economic Cycle — Adopting the Simpson-Bowles fiscal consolidation when interest rates were at zero would have risked excessive disinflation, since long rates had no room to fall to provide an offsetting expansionary impulse. After the large run-up in debt and rise in real interest rates, the developing fiscal situation risks inflationary pressure, Treasury market disruption, or crowding out of private investment.

AI Summary. The authors estimate the S&P 500 will deliver an annualized nominal total return of 3% over the next 10 years, roughly 1% in real terms, modeling long-term returns as a function of starting valuation, market concentration, frequency of economic contractions, corporate profitability, and interest rates. The index returned 13% annualized over the past decade, above its 11% long-term average.

David Kostin, Ben Snider, Ryan Hammond, et al. Goldman Sachs
Date Posted:
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.@GoldmanSachs estimates that the S&P 500 will deliver an annualized nominal total return of 3% over the next decade, roughly 1% on a real basis. The 13% annualized return over the last decade exceeded the long-term mean of 11%.

How will high market concentration and valuations affect stock returns?

Core argument: The S&P 500 is estimated to deliver a 3% annualized nominal total return over the next 10 years — the 7th percentile since 1930 — and roughly 1% in real terms.

We estimate the S&P 500 will deliver an annualized nominal total return of 3% during the next 10 years (7th percentile since 1930) and roughly 1% on a real basis. We model prospective long-term equity returns as a function of five variables: starting absolute valuation, stock market concentration, economic contraction frequency, corporate profitability, and interest rates. The S&P 500 index during the past decade has posted an annualized total return of 13%. The annualized return translates into a cumulative 233% total return across the period. Dividends contributed 54 pp (roughly 1/4) of the total return. Of the remaining 178% of price gain, 127 pp (nearly 3/4) was attributable to increased earnings during the period and 52 pp (approximately 1/4) was attributable to valuation expansion. Increased sales, higher operating margins, and lower tax rates contributed to annualized earnings growth of 7% over the period while the forward P/E multiple expanded from 16x to 22x. The 13% annualized stock market return during the past ten years exceeded the long-term average of 11%.

Takeaways by Macro Roundup® AI

  1. The S&P 500 is estimated to deliver a 3% annualized nominal total return over the next 10 years — the 7th percentile since 1930 — and roughly 1% in real terms.
  2. The forecast models long-term equity returns as a function of five variables: starting absolute valuation, stock market concentration, economic contraction frequency, corporate profitability, and interest rates.
  3. The S&P 500 returned 13% annualized over the past decade, above the 11% long-term average, for a cumulative 233% total return, with dividends adding 54 pp, earnings growth 127 pp, and valuation expansion 52 pp as the forward P/E rose from 16x to 22x.

Related Articles:

  • US Exceptionalism: Drivers of Equity Outperformance and What’s Needed for a Repeat — US companies need about 7% earnings-per-share growth to deliver a normal 4% equity risk premium above the risk-free rate, versus about 3% for other developed markets, with the highest expectations embedded in technology and the largest US tech firms. Chinese companies could generate a 4% risk premium over Chinese bonds with no earnings growth.
  • Which U.S. Stocks Generated the Highest Long-Term Returns? — Of the 29,078 U.S. common stocks in a database spanning nearly a century, 51.6% had negative cumulative returns, while 17 stocks returned more than 5m% — led by Altria at 265m%. Those top performers averaged annualized returns of just 13.47%, underscoring the value of time invested.
  • and — Of the 29,078 U.S. common stocks in a database spanning nearly a century, 51.6% had negative cumulative returns, while 17 stocks returned more than 5m% — led by Altria at 265m%. Those top performers averaged annualized returns of just 13.47%, underscoring the value of time invested.
  • Stock Market Concentration — Over 2014–2023 the 10 largest U.S. stocks averaged 19% of market capitalization while generating 47% of total economic profit, and by 2023 they were 27% of market capitalization and 69% of economic profit. The S&P 500 returned above its average when concentration was rising and below it when concentration was falling.

