Edward Conard

Top Ten New York Times Bestselling Author

  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “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
  • “…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
  • “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
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, January 30, 2026

AI Summary. A monetarist critique of the Federal Reserve attributes inflation in part to the expansion of its balance sheet and argues that a smaller balance sheet would create room for interest-rate cuts. The same view holds that a large balance sheet encroaches on fiscal policy and carries distributional consequences, implying a trade of wealth effects for lower rates.

Joseph Wang Fed Guy Blog
Date Posted:

Kevin Warsh, Trump’s nominee for Fed chair, is a long-time critic of the Fed, but from a hawkish monetarist stance. His emphasis on balance sheet reduction may permit him to lower the funds rate more than in the absence of such “quantitative tightening.”

Would a smaller central bank balance sheet allow lower interest rates?

Core argument: Kevin Warsh, a long-time Fed critic, attributes inflation in part to the Fed's balance sheet expansion and argues that shrinking the balance sheet would give the Fed more room to cut interest rates.

Warsh is a long time critic of the Fed who has consistently argued for a smaller balance sheet. He holds a monetarist view where he attributes inflation in part due to the Fed’s balance sheet expansion, so he suggests a smaller balance sheet would give the Fed more room to cut rates. He has also highlighted concerns over mission creep, where a large balance sheet encroaches upon fiscal policy. Secretary Bessent notably echoed the same philosophy in a widely read essay published in Spring 2025 that also expressed concerns over the distributional consequences of a large Fed balance sheet. A Warsh Fed would be one who seeks to trade the wealth effect for more rate cuts.

Takeaways by Macro Roundup® AI

  1. Kevin Warsh, a long-time Fed critic, attributes inflation in part to the Fed's balance sheet expansion and argues that shrinking the balance sheet would give the Fed more room to cut interest rates.
  2. Warsh argues that a large Fed balance sheet creates mission creep by encroaching on fiscal policy, a concern Secretary Bessent echoed in an essay published in Spring 2025.
  3. A Warsh-led Fed would seek to trade the wealth effect for more rate cuts, and Bessent's essay also raised concerns over the distributional consequences of a large Fed balance sheet.

Related Articles:

  • Data Update 3: The Trust Deficit – Bonds, Currencies, Gold and Bitcoin in 2025! — Federal Reserve rate changes affect short-term Treasuries, but long-term Treasury yields are driven more by expected inflation and real growth, according to the author's analysis. An "intrinsic" 10-year risk-free rate, calculated by adding actual inflation and real GDP growth, tracks the big historical moves in Treasury rates, standing at 5.10% against a 4.18% 10-year Treasury yield.
  • Who Buys Treasuries When the Fed Reduces its Holdings — Analysis of Federal Reserve balance sheet reduction finds that households and broker-dealers absorbed the additional supply of Treasury securities during the 2017–2019 episode, with household holdings correlated with hedge fund holdings. In the first year of the reduction begun in 2022, households purchased a large share while hedge funds did not, and insurance companies and foreign investors also increased holdings.
  • Summers Says Slowing Balance-Sheet Runoff Pace Is ‘Alarming’ Signal on Debt Fragility — The Federal Reserve cut the monthly cap on Treasury securities allowed to roll off its balance sheet to $5bn from $25bn; because its purchases create interest-bearing bank reserves, slowing the runoff shortens the effective maturity of US public-sector debt. One argument holds this signals fragility in placing government debt amid worsening fiscal policy.

AI Summary. Capital spending by Amazon, Meta, Oracle, Alphabet and Microsoft has tripled since 2023, and sell-side forecasts project more than $2.7tn of cumulative outlays through 2029, mostly tied to AI infrastructure. These programs, initially funded largely from internal cash flow, are shifting toward debt, with the companies pricing roughly $90bn of bond deals.

John Cortese, Rob Bittencourt, Akila Grewal, Shobhit Gupta, et al. Apollo
Date Posted:

Apollo forecasts a cumulative $2.7T of AI-related spending from 2025 to 2029, which will be increasingly debt funded – reflecting “a material shift in these companies’ historical reliance on cash flow-funded financing models.”

How are big tech companies shifting from cash to debt financing?

