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


Friday, January 9, 2026

AI Summary. Spending on semiconductor plants and data centers, negligible before recent years, has averaged 0.4 percentage points of US GDP growth, and total IT-related investment has reached 5% of GDP, exceeding its dot-com-era peak. Unlike that earlier boom, which was driven by firms using IT products, the current one is driven by IT producers.

Iñaki Aldasoro, Sebastian Doerr and Daniel Rees Bank for International Settlements
Date Posted:

BIS finds US Capex on IT manufacturing facilities and datacenters was ~1% of GDP in 2025, on par with the scale of the 2010’s shale boom. Overall, AI-related investment was ~5% of GDP, and contributed half of US GDP growth, in 2025.

How large is AI-related investment relative to GDP and past booms?

Core argument: Spending on semiconductor manufacturing facilities and data centers contributed an average 0.4pp to GDP growth over the three years after 2022, up from a negligible contribution before then.

From a negligible contribution before 2022, expenditures on semiconductor manufacturing facilities and data centers contributed on average 0.4pp to GDP growth over the subsequent three years (See Graph 1.B). Total IT investment, which also includes spending by businesses on equipment and software to facilitate AI use, has accounted for almost half of GDP growth in recent quarters. By mid-2025, expenditures on IT manufacturing facilities and data centers (equipment and construction costs) were equivalent to 1% of GDP. Total IT-related investment, including investment in other IT equipment and software, [rose] to 5% of GDP, exceeding its previous peak at the height of the dot-com boom in 2000. Unlike that earlier episode, which was driven almost entirely by spending by firms using IT products, the current boom is driven by IT-producing firms. The rise in AI-related [data center and IT manufacturing facilities] investment is not particularly large by historical standards (See Graph 4.A). At ~ 1% of US GDP, it is similar in size to the US shale boom of the mid-2010s and half as large as the rise in IT investment during the dot-com boom of the 1990s. The commercial property and mining investment booms experienced in Japan and Australia during the 1980s and 2010s, respectively, were over five times as large relative to GDP.

Takeaways by Macro Roundup® AI

  1. Spending on semiconductor manufacturing facilities and data centers contributed an average 0.4pp to GDP growth over the three years after 2022, up from a negligible contribution before then.
  2. Total IT-related investment reached 5% of GDP by mid-2025, exceeding its previous peak at the height of the 2000 dot-com boom, and has accounted for almost half of GDP growth in recent quarters.
  3. At about 1% of US GDP, AI-related data center and IT manufacturing facility investment is similar in size to the mid-2010s US shale boom and half the dot-com-era rise in IT investment, while Japan's 1980s property and Australia's 2010s mining booms were over five times as large relative to GDP.

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.
  • Smothering Heights — The four largest cloud computing firms are devoting rising shares of revenue to capital spending and research, with Meta's combined share reaching 70%. Unlike past investment booms, this one has been financed mostly from internal cash flow: 28 direct AI stocks make up 50% of S&P 500 market value but just 5% of its net debt.
  • OECD Economic Outlook, Volume 2025 Issue 2: Resilient Growth but with Increasing Fragilities — U.S. real GDP grew at a 1.1% annualized rate over the first half of 2025, but excluding booming AI-related investment output contracted 0.1%, with non-AI investment weakening. The OECD identifies a correction in equity markets lifted by expectations of high AI returns as a key downside risk to its projections.

AI Summary. County-level mapping of net domestic migration within the United States shows some counties gained net movers equal to 10% or more of their 2020 population while others lost an equivalent share, excluding international moves.

John Johnson Blue Book
Date Posted:

Btw 2020 and 2024, 3.7% of California’s 2020 population moved out of state. The population of the “Texas Triangle” – the Dallas, Houston, and San Antonio region – grew 3.5%. The Upper Rockies region grew 6% relative to 2020.

How large are county-level swings in domestic migration across America?

Core argument: A county-level map of cumulative net domestic migration from 2020 to 2024 marks in darkest green counties whose net in-migration equals 10% or more of their 2020 population, and in darkest purple those with net out-migration of 10%.