AI Summary. US equity prices now imply that structural limits will be pushed back, with US market capitalization about as large a share of global indices as any single country has been and US stocks needing roughly 65 cents of every dollar flowing into equities to keep rising. An AI-driven productivity boom could extend that outperformance.

Bob Prince, Greg Jensen, and Karen Karniol-Tambour Bridgewater
Date Posted:

Bridgewater argues, “It would take almost a miracle for US assets to repeat the last decade.” To keep rising, US equities would need to attract ~65 cents of every dollar flowing into global stocks.

Have US stock prices reached the limits of global investor flows?

Core argument: US equities need to attract roughly 65 cents of every dollar flowing into stocks to keep rising, with US market cap now about as large a share of global indices as any single country has ever been.

While the US is relatively unconstrained by economic limits, it faces limits of pricing that mean it would take almost a miracle for US assets to repeat the last decade. US equity pricing now implies not just cyclical outperformance, but the pushing back of structural limits. One example is the limit of flows: US market cap is now roughly as large a share of global indices as one country has ever been. To keep rising, US equities need to attract ~65 cents of every dollar that flows into stocks. But the pricing doesn’t make those flows attractive: in 2010, US earnings were discounted to grow modestly and at a similar rate to the rest of the world. The US then had an exceptional decade because its companies were more dynamic, had more supportive governance for shareholders, and operated against a more favorable policy backdrop. An AI productivity miracle could push back the limits and extend US outperformance, so we are tracking this closely. AI will shape the environment directly, both near term (through capex, winners and losers, etc.) and more broadly over time (e.g., productivity growth expanding the limits).

Takeaways by Macro Roundup® AI

  1. US equities need to attract roughly 65 cents of every dollar flowing into stocks to keep rising, with US market cap now about as large a share of global indices as any single country has ever been.
  2. The CIOs argue that US equity pricing now implies not just cyclical outperformance but the pushing back of structural limits, making a repeat of the last decade nearly miraculous.
  3. In 2010, US earnings were discounted to grow modestly and at a rate similar to the rest of the world, and the US then outperformed on more dynamic companies, shareholder-supportive governance, and a more favorable policy backdrop.

Related Articles:

  • Business Spending Is Lining Up to Reinforce Growth — Around 70% of sectors are posting positive year-over-year profit growth, with big tech showing the largest acceleration in demand and profits but strength broadening across the economy. Companies are responding with rising capital spending growth and more optimistic investment plans, as firms typically add capacity with a slight lag after real demand picks up.
  • US Exceptionalism: Drivers of Equity Outperformance and What’s Needed for a Repeat — US companies need about 7% earnings-per-share growth to deliver a normal 4% equity risk premium above the risk-free rate, versus about 3% for other developed markets, with the highest expectations embedded in technology and the largest US tech firms. Chinese companies could generate a 4% risk premium over Chinese bonds with no earnings growth.
  • Global Strategy Paper Updating Our Long-Term Return Forecast For US Equities To Incorporate The Current High Level Of Market Concentration — The authors estimate the S&P 500 will deliver an annualized nominal total return of 3% over the next 10 years, roughly 1% in real terms, modeling long-term returns as a function of starting valuation, market concentration, frequency of economic contractions, corporate profitability, and interest rates. The index returned 13% annualized over the past decade, above its 11% long-term average.

AI Summary. International students on temporary visas received more than a third of US science and engineering doctorates, including 59% in computer science, with most coming from China and India, and 77% of Chinese doctoral recipients said they intended to stay in the US. The US hosts 15% of the world's international students, down from 23%.

Jeff Tollefson and Richard Van Noorden Nature
Date Posted:
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Over the past 5 years, the US has won more science Nobels than the rest of the world combined. The US science workforce is highly reliant on non-native talent: 43% of doctorate-holders in the US STEM workforce are foreign-born.