Core argument: Sell-side forecasts point to more than $2.7 trillion of cumulative hyperscaler capex outlays from 2025 to 2029, the majority tied directly to AI infrastructure, with hyperscaler capex already tripled since 2023.

The estimated capex needs, especially if the more optimistic scenarios for AI adoption are realized, are staggering. Hyperscaler capex has already tripled since 2023, with Amazon, Meta, Oracle, Alphabet (Google) and Microsoft together sponsoring the largest private-sector infrastructure buildout in decades. Sell-side forecasts now point to more than $2.7 trillion of cumulative outlays from 2025 to 2029, the majority tied directly to AI infrastructure. Initial capex outlays were largely self-funded with internal cash flow, but we expect debt to play a more central role in funding the hyperscalers’ capex programs going forward which will have meaningful implications for credit markets. This pivot is already visible in recent debt issuance patterns. In the last three months of 2025, Oracle, Meta, Google and Amazon priced multibillion-dollar deals totaling $90 billion. Oracle raised debt equivalent to nearly 40% of its $50 billion fiscal year 2026 capex guidance, while Meta and Alphabet issued debt equivalent to approximately 30% and 20% of their fiscal year 2026 capex forecasts, respectively. These debt issuances represent a material shift in these companies’ historical reliance on cash flow-funded financing models. Allocators may be taking on a growing, often hidden, “AI beta” across asset classes. For fixed income investors, this means considering a broader set of assets.

Takeaways by Macro Roundup® AI

  1. Sell-side forecasts point to more than $2.7 trillion of cumulative hyperscaler capex outlays from 2025 to 2029, the majority tied directly to AI infrastructure, with hyperscaler capex already tripled since 2023.
  2. Oracle, Meta, Google and Amazon priced multibillion-dollar deals totaling $90 billion in the last three months of 2025, a material shift from these companies' historical reliance on cash flow-funded financing models.
  3. Oracle raised debt equivalent to nearly 40% of its $50 billion fiscal year 2026 capex guidance, while Meta and Alphabet issued debt equivalent to approximately 30% and 20% of their fiscal year 2026 capex forecasts, respectively.

Related Articles:

  • Oracle’s Value Is Cut In Half From 2025 Peak as AI Caution Rises — Oracle shares have fallen more than 50% from their record high, erasing about $463bn in market value, as investors grow cautious about artificial intelligence and the company's ties to OpenAI. The decline comes as major technology firms pledge billions for data centers, in some cases without a clear return on investment.
  • 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.
  • Financing The AI Boom: From Cash Flows To Debt — 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.

AI Summary. Morgan Stanley's accounting team estimates that splitting hyperscaler capital spending into AI and non-AI components, with graphics chips assumed to last up to six years and warehouses 15 years, could quadruple Alphabet's depreciation expense within several years and lift Oracle's from $4bn to $56bn, equal to 28% of expected revenue.

Bryce Elder Financial Times
Date Posted:

According to a Morgan Stanley analysis, Oracle’s depreciation will be ~28% of revenue by 2029, up from only ~5% today. Meta’s and MSFT’s will both rise to just under 20%, and Google’s will double to ~10%.

How much will AI spending inflate hyperscaler depreciation expenses?

Core argument: Morgan Stanley's Accounting & Tax desk calculates that Oracle's $4bn 2025 depreciation charge could reach $56bn by 2029, equivalent to 28% of the revenue consensus expects for that year.

Because tech companies rarely break out depreciation in their income statements, analysts often take a blunt approach and model the effect through cash flow, then fiddle with their operating margin estimates until everything hangs together. During periods of high investment in assets whose useful lives are very different, namely GPUs and warehouses, the analyst has a very high chance of being wrong. Morgan Stanley’s Accounting & Tax desk, led by analyst Todd Castagno, takes a more granular approach. The team splits hyperscaler capex into AI and non AI, smooths out construction-in-progress costs, and allocates the expected lease expenses to property. The team assumes GPUs have a useful life of up to six years and that warehouses will last for 15 years. Based on Morgan Stanley’s calculations, Alphabet’s depreciation expense could quadruple by its 2028 year-end. Oracle’s 2025 depreciation charge of $4bn might balloon to $56bn by 2029, which would be equivalent to 28% of revenue expected by the consensus. Unless forecasts move significantly higher, depreciation will soon come to dominate total expenses.