Patterns of domestic migration—where people who already live in America choose to move—reveals a lot about where people do or don’t want to live. Or, framed differently, where they can and can’t afford to. This map shows the cumulative domestic migration of each US county, from 2020 to 2024. The darkest green color shows places where the (net) number of people who’ve moved in since 2020 is equal to 10% or more of the population in 2020. The darkest purple color shows the reverse. In those counties the net number of people who’ve moved out is equal to 10% of the 2020 population. This only includes people who moved from one place in the United States to another, not people who moved into or out of the country. I was surprised by the extent to which certain ecological regions correspond to the patterns on this map.

Takeaways by Macro Roundup® AI

  1. A county-level map of cumulative net domestic migration from 2020 to 2024 marks in darkest green counties whose net in-migration equals 10% or more of their 2020 population, and in darkest purple those with net out-migration of 10%.
  2. The migration map counts only moves from one place in the United States to another, excluding moves into or out of the country.
  3. Certain ecological regions correspond to the county-level patterns of net domestic migration shown on the map.

Related Articles:

  • Young Families Have Stopped Leaving Big Cities, For Now — New data show the population of children under five in large U.S. urban counties fell 0.2%, matching the national rate of decline and ending a stretch in which big cities lost young children faster than the country as a whole. Every large urban county with under-five growth since 2020 is in Texas, North Carolina, or Florida.
  • How Big-City Expats Might Reshape the Politics Of Rural America — Rural population growth accelerated to 1.4% from 0.7%, a gain of nearly 1m residents, while large urban areas shifted from 1.5% growth to a 0.5% decline, losing more than 500,000 residents. About a third of new residents in rural counties that voted Republican came from Democratic-leaning counties, rising to 40% in rural counties within urban commuting zones.
  • The Economic Geography Of The 2024 Elections — Counties where government transfer programs such as Social Security, Medicare, Medicaid, and unemployment insurance make up at least a quarter of personal income gave Trump 63% of the vote, while counties where transfers account for less than 15% gave Harris 56%. Transfers supplied 18% of total US personal income.

AI Summary. Among young labor market entrants, the rate of finding jobs has held steady only in occupations with low exposure to artificial intelligence, declining by more than 3 percentage points for the most AI-exposed group from its recent peak. The decline reflects fewer people entering these jobs rather than exits, with small aggregate effects.

Tyler Atkinson and Shane Yamco Federal Reserve Bank of Dallas
Date Posted:

The job-finding rate for workers aged 20–24 in the occupations most exposed to AI has declined by more than 3pp since its peak in November 2023, while the separation rate has not risen.

Is AI reducing job finding rates for young workers?

Core argument: The job finding rate for young, most AI-exposed workers has declined by more than 3 percentage points since its November 2023 peak, while holding steady for jobs with low AI exposure.

Among young labor market entrants, the job finding rate has held steady only for jobs with low AI exposure, while it has declined for groups with higher AI exposure since November 2022. Since its recent peak in November 2023, the job finding rate of the young, most AI-exposed group has declined by more than 3 percentage points. Looking at past business cycles, the data confirm this isn’t a typical cyclical phenomenon. Thus far, lower employment in high AI exposure occupations for young workers is mainly driven by a lower inflow, particularly among those out of the labor force, rather than by an outflow. There appears to be lower employment for young workers in occupations with the most exposure to AI, but so far, the aggregate impacts are small and subtle. If all the decline in employment for the young, most AI-exposed workers translated into unemployment, it would be responsible for only a 0.1 percentage point rise in aggregate unemployment since November 2022.

Takeaways by Macro Roundup® AI

  1. The job finding rate for young, most AI-exposed workers has declined by more than 3 percentage points since its November 2023 peak, while holding steady for jobs with low AI exposure.
  2. Lower employment for young workers in high-AI-exposure occupations is driven mainly by lower inflow, particularly among those out of the labor force, rather than by outflow from employment.
  3. If the entire employment decline among young, most AI-exposed workers became unemployment, it would account for only a 0.1 percentage point rise in aggregate unemployment since November 2022.