Does US science leadership depend on foreign doctoral students?

Core argument: More than one-third of US science and engineering PhDs last year went to international students on temporary visas, with the share reaching 59% in computer science, and most of those students coming from China and India.

More than 1/3 of science and engineering PhDs granted [in the US] last year went to international students (those on temporary visas), with the share at 59% in computer science. Most of these students come from China and India. And when asked, 77% of Chinese students who earned doctoral degrees in the United States said that they intended to stay in the country, according to 2022 data, a proportion that has dipped only slightly over the previous five years. More generally, the United States remains the world’s top venue for international students, according to data from the Organisation for Economic Co-operation and Development, hosting 15% of all students worldwide in 2020, the latest comparative figures available. But there are signs that the United States might be losing its edge. Its share of international students is declining, down from 23% in 20005. And although enrolment numbers have recovered to an all-time high after a brief pandemic dip there remains a question about whether top talent from China continues to view the United States as an attractive destination.

Takeaways by Macro Roundup® AI

  1. More than one-third of US science and engineering PhDs last year went to international students on temporary visas, with the share reaching 59% in computer science, and most of those students coming from China and India.
  2. 77% of Chinese students who earned US doctorates said they intended to stay in the country, according to 2022 data, a proportion that dipped only slightly over the previous five years.

Related Articles:

  • China Has Become a Scientific Superpower — China tops the Nature Index, which counts contributions to papers in a set of prestigious peer-reviewed journals, after ranking second at the index's launch with less than a third of America's contribution. Six Chinese universities or institutions rank in the world's top ten by research output in the Leiden Ranking, and seven by the Nature Index.
  • The Extreme Shortage of High IQ Workers — Semiconductor manufacturing requires workers of above-average intelligence, with the most demanding roles needing IQs in the top 1 in 1,000 — a pool of about 164,000 people in the US, of whom perhaps 100,000 can be placed in such professions. The author argues this scarcity explains reliance on high-IQ workers abroad and on smarter tools and non-human intelligence.
  • Top Talent, Elite Colleges, and Migration: Evidence from the Indian Institutes of Technology — Among top scorers on India's Joint Entrance Exam for the Indian Institutes of Technology, 62% of the top 100 and 36% of the top 1,000 migrated abroad within eight years, primarily to the U.S. for graduate school. The authors argue elite schools shape migration by signaling ability and providing access to networks.

AI Summary. Boeing factory workers rejected a labor contract that would have raised wages 35% over four years, with 64% of voting union members opposed. The strike by 33,000 workers has halted 737, 767 and 777 production at Boeing's Seattle-area hub, weighing on finances and prompting credit-rating firms to weigh a downgrade to junk.

Julie Johnsson and Spencer Soper Bloomberg
Date Posted:

The Machinists and Aerospace Workers rejected Boeing’s offer of a 35% wage increase over four years; the almost 40-day strike is costing Boeing at least $100mm a day and its debt is facing a downgrade to junk status.

Does a rejected wage contract prolong a strike halting aircraft production?

Core argument: 64% of voting Boeing machinists rejected a tentative contract that would have raised wages 35% over four years, according to the International Association of Machinists and Aerospace Workers district representing the 33,000 striking workers.

Boeing CEO Kelly Ortberg’s quest to stabilize the struggling US planemaker suffered a stinging setback after factory workers rejected a new labor contract that would have increased their wages by 35% over four years. Some 64% of the union members who cast ballots on Wednesday voted against the tentative agreement, according to the International Association of Machinists and Aerospace Workers district representing the 33,000 striking workers. While the opposition this time was smaller than the overwhelming 94% vote to reject the company’s initial offer in September, the result is a setback to Boeing’s efforts to get operations back on track. The planemaker has been forced to suspend work on its 737 and larger 767 and 777 airliner models at its Seattle-area manufacturing hub for more than a month, weighing on its finances and putting credit-rating companies on alert for a possible downgrade to junk status.