Takeaways by Macro Roundup® AI

  1. Morgan Stanley's Accounting & Tax desk calculates that Oracle's $4bn 2025 depreciation charge could reach $56bn by 2029, equivalent to 28% of the revenue consensus expects for that year.
  2. Morgan Stanley's team, led by Todd Castagno, estimates Alphabet's depreciation expense could quadruple by its 2028 year-end, splitting hyperscaler capex into AI and non-AI and assuming GPUs last up to six years and warehouses 15 years.
  3. Because tech companies rarely break out depreciation in income statements, analysts model the effect through cash flow and adjust operating margin estimates, an approach with a high chance of error when GPUs and warehouses have very different useful lives.

Related Articles:

  • AI Capex Risk as Predictable Engineering — The 2020 scaling-laws paper fostered a belief that mixing compute, data, and parameters yields better AI models in a deterministic way, which the author argues let unusually large capital spending plans pass without investor revolt. The author contends that curve was empirical rather than physical and is now breaking, returning AI capital spending to normal economics.
  • 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.
  • 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.

AI Summary. By the investment firm's definition of a bubble — a price two standard deviations above an asset class's long-term real trend — U.S. equities are in bubble territory and extremely overpriced on historically effective valuation metrics, with a cyclically adjusted price-earnings ratio of 40 and a record share of the market trading above 10x sales.

Jeremy Grantham and Edward Chancellor GMO
Date Posted:

Jeremy Grantham notes, “We have always defined a bubble as a two-standard-deviation divergence of the price of any asset class above its long-term real price trend. The U.S. stock market has now been in bubble territory for a prolonged period.”

Are U.S. equities in bubble territory by standard valuation measures?

Core argument: GMO argues U.S. equities are extremely overpriced by every historically effective valuation metric, with a CAPE of 40 above any level seen outside the very peak of the internet bubble.

At GMO, we have always defined a bubble as a two-standard-deviation divergence of the price of any asset class above its long-term real price trend. The U.S. stock market has now been in bubble territory for a prolonged period. Sooner or later, the bubble will burst and the price will return to its historic level. By every historically effective valuation metric, U.S. equities are now extremely overpriced. Their CAPE of 40 is above any level seen outside the very peak of the internet bubble. The U.S. market cap to GDP ratio, the so-called Buffett Indicator, is at all-time highs. A record proportion of the U.S. stock market trades at over 10 times sales; AI-enabled surveillance company Palantir trades at over 100 times sales. Tesla, Musk's flagship company, trades at over 300 times earnings, with earnings down 61% year over year and negative revenue growth.

Takeaways by Macro Roundup® AI

  1. GMO argues U.S. equities are extremely overpriced by every historically effective valuation metric, with a CAPE of 40 above any level seen outside the very peak of the internet bubble.
  2. GMO defines a bubble as a two-standard-deviation divergence of an asset class's price above its long-term real price trend, and says the U.S. stock market has been in bubble territory for a prolonged period and will eventually return to its historic level.
  3. A record proportion of the U.S. stock market trades at over 10 times sales, with Palantir above 100 times sales and Tesla above 300 times earnings alongside earnings down 61% year over year and negative revenue growth, while the Buffett Indicator sits at all-time highs.

Related Articles:

  • Oracle’s Value Is Cut In Half From 2025 Peak as AI Caution Rises — Oracle shares have fallen more than 50% from their record high, erasing about $463bn in market value, as investors grow cautious about artificial intelligence and the company's ties to OpenAI. The decline comes as major technology firms pledge billions for data centers, in some cases without a clear return on investment.
  • Is It a Bubble? — Transformational technologies have historically generated excessive enthusiasm and investment, producing more infrastructure than needed, asset prices that prove too high, and losses for those funding them, while also accelerating adoption. AI enthusiasm is argued to fit this pattern, with debt financing having the potential to magnify the effects.
  • 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.

AI Summary. OpenAI is planning an initial public offering and is seeking to raise more than $100bn in a funding round that would value it at $830bn. A listing could bolster market confidence in its finances after investors questioned how it would fund AI infrastructure and chip deals totaling hundreds of billions of dollars.