Related Articles:

  • AI and Jobs: The Final Word (Until the Next One) — Unemployment has risen by 0.30 percentage points for the fifth of workers most exposed to artificial intelligence, compared with 0.94 percentage points for the least exposed fifth, leaving no visible AI effect on jobs. The share of workers leaving the labor force within a year is lowest among the most AI-exposed workers and roughly flat.
  • Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence — Using payroll records covering millions of US workers, the authors find employment for workers aged 22–25 in occupations most exposed to artificial intelligence, such as software developers and customer service representatives, declined 6%, while employment for older workers in those occupations rose 6–9%. Employment in less-exposed occupations grew comparably across age groups.
  • Jobless Growth — Labor demand growth may be too weak to keep pace with even modest labor supply growth: the labor market is somewhat weaker than before the pandemic, job growth has turned negative outside healthcare, and firms are focused on using AI to cut labor costs. Economists estimate most employment losses in routine manual occupations since the 1970s occurred during recessions.

AI Summary. Government-sponsored mortgage buyers Fannie Mae and Freddie Mac have been urged to purchase $200bn in mortgage bonds, roughly the room they have left under caps allowing each to hold up to $225bn of mortgage-backed securities against a combined $247bn held. The National Housing Conference estimates resuming such purchases could lower mortgage rates by a quarter-percentage point or more.

Gina Heeb, Veronica Dagher and Rebecca Picciotto Wall Street Journal
Date Posted:

President Trump ordered Fannie Mae and Freddie Mac to purchase $200B in mortgage bonds, which could lower the mean 30-year fixed rate, which was ~6.2% Thursday, by ~25bps.

Can government-backed mortgage buyers lower mortgage rates by expanding bond holdings?

Core argument: Trump has called on Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, roughly the headroom left under caps allowing each to hold up to $225 billion of mortgage-backed securities against a combined $247 billion held as of November.

One of the few things that united Obama-era Democrats and Tea Party Republicans after the financial crisis was agreement that Fannie and Freddie’s massive “retained portfolios”—quasi hedge funds grafted onto their core mortgage insurance business—had been a major problem. At their peak, each company held more than $900 billion in mortgage-related investments. Today, Fannie and Freddie are allowed to hold up to $225 billion of mortgage-backed securities, each. But they only hold a combined $247 billion, as of November, meaning they have roughly $200 billion in room to grow. “There is no question” that resuming this strategy would have downward pressure on mortgage rates, said David Dworkin, chief executive of the National Housing Conference. He estimated that the decrease could be a quarter-percentage point or more.

Takeaways by Macro Roundup® AI

  1. Trump has called on Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds, roughly the headroom left under caps allowing each to hold up to $225 billion of mortgage-backed securities against a combined $247 billion held as of November.
  2. Obama-era Democrats and Tea Party Republicans agreed after the financial crisis that Fannie and Freddie's retained portfolios—quasi hedge funds grafted onto their mortgage insurance business, peaking above $900 billion each—had been a major problem.
  3. David Dworkin, chief executive of the National Housing Conference, said there is "no question" that resuming the strategy would put downward pressure on mortgage rates, estimating a decrease of a quarter-percentage point or more.

Related Articles:

  • Fannie and Freddie May Foment Another Crisis — Fannie Mae and Freddie Mac back more than 60% of new mortgages, up from roughly 45% before the 2008 financial crisis, and hold a $7.5tn loan portfolio; including Federal Housing Administration and Veterans Affairs loans, the government backs nearly 85% of the mortgage market. The Federal Reserve owns $2.2tn in mortgage-backed securities.
  • NAR Says the Typical First-Time Homebuyer Age Was 40 This Year, Up from 33 in 2021—but Is This Accurate? — The National Association of Realtors' mail survey, with a 3.5% response rate, puts the typical first-time homebuyer at age 40, while New York Federal Reserve credit-report data for the same period show an average of 36.2 years and a median of 33. The survey underrepresents buyers under 35 by 17 percentage points.
  • The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly — Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.

AI Summary. Venezuela holds easily extractable, good-quality crude that allows quick production gains without the huge investments skeptics say are required, the author argues. After output fell to a 100-year low of 450,000 barrels a day it doubled within five years, and the author expects short-term upside surprises but long-run disappointment.