Takeaways by Macro Roundup® AI

  1. 64% of voting Boeing machinists rejected a tentative contract that would have raised wages 35% over four years, according to the International Association of Machinists and Aerospace Workers district representing the 33,000 striking workers.
  2. Opposition narrowed from the 94% vote rejecting Boeing's initial offer in September, but the rejection sets back CEO Kelly Ortberg's effort to stabilize the planemaker.
  3. Boeing has suspended work on its 737, 767 and 777 models at its Seattle-area manufacturing hub for more than a month, weighing on its finances and putting credit-rating companies on alert for a possible downgrade to junk status.

Related Articles:

  • Boeing’s Next Crisis: Aerospace Workers Demanding 40% Pay Raise — Boeing's largest union, the International Association of Machinists and Aerospace Workers, is demanding a 40% pay raise over three or four years, citing a scarcity of qualified aerospace workers and an earlier contract that sacrificed pensions and limited raises. Analysts at Jefferies estimate every 10% rise in machinist wages would reduce Boeing's free cash flow by about $260m.
  • Trends in Real Wage Growth among Union, Nonunion Workers — Wage changes for union and nonunion workers tend to move similarly over time, with union workers' nominal wage changes less volatile, and since 2002 both groups' wages increased at the same rate. When consumer prices grew faster than wages, real wage growth turned negative despite a strong labor market, then turned positive as inflation fell.
  • Crises at Boeing and Intel Are a National Emergency — Intel and Boeing, once benchmarks for high-quality, demanding manufacturing, declined because of their own mistakes rather than cheap foreign competition. Because leading U.S. tech firms' software and devices depend on advanced semiconductors fabricated under contract, especially by Taiwan Semiconductor Manufacturing Co., Chinese subjugation of Taiwan could leave the U.S. tech sector at Beijing's mercy.

Friday, October 25, 2024

AI Summary. Taiwan Semiconductor Manufacturing Co. reports that the share of usable chips produced at its Phoenix, Arizona plant is about 4 percentage points higher than at comparable factories in Taiwan. Yield is a critical industry measure because it determines whether companies can cover the enormous costs of a chip plant.

Mackenzie Hawkins Bloomberg
Date Posted:

TSMC’s new manufacturing facility in Arizona is achieving yields 4pp higher than comparable facilities in Taiwan.

Can US chip plants match Taiwan's production yields?

Core argument: TSMC's Phoenix plant produces usable chips at a rate about 4 percentage points higher than comparable facilities in Taiwan, according to Rick Cassidy, president of TSMC's US division, speaking on a webinar.

Taiwan Semiconductor Manufacturing Co. has achieved early production yields at its first plant in Arizona that surpass similar factories back home, a significant breakthrough for a US expansion project initially dogged by delays and worker strife. The share of chips manufactured at TSMC’s facility in Phoenix that are usable is about 4 percentage points higher than comparable facilities in Taiwan, Rick Cassidy, president of TSMC’s US division, told listeners on a webinar Wednesday, according to a person who participated. The success rate, or yield, is a critical measure in the semiconductor industry because it determines whether companies will be able to cover the enormous costs of a chip plant. The latest yield advancement is notable for TSMC because it has historically kept the most advanced and efficient plants in its home island of Taiwan.

Takeaways by Macro Roundup® AI

  1. TSMC's Phoenix plant produces usable chips at a rate about 4 percentage points higher than comparable facilities in Taiwan, according to Rick Cassidy, president of TSMC's US division, speaking on a webinar.
  2. Yield is a critical measure in the semiconductor industry because it determines whether companies can cover the enormous costs of a chip plant.
  3. TSMC has historically kept its most advanced and efficient plants in Taiwan, making the Arizona facility's yield advantage notable for a US expansion project dogged by delays and worker strife.

