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
  • “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 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 represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
  • “…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 should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, October 8, 2025

AI Summary. Oracle generated about $900m from renting servers powered by Nvidia chips over a three-month period and recorded $125m in gross profit, a 14% gross margin that is below those of many nontech retail businesses. The author argues data centers are a capital-intensive business with unimpressive margins.

Paul Kedrosky Applied Complexity
Date Posted:

Oracle is currently earning 14% gross margins from renting out Nvidia’s cutting-edge Blackwell chip. Paul Kedrosky notes, “That’s worse than the gross margins of many nontech retail businesses.”

Are GPU rental margins lower than those of retail businesses?

Core argument: Oracle earned a 14% gross margin renting Nvidia-powered servers, generating roughly $900 million in revenue and $125 million in gross profit in the three months ended August, equal to 14 cents per $1 of sales.

Oracle's getting 14% gross margin from renting out Nvidia's Blackwell. In the three months that ended in August, Oracle generated around $900 million from rentals of servers powered by Nvidia chips and recorded a gross profit of $125 million. That is equal to 14 cents for every $1 of sales. That’s worse than the gross margins of many nontech retail businesses. [Data centers are a] highly capital-intensive business with unimpressive margins.

Takeaways by Macro Roundup® AI

  1. Oracle earned a 14% gross margin renting Nvidia-powered servers, generating roughly $900 million in revenue and $125 million in gross profit in the three months ended August, equal to 14 cents per $1 of sales.
  2. Oracle's 14% gross margin on rentals of Nvidia-powered servers is worse than the gross margins of many nontech retail businesses.
  3. Data centers are a highly capital-intensive business with unimpressive margins.

Related Articles:

  • The Kanye/Data Center Crossover — Data center capital spending differs from fiber and railroad investment because most of the cost sits in processors that are replaced every 3-4 years rather than in long-lived shells, power, and cooling connections. That short replacement cycle requires returns high enough to exceed a risk-adjusted cost of capital of 12-14% before the hardware must be replaced.
  • The Blob: Capital, China, Chips, Chicago and Chilliwack — Data center construction spending has eclipsed office construction, and the specialized power rates most data centers pay fall short of covering the cost of a new natural gas plant, leaving other customers to bear part of the bill. In the PJM grid region, data center demand accounted for 70% of the increase in electricity costs over the past year.
  • Fair Shakes — Technology-sector capital spending has accounted for 35%–45% of US GDP growth over three quarters, implying that without it growth would be near 1% given weak consumption. Among S&P 500 companies, capital spending rose 24% and research and development 10%, but the median stock grew both by only 3%–4%.

AI Summary. The 5 largest US technology companies are worth about 16% of the global public equity market, and the top 10 US stocks nearly 25%, almost $25tn. The author argues valuations are high but not bubble-level, with the "Magnificent 7" median forward price-to-earnings ratio at 27x, roughly half that of the late-1990s leaders.

Peter Oppenheimer, Sharon Bell, Guillaume Jaisson and Giovanni Ferrannini Goldman Sachs
Date Posted:
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Citing a median 24m fwd P/E ratio across the Mag7 of 27x (26x net Tesla) relative to their comps 52x during the Tech Bubble, Oppenheimer argues valuations are “not at levels that are as high as are typically seen at the height of a financial bubble.”

Are Today's Dominant Tech Valuations High Enough To Constitute A Bubble?

Core argument: The 5 largest US technology companies are worth about 16% of the entire global public equity market, exceeding the combined value of the Eurostoxx 50, the UK, India, Japan, and Canada.

The biggest 5 technology companies in the US now have a collective value that exceeds the combined size of the Eurostoxx 50, the UK, India, Japan, and Canada. Put another way, these 5 companies are worth around 16% of the entire global public equity market. The biggest 10 US stocks (8 of which are technology-related) account for nearly 25% of the global equity market, and are worth almost $25 trillion. While stock prices have appreciated strongly, up until now, these have been reflected by powerful and sustained profit growth rather than excessive speculation about the future. [The] the median 24m forward P/E ratio across the ‘Magnificent 7’ is 27x, or 26x if we exclude Tesla (which has a much higher multiple than the other companies). This is roughly half the equivalent valuation of the biggest 7 companies in the late 1990s, while the dominant companies in Japan (mostly banks) traded at higher valuations still; the current EV to sales ratios are also much lower than those of the dominant companies in the late 1990s. So it is true that valuations are high but, in our view, generally not at levels that are as high as are typically seen at the height of a financial bubble.