Berber Jin, Corrie Driebusch and Kate Clark Wall Street Journal
Date Posted:

OpenAI is “laying the groundwork” for an IPO in Q4, with the aim of getting to market prior to Anthropic. The firm is currently raising ~$100B in private capital at a valuation of $830B.

Can a public listing shore up confidence in an AI leader's finances?

Core argument: OpenAI is seeking more than $100 billion at an $830 billion valuation in a fundraising campaign that could run for much of the year and serve as a pre-IPO round.

It is expected to be a blockbuster year for stock-market debuts after a recent drought, and some on Wall Street are speculating that 2026 could be the biggest year ever for IPOs. OpenAI, rival Anthropic and SpaceX are among the most closely watched tech darlings that could go public, though listing activity also has picked up for smaller companies. Pulling off a successful public listing by year’s end is likely to be difficult for the ChatGPT maker, which is still confronting the challenges of a fast-growing startup. An IPO could help the AI startup shore up market confidence in its finances after investors questioned how it would pay for AI infrastructure and chips deals that total hundreds of billions of dollars in the coming years. OpenAI is in the throes of a fundraising campaign that could take place for much of this year, in what could be a pre-IPO round. It is seeking to pull together more than $100 billion in a deal that would value the startup at $830 billion.

Takeaways by Macro Roundup® AI

  1. OpenAI is seeking more than $100 billion at an $830 billion valuation in a fundraising campaign that could run for much of the year and serve as a pre-IPO round.
  2. OpenAI plans a fourth-quarter IPO ahead of Anthropic, a listing that could shore up market confidence in its finances after investors questioned how it would fund AI infrastructure and chips deals totaling hundreds of billions of dollars.
  3. Some on Wall Street speculate that 2026 could be the biggest year ever for IPOs, with OpenAI, Anthropic and SpaceX among the most closely watched companies that could go public after a recent drought.

Related Articles:

  • SpaceX, OpenAI and Anthropic Prepare To Launch Landmark IPOs — SpaceX, OpenAI and Anthropic are preparing initial public offerings without yet setting valuation targets, while each pursues new private funding. OpenAI, valued at $500bn, is in early talks to raise tens of billions of dollars at $750bn or more; SpaceX is working on a share sale valuing it at $800bn, and investors expect Anthropic to be valued above $300bn.
  • 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.
  • Capital Is Making a Comeback — Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.

Monday, February 2, 2026

AI Summary. The authors argue that a decline in labor's share of US corporate value added, combined with weak corporate investment, mechanically raises valuation-to-earnings ratios even without changes in expected returns or growth. They find corporate enterprise value rose alongside an equal-sized increase in free cash flow's share of value added.

Andrew Atkeson, Jonathan Heathcote and Fabrizio Perri National Bureau of Economic Research
Date Posted:
Is Database:
Database

US business valuations jumped post-2000 and remain elevated. The Gordon formula still works with free cash flow, but FCF has outpaced earnings as labor’s share fell and firms reinvest less. Intangible capital and/or higher markups likely play a role.

Do falling labor shares and weak investment explain higher valuation ratios?

Core argument: The authors argue that a declining labor share of corporate output combined with relatively weak corporate investment mechanically generates a persistent rise in corporate valuation relative to earnings, even absent changes in expected returns or growth rates.

We use macroeconomic data derived from the Integrated Macroeconomic Accounts (hereafter IMA) to argue that the observed decline in labor’s share of corporate output in conjunction with relatively weak corporate investment mechanically generates a persistent rise in the ratio of corporate valuation relative to corporate earnings, even absent any changes in expected returns or growth rates. We consider two broad measures of corporate income, which we label earnings and free cash flow, where the latter is defined as earnings minus net investment. These data offer the following insights regarding trends in the value of U.S. corporations. 1. The enterprise value of U.S. corporations has boomed in recent decades relative to corporate output. 2. The large increase in the enterprise value of U.S. corporations from 1980 until the middle of 2022 coincides with an equal-sized increase in the share of corporate value added flowing to corporate owners as free cash flow. Thus, the ratio of free cash flow to enterprise value was unchanged over that period. 3. The observed growth in free cash flow largely reflects a similar-sized decline in the share of corporate value-added paid to labor. 4. The boom in corporate valuations has not been accompanied by significant growth in measured investment and capital. As a result, measured investment and capital are now a much smaller portion of enterprise value than was the case historically.