Related Articles:

  • With US Chips Act Money Mostly Divvied Up, the Real Test Begins — The US Chips Act is a bet that Intel, Micron, Taiwan Semiconductor Manufacturing, and Samsung can return advanced chip production to the US, with an explicit goal of making a fifth of the world's most advanced processors by 2030, up from roughly zero. Nearly 100 companies have pledged about $400bn in US facilities.
  • The Chips Act Has Been Surprisingly Successful So Far — The US government has spent over half of its $39bn in Chips Act semiconductor incentives, and chip companies and supply chain partners have announced $327bn of investments over the next 10 years, according to Semiconductor Industry Association calculations. US data show a 15-fold increase in construction of computing and electronics manufacturing facilities.
  • TSMC Boosts Joe Biden’s AI Chip Ambitions With $11.6bn US Production Deal — Taiwan Semiconductor Manufacturing Co. will produce its most advanced 2-nanometre chips at a plant in Phoenix, Arizona, and raise its total US investment from $40bn to $65bn to build a third fabrication plant. The US Commerce Department will provide $6.6bn in grants and up to $5bn in loans.

AI Summary. U.S. manufacturing job growth since the pandemic is occurring disproportionately in counties least exposed to Chinese import competition in the 2000s, according to an analysis of federal employment and wage data. The counties hardest hit by that import competition still have fewer manufacturing jobs than before the pandemic.

Connor O'Brien and Adam Ozimek Agglomerations
Date Posted:
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.@ModeledBehavior @cojobrien finds that the current expansion is the first time in 50 years that manufacturing jobs have fully recovered from a recession, but the recovery is not reaching areas hit by the “China Shock.”

Is manufacturing job growth reaching communities hit hardest by Chinese imports?

Core argument: U.S. counties most exposed to Chinese import competition in the 2000s still have fewer manufacturing jobs than before the pandemic, according to an analysis of Quarterly Census of Employment and Wages data.

Is the historic recovery in manufacturing employment since the pandemic actually reaching [economically struggling] places? Not yet. One place to look is the communities hit hardest by the “China Shock.” These are the parts of the U.S. whose local manufacturing ecosystems took the biggest hit from cutthroat competition from Chinese imports in the 2000s. While policymakers are hoping that the manufacturing boom will finally bring relief to these communities, post-pandemic manufacturing job growth is disproportionately happening in places that were least exposed to the China Shock. Breaking down U.S. counties by the degree to which they were exposed to competition from Chinese imports during the 2000s, we used the Quarterly Census of Employment and Wages (QCEW) to find that the most exposed places are not participating in the manufacturing employment boom. Indeed, the hardest-hit places still have fewer manufacturing jobs than they did before the pandemic.

Takeaways by Macro Roundup® AI

  1. U.S. counties most exposed to Chinese import competition in the 2000s still have fewer manufacturing jobs than before the pandemic, according to an analysis of Quarterly Census of Employment and Wages data.
  2. Post-pandemic manufacturing job growth is disproportionately occurring in U.S. counties that were least exposed to the China Shock, rather than in the communities whose manufacturing ecosystems were hit hardest.
  3. Policymakers hope the manufacturing boom will bring relief to communities hit by the China Shock, but those places are not yet participating in the employment recovery.

Related Articles:

  • Manufacturing Jobs Have Recovered, But Not Everywhere — U.S. manufacturing employment recovered the 650,000 jobs lost in the 2020 recession, rising above 12.9m workers and exceeding the pre-pandemic level of 12.8m — the first such post-recession recovery since the late 1970s. Even so, manufacturing's share of private-sector employment fell from 31% in 1970 to 9.7%.
  • The Mysterious Slowdown in U.S. Manufacturing Productivity — US manufacturing labor productivity growth slowed broadly after the Great Recession, with the four largest firms in each industry averaging –0.5% growth from 2010 to 2022 versus 3.7% from 1987 to 2007, and smaller follower firms showing an identical 4.2 percentage-point decline. The authors find the slowdown spans all industries and firm sizes.
  • Labor Market Conflict and the Decline of the Rust Belt — The authors argue that persistent labor market conflict in the Rust Belt's main industries lowered investment and productivity growth, shifting employment to the rest of the country, and estimate it accounts for roughly half the decline in the region's share of US manufacturing employment. Rising foreign competition plays a more modest quantitative role.