Takeaways by Macro Roundup® AI

  1. The 5 largest US technology companies are worth about 16% of the entire global public equity market, exceeding the combined value of the Eurostoxx 50, the UK, India, Japan, and Canada.
  2. The 10 biggest US stocks, 8 of them technology-related, are worth almost $25 trillion and account for nearly 25% of the global equity market.
  3. The median 24-month forward P/E for the "Magnificent 7" is 27x, or 26x excluding Tesla, roughly half the equivalent valuation of the biggest 7 companies in the late 1990s, whose EV/sales ratios were also higher.

Related Articles:

  • The Blob: Capital, China, Chips, Chicago and Chilliwack — Data center construction spending has eclipsed office construction, and the specialized power rates most data centers pay fall short of covering the cost of a new natural gas plant, leaving other customers to bear part of the bill. In the PJM grid region, data center demand accounted for 70% of the increase in electricity costs over the past year.
  • Honey, AI Capex is Eating the Economy — Capital spending on AI data centers is around 20% of railroads' peak spending as a share of GDP and is rising quickly, having already surpassed the dot-com era peak in telecom investment. Unlike long-lived rail infrastructure, data centers are short-lived assets requiring frequent hardware replacement, and the capital is being reallocated from other sectors.
  • Data Centers: More Money, Fewer Buyers — Data center developers can earn 12–15% returns on new construction while stabilized hyperscale campuses trade at 4–5% capitalization rates, drawing capital into development. Because long, flat leases to Amazon, Microsoft and Google make finished assets behave like annuities, few buyers exist, so developers turn to securitization instead of selling.

AI Summary. More than $400bn of planned gas-fired power plants slated through the end of the decade risk delay or cancellation because turbine manufacturing capacity cannot meet expected orders, according to Bloomberg News calculations. Only three major suppliers, operating a handful of factories from Germany to Japan, build the largest power-plant turbines.

Stephen Stapczynski, Akshat Rathi, and Josh Saul Bloomberg
Date Posted:
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A new combined cycle-gas plant cost ~$800 a kilowatt in 2021, but is ~$2,600–2,800 today due to supply constraints. Siemens, GE Vernova and Mitsubishi Heavy account for 70% of global gas turbine production capacity and are struggling to increase capacity.

Do turbine manufacturing limits threaten $400 billion of planned gas power plants?

Core argument: More than $400 billion of planned gas-fired power plants through the end of the decade risk delay or cancellation because turbine manufacturing capacity cannot meet future orders, according to Bloomberg News calculations.

More than $400 billion worth of planned gas-fired power plants through the end of the decade are in jeopardy of delay or cancellation because of the lack of capacity to meet future turbine orders, according to Bloomberg News calculations. The crux of the bottleneck is that there are only three major suppliers for the largest turbines used in power plants across a handful of factories from Germany to Japan. GE Vernova is already in talks with customers about fulfilling turbine orders as far out as 2030. Mitsubishi Heavy plans to quickly double its gas turbine capacity, but has most slots booked for 2027 and 2028. Siemens Energy declined to give specific timelines on its orderbook, but said turbines are only one of many things needed to build a gas power plant.

Takeaways by Macro Roundup® AI

  1. More than $400 billion of planned gas-fired power plants through the end of the decade risk delay or cancellation because turbine manufacturing capacity cannot meet future orders, according to Bloomberg News calculations.
  2. Only three major suppliers produce the largest power-plant turbines, across a handful of factories spanning Germany to Japan, forming the crux of the bottleneck.
  3. GE Vernova is discussing turbine orders with customers as far out as 2030, while Mitsubishi Heavy plans to double gas turbine capacity but has most 2027 and 2028 slots booked.

Related Articles:

  • World’s Largest Transformer Maker Warns of Supply Crunch — Hitachi Energy, the world's largest transformer maker, says the industry is overwhelmed and cannot keep pace with demand for grid equipment, with utilities that have not pre-reserved units now facing waits of three to four years versus six to eight months previously. Demand has been strained partly by data centres running generative artificial intelligence.
  • What’s Happening to Wholesale Electricity Prices? — Average US retail electricity prices have risen about 35% since 2020, while average wholesale electricity costs have nearly doubled, with wholesale prices far more volatile. Wholesale location marginal prices consist of energy generation costs (typically 80–90% of the total), transmission congestion, and transmission losses, with a price spike partly driven by a large rise in natural gas prices.
  • Heliocentrism — An energy use must be electrified before green grid electricity can decarbonize it, and while US grid decarbonization continues at a steady pace, the electricity share of final US energy consumption has grown little. Transmission line growth runs well below Department of Energy targets for 2030 and 2035, and transformer delivery times have stretched from 4–6 weeks to 2–3 years.