Takeaways by Macro Roundup® AI

  1. The authors argue that a declining labor share of corporate output combined with relatively weak corporate investment mechanically generates a persistent rise in corporate valuation relative to earnings, even absent changes in expected returns or growth rates.
  2. Using the Integrated Macroeconomic Accounts, the authors find the increase in U.S. corporate enterprise value from 1980 to mid-2022 coincided with an equal-sized rise in the share of corporate value added flowing to owners as free cash flow, leaving the free-cash-flow-to-enterprise-value ratio unchanged.
  3. The boom in U.S. corporate valuations has not been accompanied by significant growth in measured investment and capital, which now constitute a much smaller portion of enterprise value than historically.

Related Articles:

  • Reconciling Macroeconomics and Finance for the U.S. Corporate Sector: 1929 to Present — Using integrated U.S. macroeconomic and financial accounts, the authors find that fluctuations in expected cash flows to corporate owners, rather than expected rates of return, have been the dominant driver of swings in U.S. corporate market valuations. They attribute most valuation fluctuations to changes in the share of corporate output flowing to owners as pure rent.
  • Stocks Near Highest Valuations Since 1880 — The cyclically adjusted price-earnings ratio, which divides stock prices by the average of the past 10 years of inflation-adjusted earnings to smooth business-cycle swings, stands near its highest level since 1880. Because it uses a decade of earnings rather than one year, it is a gauge of sustainable earnings power.
  • The Wage Compression That Persisted — Hourly wages at the 10th percentile have risen more since 2019 than wages at the median and 90th percentile, and this compression of wage inequality has largely persisted, strengthening when adjusted for worker age, education, and gender. Real wage growth at the bottom appears to have slowed more recently.

AI Summary. The authors estimate that the HOPE VI program, which revitalized high-poverty US public housing projects, raised adult household income by 2.77% per childhood year spent in a revitalized project, implying a 50% gain from birth, exceeding the program's up-front taxpayer costs. They attribute the gains largely to increased interaction with higher-income peers in surrounding neighborhoods.

Raj Chetty, Rebecca Diamond, Thomas Foster, Lawrence Katz, et al. Harvard University
Date Posted:
Is Database:
Database

Btw 1993 and 2010, children who moved into revitalized public housing that mixed market-rate and subsidized units, stayed a mean 5 years, and earned ~17% higher income as of their late 20s/early 30s. One key channel was exposure to higher-income peers.

Does revitalizing high-poverty public housing raise children's adult incomes?

Core argument: Each year a child spent growing up in a HOPE VI revitalized public housing project raised adult household income by 2.77%, implying a 50% income gain for a child living there from birth.

This paper has shown that the largest effort to revitalize high-poverty public housing projects in the United States—the HOPE VI program—succeeded in increasing economic mobility. Each year a child spent growing up in a revitalized public housing project increased their household income in adulthood by 2.77%, implying that growing up from birth in a revitalized public housing project would increase income by 50%. These income gains are substantially larger than the program’s up-front costs to taxpayers, demonstrating that it is possible to create higher-opportunity neighborhoods in a cost-effective manner even without changing broader determinants of outcomes such as labor market conditions or schools. The potential for change in short time frames is particularly notable given the historical roots of differences in opportunity across neighborhoods. The gains from HOPE VI are largely explained by changes in social interaction: children in revitalized projects interact more with peers in surrounding neighborhoods and gain more when they have higher-income peers.

Takeaways by Macro Roundup® AI

  1. Each year a child spent growing up in a HOPE VI revitalized public housing project raised adult household income by 2.77%, implying a 50% income gain for a child living there from birth.
  2. The income gains from HOPE VI are substantially larger than the program's up-front costs to taxpayers, indicating that higher-opportunity neighborhoods can be created cost-effectively without changing labor market conditions or schools.
  3. The gains from HOPE VI are largely explained by changes in social interaction, as children in revitalized projects interact more with peers in surrounding neighborhoods and gain more when those peers have higher incomes.