Javier Blas Bloomberg
Date Posted:

Blas argues that increased Venezuelan oil output of 300,000 to 500,000bpd can likely be brought online over 12 to 18 months without “eyewatering” capex. As evidence that output can be increased, he notes production has doubled since its 2020 trough.

Can Venezuela raise oil output quickly without huge new investment?

Core argument: Venezuelan oil production fell to a 100-year low of 450,000 barrels a day in 2020 and then doubled over the following five years, a rebound whose size few anticipated.

Conventional wisdom says the future of the Venezuelan oil industry is bleak. I disagree. The naysayers state that any output gains are far, far away and need huge investments. The reality is more nuanced. There are low-hanging barrels in the country, if you’ll forgive the mixed metaphor. This is good-quality crude that’s relatively easy to extract — and it opens the way to quick wins in reviving dilapidated petroleum infrastructure. I’ve seen this movie several times in nearly 30 years covering the industry, including Iraq in 2003, Libya in 2011 and Iran in 2021-2023. Venezuela itself is an example: After oil production plunged to a 100-year low of 450,000 barrels a day in 2020, few anticipated the size of its rebound. But it doubled in five years. Now, I expect the post-Maduro nation to surprise positively in the short term, and negatively in the long run.

Takeaways by Macro Roundup® AI

  1. Venezuelan oil production fell to a 100-year low of 450,000 barrels a day in 2020 and then doubled over the following five years, a rebound whose size few anticipated.
  2. The author argues Venezuela holds good-quality crude that is relatively easy to extract, opening the way to quick wins in reviving dilapidated petroleum infrastructure rather than requiring only huge investments.
  3. Citing Iraq in 2003, Libya in 2011 and Iran in 2021-2023, the author expects post-Maduro Venezuela to surprise positively in the short term and negatively in the long run.

Related Articles:

  • 12 Insights About Venezuela And The “Donroe Doctrine” — Petroleum supplies 90% of US transport energy consumption and about 33% of industrial production, mainly high-temperature heat and feedstocks, with passenger cars, SUVs and light trucks accounting for roughly 60% of transport energy use. The oil intensity of GDP is gradually declining in most of the world, though the US retains the highest oil intensity among major economies.
  • Venezuela’s Self-Reported Oil Reserves — Venezuela's self-reported crude oil reserves tripled from about 100bn barrels to 300bn barrels after heavy oil in the Orinoco Belt was reclassified as "proved," rather than through any large new discovery or production increase. Much of that oil is extra-heavy, with low recovery rates and high production costs.
  • Latin America’s Perpetual Growth Crisis — Per capita GDP in the US grew a cumulative 20% over a decade, about 2% a year, outpacing Latin American economies; Colombia, Peru and Chile fared best in the region but still fell well short, while Mexico and Brazil underperformed. The author argues Ecuador's and Argentina's dollar pegs preclude growth.

Monday, January 12, 2026

AI Summary. US blue-collar employment shrank by more than 145k over the past year, with warehouse jobs down over 50k and construction job growth flat, while tech employment fell more than 19k. Unemployment rose 2.9 percentage points for teenagers and 1.6 points for young college graduates, versus 0.2 points for workers over 25.

Joseph Politano Apricitas Economics
Date Posted:

Job growth slowed to a mean of 44k a month in 2025, with blue-collar and young workers most impacted. Unemployment rose .7pp for those <25 and 1.6pp for new college grads alongside, “the largest gap in wage growth favoring high earners since the early 2010s.”

Who is bearing the brunt of weak hiring across sectors?

Core argument: Blue-collar employment shrank by more than 145k over the past year, with construction job growth functionally zeroed out and warehouses cutting over 50k jobs, leaving that sector 150k below its early-2022 peak.