AI Summary. The International Monetary Fund's data on official foreign exchange reserves show the dollar's share falling from 58% to 56% in one quarter, a 2.5 standard deviation drop, with the euro rising from 20% to 21%. An updated analysis attributes the decline to dollar depreciation rather than reserve managers exiting dollars.

Robin Brooks Robin Brooks Substack
Date Posted:

Q2 and “Liberation Day” saw the dollar’s share of official foreign exchange reserves drop from 58% to 56% with the Euro’s share rising from 20% to 21%. The decline in the dollar’s share of Central Bank reserves in Q2 was due to dollar depreciation rather than reserve managers pulling out of the dollar around “Liberation Day.”

Does dollar depreciation explain the falling dollar share of reserves?

Core argument: The euro was the main beneficiary of the Q2 shift in the IMF's COFER data, with its reserve allocation rising from 20% to 21%, a 1.5 standard deviation increase.

NOTE Robin Brooks updated this analysis to reflect that the decline in the dollar’s share of Central Bank reserves in Q2 was due to dollar depreciation rather than reserve managers pulling out of the dollar around “Liberation Day.” See: FX-Valuation Adjusted COFER Shares
The IMF just published its latest COFER survey, which tracks how official foreign exchange reserves are allocated across currencies. The last data point in this survey is is now Q2 2025 [which covers the reaction of reserve managers to “Liberation Day”]. Q2 shows an unusually large drop in allocations to the Dollar by the standards of these data. The Dollar share went from 58% at the end of Q1 to 56% at the end of Q2 (black line). That may not sound like much, but it’s massive by the standards of these data, amounting to a 2.5 standard deviation drop. The main beneficiary was the Euro (blue line), which saw its allocation rise from 20 to 21%, a 1.5 standard deviation rise. By the standards of these data, these changes are earthquakes and as close as COFER data will ever get to showing a Dollar exodus. My best guess is that Q3 data will show stabilization in the Dollar share, though the scale of the Q2 drop should certainly give everyone in the Trump administration pause.

Takeaways by Macro Roundup® AI

  1. The euro was the main beneficiary of the Q2 shift in the IMF's COFER data, with its reserve allocation rising from 20% to 21%, a 1.5 standard deviation increase.
  2. Robin Brooks updated his analysis to attribute the Q2 decline in the dollar's reserve share, from 58% to 56%, to dollar depreciation rather than reserve managers pulling out of the dollar around "Liberation Day," and expects Q3 data to show stabilization.

Related Articles:

  • Dollar Dominance and Dollar Depreciation — Moving On Different Tracks — The dollar is projected to depreciate as less exceptional US economic and market performance makes it harder to attract unhedged capital flows to fund a large current account and fiscal deficit, leaving a high currency valuation to correct further. A softening US labor market supports that view.
  • Are Foreigners Selling US Assets (Part II) — Proprietary flow tracking shows foreign bond flows into US assets, an outlier low in one month, have substantially normalized, suggesting an allocation shift away from dollar assets may have peaked. The authors argue traditional fundamentals, such as the US business cycle and Federal Reserve policy, will matter more for any further dollar weakness.
  • De-Dollarization? Diversification? Exploring Central Bank Gold Purchases and the Dollar’s Role in International Reserves — Central banks' gold accumulation is generally not associated with reducing the dollar's share of international reserves at the country level, apart from a few prominent cases, and is more consistent with modest overall diversification. Gold's role as an official-sector store of value has grown, but its use as a unit of account and medium of exchange remains limited.

AI Summary. UK 10-year government bond yields are the highest in the G7 and gross public debt stands at 101% of GDP, high by historical standards outside major wars. The authors estimate the UK needs a primary budget surplus of about 1% of GDP — a consolidation of roughly 3% — to stabilise debt.

Sven Jari Stehn and Fausto Martin Goldman Sachs
Date Posted:
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10-year gilt yields are the highest across the G7. Goldman estimates the UK needs a fiscal consolidation of ~ 3% of GDP to attain a primary balance of ~1% to stabilize debt.