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.
  • ZIP Code Is Destiny? Turns Out That’s Bunk — The authors argue that research crediting neighborhoods with causing better child outcomes confuses causation with parental self-sorting, since more affluent, better-educated, and more stable families tend to move to good neighborhoods before their children are born. Their analysis of Danish population data found the same sorting pattern as in the United States.
  • The Economics of Income Mobility — In interviews with 1,000 adults in Memphis, Tulsa, and New Orleans who self-identified as having grown up poor, the authors found human capital was the strongest predictor of escaping poverty, followed by noncognitive skills such as resilience, self-esteem, and conscientiousness. Trusted adults in childhood, early police encounters, mental health, and adverse experiences also mattered.

AI Summary. Oracle plans to raise $45bn–$50bn through debt and equity sales to build additional cloud infrastructure capacity, including a US dollar bond offering expected to total roughly $20bn–$25bn. Spending on AI data centers has pushed Oracle's free cash flow negative, where it is expected to stay until 2030.

Brody Ford and Vincent Lee Bloomberg
Date Posted:

Oracle’s free cash flow is now negative; the firm is planning on raising ~ $45–50B this year through a combination of debt and equity sales to build additional cloud infrastructure capacity.

How much debt and equity does AI data center expansion require?

Core argument: Oracle plans to raise $45 billion to $50 billion this year through debt and equity sales to build additional cloud infrastructure capacity, reflecting the scale of financing needed to feed AI's growth.

Oracle plans to raise $45 billion to $50 billion this year through a combination of debt and equity sales to build additional cloud infrastructure capacity, reflecting the scale of financing needed to feed AI’s growth. On Monday, it kicked off a US dollar bond offering that is expected to be about $20 billion to $25 billion, according to people with knowledge of the matter, who asked not to be identified because they’re not authorized to speak publicly. Developing AI data centers has pushed Oracle’s free cash flow negative, where it is expected to stay until 2030, according to data compiled by Bloomberg. The company is on the hook for tens of billions of dollars in spending in the coming years, largely on semiconductors and leases.

Takeaways by Macro Roundup® AI

  1. Oracle plans to raise $45 billion to $50 billion this year through debt and equity sales to build additional cloud infrastructure capacity, reflecting the scale of financing needed to feed AI's growth.
  2. Oracle kicked off a US dollar bond offering expected to total about $20 billion to $25 billion, according to people with knowledge of the matter who asked not to be identified.
  3. Developing AI data centers has pushed Oracle's free cash flow negative, where it is expected to stay until 2030 according to data compiled by Bloomberg, with tens of billions of dollars in spending ahead, largely on semiconductors and leases.

Related Articles:

  • 2026 Credit Outlook: From Scarcity to Selection—The Return of a Buyer’s Market — Capital spending by Amazon, Meta, Oracle, Alphabet and Microsoft has tripled since 2023, and sell-side forecasts project more than $2.7tn of cumulative outlays through 2029, mostly tied to AI infrastructure. These programs, initially funded largely from internal cash flow, are shifting toward debt, with the companies pricing roughly $90bn of bond deals.
  • Oracle’s Value Is Cut In Half From 2025 Peak as AI Caution Rises — Oracle shares have fallen more than 50% from their record high, erasing about $463bn in market value, as investors grow cautious about artificial intelligence and the company's ties to OpenAI. The decline comes as major technology firms pledge billions for data centers, in some cases without a clear return on investment.
  • 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.

AI Summary. A decade of underinvestment alongside demand from artificial intelligence and electrification points to large copper deficits in coming years, though global inventories are not especially tight today. US tariff plans on copper drew metal into US warehouses, tightening London inventories while creating a US surplus, and copper's designation as a critical mineral gives policymakers reason to keep it there.

Jeff Currie and James Gutman Carlyle
Date Posted:

Jeff Currie argues that while “just-in-time” is more efficient than “just-in-case,” stockpiling due to geopolitical anxiety is likely to amplify “cyclicality that is inherent in commodity markets.” He cites rising US copper inventories as an example.

Will underinvestment and AI demand push copper prices higher?