The contraction in blue-collar jobs continues to intensify, with employment levels shrinking by more than 145k over the last year. Job growth in construction has functionally zeroed out, while manufacturing and logistics are each losing tens of thousands of jobs. Warehouses shrunk their workforce by > 50k over the last year, putting the sector 150k jobs below its early-2022 peak. The tech sector labor market remains extremely weak, with employment shrinking by more than 19k over the last year and down roughly 100k since late 2023, Over the last year, the unemployment rate for teenagers is up by 2.9pp, the unemployment rate for people in their early 20s is up by 0.7pp, but the unemployment rate for those above 25 is up by only 0.2pp. Unemployment for young college-educated workers is up by a full 1.6pp over the last year; unemployment for new labor market entrants and labor market reentrants are both near their highest levels since 2016. The distribution of wage growth has also radically changed amidst the “no-hire” economy. From 2021-2022, wage growth for the lowest-paid workers accelerated to the fastest pace in a generation. Wage growth for these lowest-paid workers has ground to a halt over the last two years, and they are now seeing much lower raises than their higher paid counterparts. This is now the largest gap in wage growth favoring high earners since the early 2010s.

Takeaways by Macro Roundup® AI

  1. Blue-collar employment shrank by more than 145k over the past year, with construction job growth functionally zeroed out and warehouses cutting over 50k jobs, leaving that sector 150k below its early-2022 peak.
  2. Teenage unemployment rose 2.9pp over the past year and unemployment for young college-educated workers rose 1.6pp, versus 0.2pp for workers above 25, with new entrants and reentrants near their highest levels since 2016.
  3. Wage growth for the lowest-paid workers, which accelerated to its fastest pace in a generation in 2021–2022, has ground to a halt over the last two years, producing the largest gap favoring high earners since the early 2010s.

Related Articles:

  • U.S. Wages Still Rising Briskly, Employment Holding Up, and Inflation Still Sticky (Probably) — The U.S. job market looks no less healthy than a few months earlier: the rise in unemployment to 4.56% has coincided with more people actively looking for work, while the share of Americans aged 25-54 with a job held near 80.6%. Wages rising about 4% a year can explain inflation running about 1 percentage point above pre-pandemic rates.
  • Our Favorite Charts of 2025 — Wage growth is slowing more for lower-paid workers than for higher earners, limiting those households' ability to keep spending, while hiring is concentrated in select industries such as healthcare and among larger firms as small private firms shed workers. Layoffs remain low, but the number of workers unemployed for 27 weeks or more has only rarely been higher.
  • Jobless Growth — Labor demand growth may be too weak to keep pace with even modest labor supply growth: the labor market is somewhat weaker than before the pandemic, job growth has turned negative outside healthcare, and firms are focused on using AI to cut labor costs. Economists estimate most employment losses in routine manual occupations since the 1970s occurred during recessions.

AI Summary. A U.S. plan for federally controlled mortgage agencies Fannie Mae and Freddie Mac to buy $200bn of mortgage-backed bonds amounts to quantitative easing aimed at cutting mortgage costs, and reflects that the Federal Reserve cannot control the long-term yields driving mortgage rates through its overnight rate target. The announcement pushed the 30-year benchmark mortgage bond yield below 5%.

John Authers Bloomberg
Date Posted:

As the Fed cut the FFR from 5.5% to 3.75%, the 30-year benchmark mortgage bond yield rose from 4.76% to ~5.07% as of last Thursday, when Trump’s exhortation to Fannie/Freddie to buy $200B in MB debt drove the 30 year fixed to 4.9%, ~ on par with its September 2024 level.

Can mortgage agencies lower mortgage rates where the Fed cannot?

Core argument: The president's announcement that Fannie Mae and Freddie Mac should buy $200 billion in mortgage-backed bonds brought the 30-year benchmark mortgage bond yield below 5%, its lowest since September 2024.

The president announced Thursday that he wanted Fannie Mae and Freddie Mac, the mortgage finance agencies still under federal control, to buy $200 billion in mortgage-backed bonds. That is basically quantitative easing, previously the purview of the Fed, aimed directly at making mortgages cheaper. It’s also a recognition that the Fed can’t control the long-term yields that drive mortgage rates using its target overnight rates. That move brought the 30-year benchmark mortgage bond yield down below 5% to its lowest since September 2024. The Fed had cut six times since then, while mortgage yields wavered higher. This administration wants lower interest rates and more affordable housing. It’s worked out that it can’t force the Fed to play along with this, and that the central bank can’t make this happen if it wants to. Now, the government has shown how willing it is to take destiny into its own hands.