How much fiscal consolidation does the UK need to stabilise debt?

Core argument: UK gross public debt stands at 101% of GDP per IMF data, historically high outside major wars and meaningfully exceeded in Europe only by Italy (135%) and France (115%), alongside Japan (237%) and the US (121%).

Ten-year gilt yields are the highest across the G7, with the most elevated term premium among major advanced economies. [The UK's] gross public debt (as measured by the IMF) is now at 101% of GDP, which is historically high outside of major wars and meaningfully exceeded only by Italy (135%) and France (115%) in Europe, Japan (237%) and the US (121%). The UK’s fiscal imbalances and “r-g” differential imply that a substantial consolidation is needed to stabilise the debt-to-GDP ratio. In particular, we estimate that the UK needs to attain a primary balance of about 1% of GDP to stabilise debt. The required consolidation of around 3% of GDP is large compared with history and towards the upper end across advanced economies.

Takeaways by Macro Roundup® AI

  1. UK gross public debt stands at 101% of GDP per IMF data, historically high outside major wars and meaningfully exceeded in Europe only by Italy (135%) and France (115%), alongside Japan (237%) and the US (121%).
  2. Stabilising the UK debt-to-GDP ratio requires a primary balance of about 1% of GDP, implying a consolidation of around 3% of GDP, large compared with history and towards the upper end across advanced economies.
  3. UK ten-year gilt yields are the highest across the G7, with the most elevated term premium among major advanced economies.

Related Articles:

  • Global Debt Report 2025 — About 60% of fixed-rate government debt in advanced economies maturing by 2027 — roughly $9tn — was issued before the recent interest-rate tightening, with weighted average yields below 2% versus projected 10-year rates near 3.6%, implying refinancing at nearly double the original cost. France, Spain, the UK, and the US face heightened vulnerability, with maturing debt exceeding 15% of GDP.
  • The Global Debt Crisis — Market pricing for Japan's 10-year government bond yield 20 years from now stands at 4.52%, far above its current 10-year yield of 1.69%, while France's equivalent forward yield is 5.03% versus a 3.57% 10-year yield. The author argues these large risk premiums, alongside a falling Yen, signal mounting fiscal stress.
  • France and Britain Are In Thrall To Pensioners — French pensioners receive larger government payments than in any other western country and begin receiving them several years earlier, leaving over-65s with higher average incomes than the working-age population — a situation without precedent internationally or in France's own history. Proposals to raise the retirement age or delay pension increases have triggered nationwide protests and government collapses.

AI Summary. China's liuzhi detention system operates alongside normal policing, requiring no court approval and denying detainees lawyers, with windowless cells, constant lighting and round-the-clock supervision. Stock-exchange filings show 39 executives at listed companies disappearing into the system by the end of September, exceeding the prior year's record.

Economist Staff The Economist
Date Posted:

There were 38,000 Chinese officials and businessmen in liuzhi – an extra-judicial form of detention – in 2024, almost a 50% increase from 2023. Another 200,000 individuals have been banned from “high consumption,” such as staying at posh hotels.

Are more Chinese executives vanishing into a detention system without courts?

Core argument: The Economist counted 39 cases of bosses at Chinese listed companies vanishing into the liuzhi detention system by the end of September, about one a week, already exceeding last year's record tally.

Liuzhi runs parallel to normal policing. Detentions do not require court approval. Detainees are denied the standard services of lawyers. Cells typically have no windows or clocks, lights are always on and detainees are often supervised 24 hours a day, even when using the toilet. This year bosses at listed companies have been vanishing into this grim system at a staggering rate: The Economist counted 39 such cases by the end of September, or about one a week, in stock-exchange filings. That already exceeds last year’s record tally. Total detentions, including those of both officials and business people, soared by nearly 50% in 2024, to around 38,000. The corporate side of the crackdown appears to be extensive.

Takeaways by Macro Roundup® AI

  1. The Economist counted 39 cases of bosses at Chinese listed companies vanishing into the liuzhi detention system by the end of September, about one a week, already exceeding last year's record tally.
  2. Total liuzhi detentions of officials and business people in China soared by nearly 50% in 2024, to around 38,000.
  3. China's liuzhi system runs parallel to normal policing, requiring no court approval for detentions, denying detainees standard services of lawyers, and holding them in cells that typically have no windows or clocks, with lights always on and supervision often 24 hours a day.