AI Summary. NVIDIA's market capitalization exceeds the combined value of the stock markets of five G7 countries, and foreigners own 18% of the US stock market, leaving global equity portfolios and retirement allocations heavily exposed to a single company. Public markets contain both safe and risky investments, as do private assets.

Torsten Sløk Apollo
Date Posted:

At ~ $3.5T NVIDIA’s market cap is larger than the market cap of 5 of the G7 countries. Torsten Sløk warns “Global equity markets are basically leveraged to NVIDIA.”

Are global equity portfolios dangerously concentrated in one company?

Core argument: NVIDIA's market capitalization exceeds the combined total market cap of five of the G7 countries, leaving global equity markets, including retirement allocations to equities, effectively leveraged to NVIDIA.

NVIDIA is now bigger than the total market cap of five of the G7 countries. And foreigners own 18% of the US stock market. The bottom line is that global equity markets, including retirement allocations to equities, are basically leveraged to NVIDIA. Let’s hope the value of NVIDIA doesn’t decline significantly. The idea that public markets are safe and retirement savings in public markets are safe is misguided. Some investments in public markets are safe, and some are risky. Same for private assets. Some private investments are safe, and some private investments are risky.

Takeaways by Macro Roundup® AI

  1. NVIDIA's market capitalization exceeds the combined total market cap of five of the G7 countries, leaving global equity markets, including retirement allocations to equities, effectively leveraged to NVIDIA.
  2. Foreigners own 18% of the US stock market.
  3. The premise that public markets and retirement savings held in them are inherently safe is misguided, since both public and private markets contain a mix of safe and risky investments.

Related Articles:

  • Stock Market Concentration — Over 2014–2023 the 10 largest U.S. stocks averaged 19% of market capitalization while generating 47% of total economic profit, and by 2023 they were 27% of market capitalization and 69% of economic profit. The S&P 500 returned above its average when concentration was rising and below it when concentration was falling.
  • Which U.S. Stocks Generated the Highest Long-Term Returns? — Of the 29,078 U.S. common stocks in a database spanning nearly a century, 51.6% had negative cumulative returns, while 17 stocks returned more than 5m% — led by Altria at 265m%. Those top performers averaged annualized returns of just 13.47%, underscoring the value of time invested.
  • Long-Term Shareholder Returns: Evidence From 64,000 Global Stocks — A study of about 64,000 global stocks estimates net global stock market wealth creation of $75.7tn, with returns highly concentrated: the top 159 firms (0.25%) account for half of net wealth creation and the top 1,526 (2.39%) account for all of it. Fewer than half of stocks beat one-month US Treasury bills, 42.6% of non-US and 44.8% of US stocks.

AI Summary. Canada plans to admit about 395,000 permanent residents, nearly 20% fewer than the 485,000 expected this year, and set its first target for temporary immigrants such as international students and foreign workers, cutting their numbers by roughly 446,000 over two years. The government projects the population would fall 0.2% in each of the next two years.

Randy Thanthong-Knight Bloomberg
Date Posted:

Canada is planning to admit 20% fewer permanent immigrants next year and reduce temporary residents by 58%. The plan means Canada’s population would decline by 0.2% in each of the next two years, vs. 3% y/y growth in Q2 2024.

Will sharp immigration cuts shrink Canada's population?

Core argument: Canada will admit 395,000 permanent residents next year, nearly 20% fewer than this year's expected 485,000.