Takeaways by Macro Roundup® AI

  1. The president's announcement that Fannie Mae and Freddie Mac should buy $200 billion in mortgage-backed bonds brought the 30-year benchmark mortgage bond yield below 5%, its lowest since September 2024.
  2. The Fannie Mae and Freddie Mac purchase plan amounts to quantitative easing, previously the purview of the Fed, aimed at making mortgages cheaper.
  3. The Fed cut rates six times since September 2024 while mortgage yields wavered higher, reflecting that its target overnight rates cannot control the long-term yields that drive mortgage rates.

Related Articles:

  • A Mystery in Fixed Income — Long-term interest rates have drifted higher than short-term rates and oil prices would predict, an unusual pattern during Federal Reserve rate-cutting cycles. Proposed explanations include investor concern about growing Treasury debt issuance or an effective increase in the Federal Reserve's 2% inflation target.
  • Trump Calls on Fannie and Freddie to Buy $200 Billion in Mortgage Bonds — Government-sponsored mortgage buyers Fannie Mae and Freddie Mac have been urged to purchase $200bn in mortgage bonds, roughly the room they have left under caps allowing each to hold up to $225bn of mortgage-backed securities against a combined $247bn held. The National Housing Conference estimates resuming such purchases could lower mortgage rates by a quarter-percentage point or more.
  • Data Update 4 for 2025: Interest Rates, Inflation and Central Banks! — Interest rates are ultimately driven by macroeconomic fundamentals, with an "intrinsic risk-free rate" defined as the sum of the inflation rate and real GDP growth tracking the observed 10-year Treasury bond yield closely. On this view, central banks' influence comes from preferential access to data on those fundamentals, their capacity to alter them, and their credibility.

AI Summary. Gold rose as much as 2.7% to above $4,600 a troy ounce and silver jumped as much as 7.8% to a record above $86 an ounce, while the dollar weakened 0.3% against a basket of major currencies amid concerns about Federal Reserve independence. US stocks were marginally higher and the 10-year Treasury yield traded near 4.18%.

William Sandlund, Ian Smith and Rachel Rees Financial Times
Date Posted:

Gold hit a record high after Federal prosecutors launched a criminal investigation into Jay Powell, climbing 2.7% above $4,600 a troy ounce, and the dollar weakened 30bps against a basket of major currencies.

Are worries about central bank independence lifting gold and weakening the dollar?

Core argument: Gold climbed as much as 2.7% to a record above $4,600 a troy ounce amid worries over Federal Reserve independence, while the dollar weakened 0.3% against a basket of major currencies including the pound and the euro.

The precious metal climbed as much as 2.7% to above $4,600 a troy ounce, while the dollar weakened 0.3% against a basket of major currencies including the pound and the euro. Silver jumped as much as 7.8% to a fresh record of more than $86 a troy ounce. US stocks were marginally higher, recovering from earlier falls. The yield on the 10-year Treasury, which moves inversely to the price, climbed 0.02 percentage points to 4.21% before falling back to 4.18%.

Takeaways by Macro Roundup® AI

  1. Gold climbed as much as 2.7% to a record above $4,600 a troy ounce amid worries over Federal Reserve independence, while the dollar weakened 0.3% against a basket of major currencies including the pound and the euro.
  2. Silver jumped as much as 7.8% to a fresh record of more than $86 a troy ounce.
  3. The yield on the 10-year Treasury climbed 0.02 percentage points to 4.21% before falling back to 4.18%, and US stocks were marginally higher after recovering from earlier falls.

Related Articles:

  • Political Pressure on the Fed — Using data on President–Federal Reserve interactions, the author estimates that political pressure to ease monetary policy raises the price level strongly and persistently without boosting real activity, working through inflation expectations more than a typical easing. Such pressure occurred mainly in the 1970s and contributed to inflationary episodes.
  • The Cost of Money is Part of the Cost of Living: New Evidence on the Consumer Sentiment Anomaly — Variation in the University of Michigan consumer sentiment index that inflation and unemployment cannot explain is strongly correlated with growth in consumer borrowing costs, such as mortgage and car loan rates. The authors estimate that including interest payments and homeownership costs in the consumer price index would raise measured inflation from 3% to 9%.
  • The Debasement Trade Roars Back — Currencies of low-public-debt countries such as Switzerland and Sweden are showing increasing correlation with daily moves in gold and silver prices. Sweden's krona has traditionally been highly volatile without safe-haven attributes, a pattern the article attributes to the "debasement trade.