Related Articles:

  • 2023 Letter — Rising numbers of Chinese nationals are being apprehended at the US-Mexico border, with US officers encountering around 1,000 in one month early in the year and nearly 5,000 by November. Most Chinese emigrants leave through legal means, going primarily to Singapore, Japan, and Thailand.
  • Global Markets Uncouple From China — Foreign portfolio inflows into China have been flat for the past three years following large outflows, while non-China emerging markets have seen a strong rebound in non-resident portfolio inflows. After earlier global market shocks, flows into China rebounded strongly; the most recent bounce back has been far shallower.
  • World’s Top Hedge Fund Bridgewater Dumps All China Stocks In Retreat From Market — Hedge fund Bridgewater exited positions in 16 Chinese stocks worth a combined $1.41bn and closed its indirect exposure through China-focused exchange-traded funds, according to its US regulatory filing. The firm shifted toward US mega-cap technology stocks, raising its stakes in Nvidia by 154%, Microsoft by 112%, Meta Platforms by 90% and Alphabet by 84%.

Thursday, October 9, 2025

AI Summary. Carlota Perez's framework of technological revolutions casts heavy artificial-intelligence infrastructure spending as a late-stage installation surge, in which financial capital overshoots and builds capacity ahead of demand, leaving both losses and infrastructure for later productivity. The author argues this model is descriptive rather than prescriptive, and that executives and policymakers invoking it rationalize losses in advance and erode market discipline.

Paul Kedrosky Applied Complexity
Date Posted:
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Paul Kedrosky argues the AI buildout may be a bubble, as unlike the railroad and dot-com booms, “capital destruction isn’t merely tolerated; it is sanctified in advance…the line between necessary excess and outright mania disappears.”

Does framing AI spending as an installation surge weaken market discipline?

Core argument: Viewed through Carlota Perez's framework of technological revolutions, AI capital spending can look less like a financial bubble and more like a late-stage installation surge in which financial capital overshoots and infrastructure is installed well ahead of actual demand, with most of it going bust.

Technology bubbles aren't necessarily bad. Viewed through Carlota Perez's framework of technological revolutions, this moment can look less like a bubble in the narrow financial sense and more like a late-stage installation surge. That, in her framing, is the period when financial capital overshoots, infrastructure is bought and installed at great speed and well ahead of actual demand, and most of it goes bust. The wreckage left behind is real. But so is the scaffolding for later productivity. There are at least two problems with this view. Perez's model is descriptive, not prescriptive. This view of technology's collateral damage becomes a kind of secular theodicy. Losses are not treated as gratuitous accidents but as sacrifices, sanctified as the necessary price of advancement. The railway bust “paid for” railways. The dot-com crash “paid for” Netflix. Investors in railways did not knowingly pursue capital destruction in the name of national integration. Dot-com entrepreneurs did not consciously blow themselves up to create server farms and unlit fiber for the next generation. Once CEOs, VCs, and policymakers begin to invoke Perez explicitly—as Microsoft's Satya Nadella does in interviews, among many others—the model flips. It ceases to describe inadvertent overshoot and starts prescribing intentional frenzy. The discipline of markets erodes, because losses are rationalized in advance. The cycle becomes self-aware, even the cause of a super-bubble.

Takeaways by Macro Roundup® AI

  1. Viewed through Carlota Perez's framework of technological revolutions, AI capital spending can look less like a financial bubble and more like a late-stage installation surge in which financial capital overshoots and infrastructure is installed well ahead of actual demand, with most of it going bust.
  2. Perez's model is descriptive rather than prescriptive, and casting technology's collateral damage as the necessary price of advancement recasts losses as sacrifices: the railway bust "paid for" railways, the dot-com crash "paid for" Netflix.
  3. Once CEOs, venture capitalists, and policymakers invoke Perez explicitly, as Microsoft's Satya Nadella does in interviews, the model flips from describing inadvertent overshoot to prescribing intentional frenzy, eroding market discipline because losses are rationalized in advance.

Related Articles:

  • The Godfather and Oracle’s Crap GPU Rental Returns — Oracle generated about $900m from renting servers powered by Nvidia chips over a three-month period and recorded $125m in gross profit, a 14% gross margin that is below those of many nontech retail businesses. The author argues data centers are a capital-intensive business with unimpressive margins.
  • Why We Are Not In A Bubble….Yet — The 5 largest US technology companies are worth about 16% of the global public equity market, and the top 10 US stocks nearly 25%, almost $25tn. The author argues valuations are high but not bubble-level, with the "Magnificent 7" median forward price-to-earnings ratio at 27x, roughly half that of the late-1990s leaders.
  • The Blob: Capital, China, Chips, Chicago and Chilliwack — Data center construction spending has eclipsed office construction, and the specialized power rates most data centers pay fall short of covering the cost of a new natural gas plant, leaving other customers to bear part of the bill. In the PJM grid region, data center demand accounted for 70% of the increase in electricity costs over the past year.