Core argument: A decade of copper underinvestment combined with AI and electrification demand points to large deficits in coming years, yet global inventories are not especially tight, producing rising prices alongside a contango curve through much of 2024.

A decade of underinvestment and strong demand from AI and electrification are pointing to large copper deficits in the coming years, but global inventories today are not especially tight. Thus, we have had a rising price but a contango curve for much of 2024. When the United States announced plans for tariffs on copper and other metals, there was a rush to take metal out of London Metals Exchange warehouses around the world and ship it to the US for delivery into Comex warehouses. This tightened LME inventories dramatically but created a surplus in the United States. The result was a backwardation on the LME but a contango on Comex. The contango made it profitable to finance warehouse deals in the US that effectively make it unavailable to the market. Under normal circumstances, once prices equilibrated to account for tariffs, the forward curves would drive a rebalancing of metal from surplus/contango regions (e.g. the US) to deficit/backwardated regions (e.g. the rest of the world). But these aren’t normal circumstances. The United States has listed copper as a critical mineral, and it would come as no surprise if policy makers saw an advantage to keeping the metal in the US, one way or another.

Takeaways by Macro Roundup® AI

  1. A decade of copper underinvestment combined with AI and electrification demand points to large deficits in coming years, yet global inventories are not especially tight, producing rising prices alongside a contango curve through much of 2024.
  2. U.S. plans for tariffs on copper and other metals triggered a rush to pull metal from London Metals Exchange warehouses worldwide for delivery into Comex, sharply tightening LME inventories while creating a U.S. surplus.
  3. The split left the LME in backwardation and Comex in contango, making financed U.S. warehouse deals profitable and effectively removing that metal from the market, while the United States has listed copper as a critical mineral.

Related Articles:

  • Capital Is Making a Comeback — Tangible investment in property, factories and equipment fell from 12.5% to 8.5% of private gross domestic product, while intangible investment in intellectual property, software and process knowledge rose from about 11.5% to 16.75%. The author argues demand for tangible capital investment will now have to rise.
  • The Transition to a Higher Cost of Capital — Bond yields near 4.5% sit below the 5.5% short-term interest rate, leaving little risk premium, and those yields have been enough to draw buyers back toward normal bond holdings. The author argues yields still need to rise to a sustainable cost of capital given structurally higher fiscal and inflationary spending.
  • The New Joule Order — Ample physical capacity keeps inflation low and stable and allows lower interest rates, but when demand catches up to capacity constraints, better returns in the physical economy pull capital back to fund expansion, making a commodity super-cycle a capital-expenditure cycle. In real terms, total energy investment is below its level 15 years ago.

AI Summary. The US is set to create a $12bn critical minerals stockpile, called Project Vault, combining $1.67bn in private capital with a $10bn loan from the US Export-Import Bank to buy and store minerals such as gallium and cobalt for automakers, technology firms and other manufacturers. The US already stockpiles critical minerals for defense but has no equivalent for civilian needs.

Jennifer Dlouhy and Joe Deaux Bloomberg
Date Posted:

The US is launching a $12B strategic critical-minerals stockpile in an effort to insulate civilian manufacturers from supply shocks. The US already operates a stockpile of critical minerals for defense firms.

Will a civilian critical minerals stockpile reduce US reliance on China?

Core argument: Project Vault would combine $1.67 billion in private capital with a $10 billion US Export-Import Bank loan to procure and store critical minerals for automakers, tech firms and other manufacturers.

The venture — dubbed Project Vault — is set to marry $1.67 billion in private capital with a $10 billion loan from the US Export-Import Bank to procure and store the minerals for automakers, tech firms and other manufacturers. The effort is akin to the nation’s existing emergency oil stockpile. But instead of crude, its focus would be minerals — such as gallium and cobalt — used in products such as iPhones, batteries and jet engines. The stockpile is expected to include both rare earths and critical minerals as well as other strategically important elements that are subject to volatile prices. The US already operates a national stockpile of critical minerals to serve the nation’s defense-industrial base but doesn’t have a stockpile for civilian needs.