AI Summary. US equities, with 5,994 firms and $69.8tn in market value, hold the largest share of global market capitalization at 46.8%, down from 48.7% a year earlier despite a 16.8% gain. Global equities added $26.3tn (+21.46%), with China best performing (+32.5% in dollar terms) and India worst (+3.31%).

Aswath Damodaran Musings On Markets
Date Posted:

The US share of global market capitalisation fell slightly from 48.7% at the end of 2024 to 46.8% at the end of 2025, despite public firms’ 16.8% gains. China returned 32.5% in dollar terms, and the greater EU returned 28.6%.

Does the US still dominate global equity market capitalization?

Core argument: Global equities added $26.3 trillion in market capitalization in 2025, a gain of 21.46% for the year.

The United States, with 5,994 firms and a total market capitalization of $69.8 trillion, continues to have a dominant share of the global market. While US stocks had a good year, up almost 16.8% in the aggregate, the US share of the global market dipped slightly from 48.7% at the end of 2024 to 46.8% at the end of 2025. The best performing sub-region in 2025 was China, up almost 32.5% in US dollar terms, and the worst, again in US dollar terms, was India, up only 3.31%. Global equities added $26.3 trillion in market capitalization in 2025, up 21.46% for the year.

Takeaways by Macro Roundup® AI

  1. Global equities added $26.3 trillion in market capitalization in 2025, a gain of 21.46% for the year.
  2. US stocks rose almost 16.8% in aggregate, yet the US share of global market capitalization slipped from 48.7% at the end of 2024 to 46.8% at the end of 2025, with 5,994 firms worth $69.8 trillion.
  3. China was the best-performing sub-region in 2025, up almost 32.5% in US dollar terms, while India was the worst, up 3.31%.

Related Articles:

  • 2026 Outlook: Tech Tonic — A Broadening Bull Market — Most major equity markets have outperformed the US, with Europe, China and Asia generating almost double US total returns in dollar terms and gains of 54% in Italy, 73% in Spain and 71% in Korea. US returns have been driven by strong earnings, particularly in technology, while Europe's have come largely from rising valuations.
  • American Unexceptionalism — The S&P 500 has outperformed other developed-market equities by a cumulative 150% over the past fifteen years, but the authors attribute about 80% of that gap to a strengthening dollar and expanding relative valuations rather than fundamentals such as dividends, buybacks, and organic growth. U.S. valuations sit around the 90th percentile on price-to-earnings measures.
  • 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. China's yuan faces appreciation pressure while Beijing maintains its commitment to currency stability, testing trading partners' willingness to absorb China's growing export surplus. If nominal appreciation is limited to a few percentage points, the real effective exchange rate stays at its depreciated level and China is likely to keep gaining global market share.

Brad Setser Council On Foreign Relations
Date Posted:

In real terms, the yuan is close to a 15-year low. Setser argues China’s “immovable” commitment to the basic stability of the yuan is at odds with “China’s trading partners’ willingness to absorb China’s ever-increasing export surplus.”

Will limited currency appreciation let China keep gaining global market share?

Core argument: China's yuan faces substantial appreciation pressure as Beijing's commitment to basic currency stability meets trading partners' limited willingness to absorb China's ever-increasing export surplus.

An immovable object—China’s commitment to the basic stability of yuan—is meeting a potentially unstoppable political force, and testing limits of China’s trading partners’ willingness to absorb China’s ever-increasing export surplus. After all, if China limits nominal appreciation to a few percentage points (to match, say, the rate differential between the yuan and the dollar in an effort to limit speculative pressure) China’s real exchange rate won’t move, and if the real effective yuan stays at its current depreciated level, China is likely to continue to gain global market share. Pressure [for yuan appreciation] is coming in the context of China’s still largely closed financial account—and the closed financial account traps Chinese savings inside China. But China is not going to suddenly open the floodgates and allow unfettered inflows and outflows, so it makes sense to assess the pressure that is coming from within the existing system.