AI Summary. After adjusting the International Monetary Fund's currency composition of official foreign exchange reserves for exchange-rate valuation changes, the US dollar's share is stable rather than declining, as is the euro's. A large dollar depreciation produces valuation effects that can make unadjusted reserve shares appear to shift.

Robin Brooks Robin Brooks Substack
Date Posted:

Robin Brooks amends his earlier analysis to note that the decline in the dollar’s share of Central Bank reserves in Q2 was due to dollar depreciation rather than reserve managers pulling out of the dollar around “Liberation Day.”

Is the dollar's reserve share stable after adjusting for exchange rates?

Core argument: Adjusting the IMF's COFER reserve data for FX valuation changes shows the US Dollar's allocation share was stable in Q2, since the large Dollar decline that quarter produced big valuation effects.

I made a bit of a dunderhead oversight in my earlier post, where I concluded that reserve managers in the IMF’s COFER survey pulled out of the US Dollar in Q2. That conclusion is not warranted because the large Dollar fall in Q2 means there were big valuation changes in that quarter. Once you adjust for those valuation changes, the share of the Dollar is stable in Q2. I’m taking the opportunity of this mea culpa post to put out FX-valuation adjusted COFER allocations to the Dollar (top left), the Euro (top right), the British Pound (bottom left) and the Japanese Yen (bottom right). My FX-valuation adjusted shares begin in Q1 2017, when they’re the same as the unadjusted ones (black lines). Once you make these adjustments, the FX-valuation adjusted allocation to the Dollar is stable in Q2 (blue line), as is that for the Euro.

Takeaways by Macro Roundup® AI

  1. Adjusting the IMF's COFER reserve data for FX valuation changes shows the US Dollar's allocation share was stable in Q2, since the large Dollar decline that quarter produced big valuation effects.
  2. The FX-valuation adjusted COFER allocation to the Euro was also stable in Q2, alongside the Dollar's adjusted share.
  3. The FX-valuation adjusted COFER series covering the Dollar, Euro, British Pound, and Japanese Yen begins in Q1 2017, where the adjusted shares match the unadjusted ones.

Related Articles:

  • Damage to US Reserve Currency Status — The International Monetary Fund's data on official foreign exchange reserves show the dollar's share falling from 58% to 56% in one quarter, a 2.5 standard deviation drop, with the euro rising from 20% to 21%. An updated analysis attributes the decline to dollar depreciation rather than reserve managers exiting dollars.
  • Dollar Dominance and Dollar Depreciation — Moving On Different Tracks — The dollar is projected to depreciate as less exceptional US economic and market performance makes it harder to attract unhedged capital flows to fund a large current account and fiscal deficit, leaving a high currency valuation to correct further. A softening US labor market supports that view.
  • De-Dollarization? Diversification? Exploring Central Bank Gold Purchases and the Dollar’s Role in International Reserves — Central banks' gold accumulation is generally not associated with reducing the dollar's share of international reserves at the country level, apart from a few prominent cases, and is more consistent with modest overall diversification. Gold's role as an official-sector store of value has grown, but its use as a unit of account and medium of exchange remains limited.

AI Summary. Central banks have been a dominant force in gold's rally, buying bullion in volumes that pushed analysts to build new models to track the demand, motivated by a drive to diversify away from the dollar and shield assets from hostile nations. Gold has overtaken the euro as the second-largest asset in global central bank reserves.

Jack Ryan and Mark Burton Bloomberg
Date Posted:
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The value of foreign central banks’ gold holdings, currently $3.83T, will likely soon eclipse the value of their Treasury holdings, now $3.92. Gold has already overtaken the euro as central banks’ second-largest asset.

Are central banks driving gold's rise in global reserves?

Core argument: Gold overtook the euro to become the second-largest asset in the reserves of the world's central banks, following a three-year rally.