Takeaways by Macro Roundup® AI

  1. Project Vault would combine $1.67 billion in private capital with a $10 billion US Export-Import Bank loan to procure and store critical minerals for automakers, tech firms and other manufacturers.
  2. The stockpile is expected to include rare earths, critical minerals such as gallium and cobalt, and other strategically important elements subject to volatile prices, used in products including iPhones, batteries and jet engines.
  3. The US operates a national critical minerals stockpile serving its defense-industrial base but has no stockpile for civilian needs, and Project Vault is likened to the nation's emergency oil reserve.

Related Articles:

  • Why China Keeps Winning The Trade War — Governments seeking supply-chain leverage face limited visibility into their own supply chains, and China's rare earth licensing requirements for multinationals may be partly intended to give Beijing that visibility and allow more precise targeting of future restrictions. Effective measures must impose asymmetric costs, and keeping foreign manufacturers dependent on drip-fed supply is central to Beijing's strategy.
  • China’s Secret Stockpiles Have Been A Great Success—So Far — A data firm estimates China's observable oil stocks reached a record 1.2bn barrels, triple the size of America's reserves, with storage capacity of 2bn barrels only 58% full and traders expecting stockpiling to continue. Analysts also note metal imports have soared even as China's metal-consuming industries have slumped.
  • How U.S. Defense Industry Dodged a Rare-Earth Shortage After China’s Curbs — A decades-old stockpile of samarium nitrate held at a chemical plant in France was refined into usable metal, allowing a U.S. maker of samarium-cobalt magnets to source the rare-earth material outside China. Samarium processed outside China costs 5–8x as much, and the French plant had stopped separating rare-earth elements as uneconomical.

AI Summary. Gold and silver prices fell as a reversal of a record-breaking rally in precious metals extended into a second week. Traders attribute the intensity of the sell-off to heavy retail investor participation, including leveraged products such as short-dated options, after demand for exchange traded funds and physical bullion had fueled the rally.

Ian Smith, Emily Herbert and William Sandlund Financial Times
Date Posted:
Is Database:
Database

Gold has fallen ~15% since its recent peak last week. Gold remains up 9% this year. Market participants attributed the volatility in part to retail buying.

Is retail investor participation intensifying the precious metals sell-off?

Core argument: Gold and silver fell on Monday as the reversal of a record-breaking rally in precious metals extended into a second week.

Gold and silver fell on Monday as the reversal of a record-breaking rally in precious metals extended into a second week. Rising demand from private investors buying exchange traded funds and physical bullion had added to the rally. Investors have looked to gold as a hedge against mounting concerns over increased fiscal spending in developed economies as well as geopolitical uncertainty. This heavy participation by retail investors, which included the use of leveraged products such as short-dated options, was exacerbating the sell-off on Monday, traders said.

Takeaways by Macro Roundup® AI

  1. Gold and silver fell on Monday as the reversal of a record-breaking rally in precious metals extended into a second week.
  2. Demand from private investors buying exchange traded funds and physical bullion had added to the precious metals rally, with investors treating gold as a hedge against concerns over increased fiscal spending in developed economies and geopolitical uncertainty.
  3. Traders said heavy retail participation, including the use of leveraged products such as short-dated options, was exacerbating Monday's sell-off in gold and silver.

Related Articles:

  • Precious Comment: Raising Our Gold Price Forecast on Sticky Hedges — Analysts forecast a 17% rise in gold prices by end-2026, with emerging-market central bank buying averaging 60 tonnes contributing 14 percentage points and Western exchange-traded fund inflows on 50 basis points of Federal Reserve rate cuts adding 3. Risks are seen as skewed to the upside.
  • Everything You Need To Know About Gold — The historical relationship in which gold prices fall as real 10-year Treasury yields rise has broken down, since gold pays no interest and would normally become less attractive as rates rise. The author argues this reflects a "debasement trade," with investors seeking safe havens on fears governments will inflate away unsustainable public debt.
  • Central Banks Rein In Gold Purchases As Investment Demand Soars — Central bank and other official-sector gold purchases fell to 863.3 tonnes, according to the World Gold Council, as high prices and the rising value of existing holdings damped further official buying. Investment demand for gold surged 84% to 2,175 tonnes, driven by exchange-traded fund inflows and demand for gold bars.