Takeaways by Macro Roundup® AI

  1. China's yuan faces substantial appreciation pressure as Beijing's commitment to basic currency stability meets trading partners' limited willingness to absorb China's ever-increasing export surplus.
  2. If China limits nominal yuan appreciation to a few percentage points to match the yuan-dollar rate differential and curb speculative pressure, China's real exchange rate would not move and China would likely continue gaining global market share.
  3. Appreciation pressure on the yuan is arising within China's still largely closed financial account, which traps Chinese savings inside China, and Beijing is not expected to suddenly permit unfettered inflows and outflows.

Related Articles:

  • China’s Trade Surplus, Part II — China's high saving and diminishing returns on investment leave consumption weak, and its currency's real trade-weighted value has fallen substantially, giving Chinese exporters a large competitive advantage. The author argues the government sets the yuan's value and now suppresses it largely through state banks buying dollars, purchases that do not appear in official reserves.
  • Markets Outlook 2026: Some Like It Hot — China's annual goods trade surplus surpassed $1tn for the first time, and analysts project its current account surplus as a share of global GDP will exceed levels last seen during the mid-2000s "China shock." The Chinese currency is estimated to be undervalued to a comparable degree, and the analysts expect gradual appreciation to continue.
  • The Case That China is Now Actively Resisting Pressure on the Yuan to Appreciate — The author argues China has been resisting pressure for the yuan to appreciate against the dollar, citing state bank foreign asset accumulation, balance of payments data, a yuan trading strong relative to its official fix, and positive foreign exchange settlement. Inflows from China's large trade surplus exceed private capital outflows.

AI Summary. Entities tied to Google's two cofounders have moved or deactivated dozens of California limited liability companies that hold some of their business interests and investments, with several converted into Nevada entities. A trust linked to one cofounder also purchased a $71.9m mansion in Miami.

Ryan Mac, Theodore Schleifer and Heather Knight New York Times
Date Posted:

In response to a union-sponsored proposal that would levy a wealth tax of 5% tax on individuals worth more than $1B, the founders of Google both cut ties with the state of California in December.

Are tech billionaires shifting their business entities out of California?

Core argument: An entity tied to Google co-founder Sergey Brin, 52, terminated or moved 15 California limited liability companies overseeing some of his business interests and investments out of the state in the 10 days before Christmas, according to documents seen by The New York Times.

In the 10 days before Christmas, an entity connected to Mr. Brin, 52, terminated or moved 15 California limited liability companies that oversee some of his business interests and investments out of the state, according to documents seen by The New York Times. Seven of the companies — including those that appear to manage one of Mr. Brin’s superyachts and his interest in a private air terminal at San Jose’s international airport — were converted into Nevada entities. Mr. Brin is joining Mr. Page, 52, in reducing his California presence. More than 45 California limited liability companies associated with Mr. Page filed documents last month to either become inactive or move out of the state, according to state records. A trust with ties to Mr. Page also purchased a $71.9 million mansion in Miami’s Coconut Grove neighborhood this week, according to a deed seen by The Times.

Takeaways by Macro Roundup® AI

  1. An entity tied to Google co-founder Sergey Brin, 52, terminated or moved 15 California limited liability companies overseeing some of his business interests and investments out of the state in the 10 days before Christmas, according to documents seen by The New York Times.
  2. Seven of the Brin-linked companies — including those that appear to manage one of his superyachts and his interest in a private air terminal at San Jose's international airport — were converted into Nevada entities.

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  • Behavioral Responses to State Income Taxation of High Earners: Evidence from California — A California ballot measure raising top marginal income tax rates by up to 3 percentage points prompted an additional 0.8% of the affected tax base to leave the state, with an estimated income elasticity of 2.5–3.2 for high earners who stayed. The authors estimate these responses eroded 45.2% of windfall revenues within one year and 60.9% within two.
  • Taxing Top Wealth: Migration Responses and Their Aggregate Economic Implications — Swedish data show that when a wealth-taxed entrepreneur emigrates, employment at their businesses falls 33%, value-added 34%, tax payments 50%, and investment 21%, but 60% of closed firms are absorbed by other domestic companies. The authors estimate aggregate effects on employment and investment are small.