Throughout [the Gold] rally, central bankers have been a dominant force in the market, buying up bullion in such huge volumes that it prompted analysts and traders to build new models to keep track of this resurgent source of demand. The buying has been motivated by a drive to diversify away from the dollar and shield their assets from hostile nations - and while gold may never return to being the bedrock of the global monetary system it once was, the value of bullion has already almost certainly well surpassed the amount of Treasuries held by non-US central banks in their foreign exchange reserves. It’s still well below the [value of] global foreign exchange reserves held in all dollar-denominated debt, but the rally also saw gold overtake the euro as the second-largest asset in the reserves of the world’s central banks earlier this year.

Takeaways by Macro Roundup® AI

  1. Gold overtook the euro to become the second-largest asset in the reserves of the world's central banks, following a three-year rally.
  2. The value of bullion has almost certainly surpassed the amount of Treasuries held by non-US central banks in their foreign exchange reserves, though it remains well below global reserves held in all dollar-denominated debt.
  3. Central bank gold purchases, motivated by a drive to diversify away from the dollar and shield assets from hostile nations, reached volumes that prompted analysts and traders to build new models to track the demand.

Related Articles:

  • Gold Prices Top $4,000 for First Time — Gold topped $4,000 a troy ounce for the first time, with futures rising more than 50% in a year — a bigger run-up than during the pandemic or the 2007-09 recession, and the largest since the inflationary shock of 1979. Central-bank buying has helped gold surpass the euro as the world's second-largest reserve asset.
  • De-Dollarization? Diversification? Exploring Central Bank Gold Purchases and the Dollar’s Role in International Reserves — Central banks' gold accumulation is generally not associated with reducing the dollar's share of international reserves at the country level, apart from a few prominent cases, and is more consistent with modest overall diversification. Gold's role as an official-sector store of value has grown, but its use as a unit of account and medium of exchange remains limited.
  • State of Chinese Gold Demand — Gold broke above its $3,200–$3,400 range to a record high above $3,600, with the near-term catalyst identified as threats to Federal Reserve independence driving US investor demand. Chinese total gold demand bottomed near $9bn and nearly doubled to $16bn before moderating to about $13bn as private-sector buying partially normalized.

AI Summary. Using the Global Flourishing Study, the authors construct a "not-flourishing" index from items on depression and loneliness and find it declines with age overall and in 15 of 22 countries, while conventional flourishing is U-shaped in age. Results are sensitive to survey mode: telephone interviews show the young as happier, web-based interviews the reverse.

David Blanchflower and Alex Bryson National Bureau of Economic Research
Date Posted:

Using 2022–2024 data from 22 countries in the Global Flourishing Study, the authors construct a “non-flourishing” index focusing on depression. “Non-flourishing” declines monotonically with age more reliably than “flourishing” increases with age.

Does measuring depression and loneliness change well-being's age pattern?

Core argument: The authors' "not-flourishing" index, built on 4 Global Flourishing Study items covering depression and loneliness, declines with age overall, in each of its four components, and in 15 of the 22 countries.

[In addition to a more conventional index of general satisfaction or ‘flourishing’] we construct a second index, which we term the ‘not-flourishing’ index, based on 4 items in the GFS [focusing on depression and loneliness], which have received much less attention from scholars. We know from the extant literature on the age-profile of mental ill-health, that the deterioration in the relative position of the young is much clearer with regards to negative affect than it is with respect to positive affect. This deterioration is reflected in behavioral outcomes which are concerning with regards to young people. We show that flourishing in the GFS is U-shaped in age in the pooled data, but it rises in age in 13 countries and declines in 7. By contrast, not-flourishing declines in age overall and in each of its four components, and it declines in age in 15 of the 22 countries. We then explore sensitivity of results to survey mode in those countries using both computer-assisted telephone interviews (CATI) and computer-assisted web-based interviews (CAWI). When CATI is used, the young are happier than other age groups, the opposite is the case when data are collected via CAWI. [However], response rates for interviewer-based surveys are also particularly low and falling. The young don't answer the phone or make phone calls.

Takeaways by Macro Roundup® AI

  1. The authors' "not-flourishing" index, built on 4 Global Flourishing Study items covering depression and loneliness, declines with age overall, in each of its four components, and in 15 of the 22 countries.
  2. Flourishing in the Global Flourishing Study is U-shaped in age in the pooled data, but rises with age in 13 countries and declines with age in 7, according to the authors.
  3. Survey mode shapes the finding: with computer-assisted telephone interviews the young are happier than other age groups, while with computer-assisted web-based interviews the opposite holds, and response rates for interviewer-based surveys are low and falling.