Canada will admit nearly 20% fewer permanent residents next year, or 395,000, compared to this year’s expected level of 485,000. The government also set its first-ever target for temporary immigrants. The group, which includes international students and foreign workers who have been a key driver of post-pandemic influxes, will see their numbers decline by about 446,000 in 2025 and 2026, compared to 2023 levels of about 800,000. Overall, the plan means Canada’s population would decline by 0.2% in each of the next two years, before rebounding with modest growth of 0.8% in 2027. That’s compared to annual growth of 3% in the second quarter of this year, one of the fastest rates in the world and on par with developing countries with high birth rates. Trudeau described the plan as a “pause” on population growth to allow all levels of government to catch up and make the necessary investments in health care, housing, and social services to accommodate more people in the future.

Takeaways by Macro Roundup® AI

  1. Canada will admit 395,000 permanent residents next year, nearly 20% fewer than this year's expected 485,000.
  2. Canada set its first-ever target for temporary immigrants, including international students and foreign workers, cutting their numbers by about 446,000 in 2025 and 2026 versus 2023 levels of roughly 800,000.
  3. Canada's population would decline 0.2% in each of the next two years before growing 0.8% in 2027, against 3% annual growth in the second quarter of this year, with Trudeau calling the plan a "pause" to let governments invest in health care, housing, and social services.

Related Articles:

  • A “Heat Dome” of Immigration — Canada has adopted some of the most aggressive immigration policies in the OECD, adding 1.273m residents in a year to reach a population of 41m — proportionally equivalent to the US admitting more than 10m immigrants annually. Canadians are increasingly angry as housing prices soar, sprawl expands, and traffic worsens.
  • Immigration Surge Fuels Male Population Boom in Canada — Canada's adult male population grew 3.4% over the past year versus 2.9% for women, the widest gap in nearly 50 years of records, as a higher share of male newcomers shifts the gender ratio. Among those aged 25 to 44, men outnumber women by 141,000, against a long-run average of zero.
  • Why is Canada’s Economy Falling Behind America’s? — The United States and Canadian economies have diverged, with American output expected to grow 11% over five years versus 6% in Canada. The International Monetary Fund projects Canadian national income per head will fall to 70% of the American level, down from roughly 80% in the decade before the pandemic.

AI Summary. China's National Bureau of Statistics reported that youth unemployment for 16-24 year-olds excluding students fell to 17.6% from 18.8%, roughly one in six, the third straight month above 17%. Authorities previously suspended publication of the rate after it reached an all-time high of 21.3%, resuming only after excluding enrolled students.

Xinyi Wu South China Morning Post
Date Posted:

Youth unemployment (16-24) in China declined in September to 17.6% down from 18.8% in August, a record high under the new methodology that excludes students. A previous approach that included students was suspended after hitting 21.3% in June 2023.

Is youth unemployment in China still elevated despite a monthly decline?

Core argument: China's September jobless rate for 16–24 year-olds excluding students fell to 17.6% from 18.8% in August, roughly one in six, according to the National Bureau of Statistics.

The September jobless rate for the 16-24 age group, excluding students, dipped to 17.6% – or roughly one out of every six in the target group – from August’s level of 18.8%, according to data released by the National Bureau of Statistics. It marked the third consecutive month that the indicator surpassed 17%. There had been a gradual improvement from March to June, when the rate fell to 13.2%. Beijing opted not to release the rate for the months of July to November last year after it had climbed to an all-time high of 21.3%. When the data set’s release resumed with December’s rate, authorities revealed that they had taken enrolled students out of the unemployment equation, bringing the rate down to 14.9%. China has reported a record-high 11.79 million college graduates this year, most of whom entered the job market this summer.

Takeaways by Macro Roundup® AI

  1. China's September jobless rate for 16–24 year-olds excluding students fell to 17.6% from 18.8% in August, roughly one in six, according to the National Bureau of Statistics.
  2. China's youth unemployment rate has exceeded 17% for three consecutive months, after a gradual improvement from March to June that brought it down to 13.2%.
  3. Beijing withheld the youth jobless rate from July to November last year after it hit an all-time high of 21.3%, resuming publication with December's rate of 14.9% once enrolled students were excluded.