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AI Summary. Border Patrol encounters with migrants at the US southern border have fallen to their lowest level in decades, with almost no one now crossing the Darién Gap jungle between Colombia and Panama, and at least 15,000 people, mostly Venezuelans, returning to South America. An asylum ban underpins the strategy, eliminating the pathway to a hearing date and work permit.

Economist Staff The Economist
Date Posted:
Is Database:
Database

“Encounters” by Border Patrol agents on the southwest land border are at the lowest level in decades and “almost no one is travelling north through the Darién Gap.”

Has an asylum ban driven border crossings to decades-low levels?

Core argument: Border Patrol encounters of migrants at the southern border began falling in Joe Biden's final year in office and plummeted after Donald Trump took office to their lowest level in decades.

“Encounters” of migrants by Border Patrol agents at the frontier began to fall during the final year of Joe Biden’s presidency. After Mr Trump took office they plummeted to the lowest level in decades. Almost no one is travelling north through the Darién Gap, a jungle on the Colombia-Panama border that became a thoroughfare for migrants from all over the world intending to claim asylum in America. A small reverse migration has even begun. At least 15,000 people, mostly Venezuelans, have returned to South America since January. Underpinning the whole border strategy is Mr Trump’s asylum ban. Migrants might dodge soldiers and risk prosecution if it meant that they could secure a hearing date and a work permit. That pathway no longer exists.

Takeaways by Macro Roundup® AI

  1. Border Patrol encounters of migrants at the southern border began falling in Joe Biden's final year in office and plummeted after Donald Trump took office to their lowest level in decades.
  2. Almost no migrants are travelling north through the Darién Gap, the jungle on the Colombia–Panama border that had become a thoroughfare for migrants from around the world intending to claim asylum in America.
  3. At least 15,000 people, mostly Venezuelans, have returned to South America since January, and Donald Trump's asylum ban, which underpins his border strategy, has closed the pathway to a hearing date and work permit.

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AI Summary. China has imposed export controls requiring its approval for foreign companies to export magnets containing as little as 0.1% Chinese-sourced rare earths or made using Chinese extraction, refining, or magnet-making technology. China controls roughly 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing.

Ryan McMorrow Financial Times
Date Posted:

New Chinese export controls will allow it to manage exports of foreign-manufactured magnets that contain trace amounts (.1%) of Chinese-sourced rare earths, or were produced using Chinese IP. China controls 93% of magnet manufacturing.

How far does China extend its control over global rare-earth supply chains?

Core argument: China's commerce ministry will require Beijing's approval for foreign companies to export magnets containing even 0.1% Chinese-sourced rare earth materials, or made using Chinese extraction, refining, or magnet-making technology.

China has unveiled sweeping export controls on rare earths and related technologies, as it strengthens its leverage over critical minerals ahead of an expected meeting this month between US President Donald Trump and Xi Jinping. Under the new rules, foreign companies will need Beijing’s approval to export magnets that contain even trace amounts [.1%] of Chinese-sourced rare earth materials, or that were produced using the country’s extraction methods, refining or magnet-making technology. The restrictions announced on Thursday by the commerce ministry will for the first time create a Chinese version of the US foreign direct product rule, a measure Washington has used to block semiconductor-related exports to China from third countries. The rules give Beijing more leverage to exert control over the global rare-earth supply chain. Rare earth minerals and magnets are critical to technologies from smartphones to electric vehicles and fighter jets. China controls about 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing, according to a Financial Times analysis.

Takeaways by Macro Roundup® AI

  1. China's commerce ministry will require Beijing's approval for foreign companies to export magnets containing even 0.1% Chinese-sourced rare earth materials, or made using Chinese extraction, refining, or magnet-making technology.
  2. China controls about 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing, according to a Financial Times analysis, with rare earths and magnets critical to smartphones, electric vehicles, and fighter jets.
  3. China's export controls create for the first time a Chinese version of the US foreign direct product rule, a measure Washington has used to block semiconductor-related exports to China from third countries.

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  • China’s Weaponisation of Rare Earths is a New Kind of Trade War — China's export controls on rare earth materials and magnets threatened to halt production across the auto industry, the largest manufacturing sector in most advanced economies, and forced Washington to negotiate on tariffs. Despite China's well-known dominance of rare earth production, Western governments and companies have not developed alternative suppliers.
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