Related Articles:

  • Why Has Youth Unemployment Risen So Much in China? — Young workers aged 15-24 are particularly vulnerable when economic growth slows, and China's youth unemployment rate does not appear to be an outlier relative to its income level among global peers. Mismatches between the skills graduates acquire in higher education and those employers demand may add to labor market frictions.
  • Xi Jinping Calls for Quality Jobs for Youth Instead of ‘Bitterness’ — China's leadership has ordered that providing "high-quality full employment" be an economic priority, with youth unemployment running at nearly three times the overall rate. Unemployment among 16-24 year-olds, excluding students, stood at 14.7% against an urban unemployment rate of 5%.
  • China’s Defeated Youth — Urban Chinese unemployment among those aged 16 to 24 has run above 20%, about double the pre-pandemic level for that age group, with over 70% of unemployed youth in one year calculated to be graduates. Sentiment analysis of social media indicates the mood of young Chinese is growing darker.

AI Summary. A presidential election forecast model shows Kamala Harris leading the national polling average by 1.3 points and the projected popular vote by 1.9 points, with the projection drawn mainly from state polls. The model treats the race as a toss-up, with state polling consistent with a trend toward Donald Trump and slightly more winning electoral maps for him.

Nate Silver and Eli McKown-Dawson Silver Bulletin
Date Posted:

Thursday’s @NateSilver538 update showed Harris’s national lead down to 1.3pp from a peak of 3.5pp on October 2. The model gave Trump a 53.7% chance of winning the electoral college.

Does a small popular vote lead guarantee an Electoral College win?

Core argument: Kamala Harris's lead in the Silver Bulletin national polling average has narrowed to 1.3 points, with more national polls showing her behind — which the forecast calls not a good sign given her likely Electoral College disadvantage.

We’ve been starting to see more national polls showing Kamala Harris behind — certainly not a good sign for her given her likely Electoral College disadvantage. Her lead in our national polling average is down to just 1.3 points. The good news for Harris is that our model doesn’t care that much about national polls; instead, our forecast of the popular vote, which is mainly based on extrapolations from state polls, has her up 1.9. And those state polls were a bit more mixed, though there was a lot of data in the Trump +1 range: still consistent with a race that we’d have to describe as a toss-up, but consistent with a trend toward Trump in recent weeks and just slightly more winning maps than Harris.

Takeaways by Macro Roundup® AI

  1. Kamala Harris's lead in the Silver Bulletin national polling average has narrowed to 1.3 points, with more national polls showing her behind — which the forecast calls not a good sign given her likely Electoral College disadvantage.
  2. The Silver Bulletin model gives national polls little weight, relying mainly on extrapolations from state polls, and its popular-vote forecast has Harris up 1.9 points.
  3. State polls were more mixed, with much data in the Trump +1 range, which the forecast describes as consistent with a toss-up, a trend toward Trump in recent weeks, and slightly more winning maps for Trump than Harris.

Related Articles:

  • Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility — Across the 1978 to 1992 birth cohorts, adult household incomes fell for white children raised in low-income families and rose for those raised in high-income families, increasing the intergenerational persistence of income ranks among white children by 28%. Over the same cohorts, adult incomes rose for Black children at all parental income levels.
  • America’s Young Men Are Falling Even Further Behind — Labor force participation among US men ages 25 to 34 has not grown in a decade, standing at 89%, which one analysis of Bureau of Labor Statistics data estimates is more than 700,000 fewer participants than at 2004 rates; women's participation in that age group is up 6 percentage points over 10 years, to 79%.
  • Real Wage Growth: The Post-Pandemic Labor Market and Beyond — Real wage gains for non-managerial workers, roughly 80% of the private workforce, exceeded both those of all workers and projections based on pre-pandemic trends, which is attributed to labor market tightness and strong demand in low-wage sectors. This compression of wage inequality has persisted even as the labor market cooled and unemployment rose above 4%.