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
  • “…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 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
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “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
  • “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 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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, April 1, 2026

AI Summary. Net outflows of unauthorized immigrants have lowered the break-even rate of U.S. payroll growth needed to hold the unemployment rate steady, so smaller job gains that once signalled economic slack are now consistent with a balanced labor market. Recent payroll growth has slightly exceeded that break-even rate on average.

Anton Cheremukhin, Daniel Wilson and Xiaoqing Zhou Federal Reserve Bank of Dallas
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A FRBD analysis finds immigration outflows lowered break-even employment growth to about -3,000 monthly, down from ~250,000 in 2023, “payroll gains that might historically have signaled economic slack are now consistent with a balanced labor market.”

Does immigration outflow lower the break-even rate for job growth?

Core argument: Payroll growth over December 2025–February 2026 slightly exceeded the estimated break-even rate on average, consistent with the unemployment rate remaining stable despite softer headline payroll numbers.

Comparing our break-even estimates with actual payroll growth (Chart 2, blue bars) suggests that job growth over the recent three months—December 2025–February 2026—has slightly exceeded the break-even rate on average, consistent with the unemployment rate remaining stable despite softer headline payroll numbers. Real-time data point to an important change in the U.S. labor market: The benchmark for evaluating payroll growth has moved significantly. As net outflows of unauthorized immigrants reduce employment growth in late 2025, payroll gains that might historically have signalled economic slack are now consistent with a balanced labor market.

Takeaways by Macro Roundup® AI

  1. Payroll growth over December 2025–February 2026 slightly exceeded the estimated break-even rate on average, consistent with the unemployment rate remaining stable despite softer headline payroll numbers.
  2. Net outflows of unauthorized immigrants reduced employment growth in late 2025, lowering the break-even benchmark against which U.S. payroll gains are evaluated.
  3. Payroll gains that would historically have signalled economic slack are now consistent with a balanced U.S. labor market, given the shift in break-even employment.

Related Articles:

  • New Data Show Intensifying Unauthorized Immigration Decline, With Large Local Variations — Individual-level immigration court and parole data indicate net unauthorized immigration has turned increasingly negative, averaging -48,000 per month over the first seven months of the year and reaching -89,000 in July. The authors estimate this pace implies an annual total of -576,000, compared with the Congressional Budget Office's projection of -290,000.
  • What Sweeping Revisions and a Blowout Month Tell Us About the U.S. Job Market — Labor Department revisions lowered previously estimated job gains for the past two calendar years, cutting the combined net change in construction, manufacturing, and retail by 115,000 jobs. Healthcare added about 437,000 jobs and social assistance about 321,000 over 12 months, while all other private-sector jobs combined shrank.
  • Trump’s Immigration Crackdown Fails to Deliver Jobs for US-Born Workers — Researchers at the American Enterprise Institute and the Brookings Institution estimate net migration into the US may have turned negative for the first time in at least 50 years. That decline coincided with rising joblessness among US-born workers, whose labor force participation has fallen in recent months to near its lowest level since 2021.

AI Summary. Shipments of AI hardware rose almost 40%, accounting for about a third of global trade growth, drawing on supply chains running through Taiwan, South Korea, and parts of Southeast Asia. The US added roughly half of the world's new data center capacity, and its AI-related goods trade rose about 66%.

Tiago Devesa, Jeongmin Seong, Olivia White, Nick Leung, et al. McKinsey
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Despite Trump’s tariffs, global trade growth expanded 6.5% last year, outpacing overall economic growth. The largest driver was the AI buildout; McKinsey estimates AI hardware shipments increased ~40% last year and account for 1/3 of the increase in global trade growth.

How much did AI hardware shipments drive global trade growth?

Core argument: Shipments of AI hardware rose nearly 40% in 2025, accounting for about a third of global trade growth, an effect that has drawn less attention than AI's impact on growth, investment, financial markets, or jobs.

Booming AI investment left a clear mark on global trade in 2025. Shipments of the hardware needed to develop and run the technology increased by almost 40% during the year, accounting for about a third of global trade growth—an impact that has received far less attention than AI’s effects on economic growth, investment, financial markets, or jobs. This expansion unfolded amid heightened geopolitical tensions and tighter trade restrictions. The rapid buildout of data centers required large volumes of semiconductors, servers, and networking equipment from tightly linked supply chains running through Taiwan, South Korea, and parts of ASEAN. The United States added roughly half of the world’s new data center capacity in 2025, making it the largest source of demand. US trade of AI-related goods rose by roughly 66%, or an estimated $220 billion. China was the second-largest builder of data centers, but trade restrictions limited its ability to import some of the most advanced chips and semiconductor manufacturing tools for much of 2025, leading it to rely heavily on domestic supplies. As a result, China’s trade in AI-related goods increased by only 16%, or an estimated $85 billion.

Takeaways by Macro Roundup® AI

  1. Shipments of AI hardware rose nearly 40% in 2025, accounting for about a third of global trade growth, an effect that has drawn less attention than AI's impact on growth, investment, financial markets, or jobs.
  2. The United States added roughly half of the world's new data center capacity in 2025, making it the largest source of demand, with US trade in AI-related goods up roughly 66%, an estimated $220 billion.
  3. China, the second-largest builder of data centers, saw its trade in AI-related goods rise only 16%, an estimated $85 billion, as trade restrictions limited imports of some of the most advanced chips and semiconductor manufacturing tools for much of 2025.

Related Articles:

  • Taiwan’s Modern Miracle — Taiwan's economy has grown more than 12% over the past year, its fastest annual pace in nearly 50 years, as AI chip demand lifts net exports and pushes manufacturing to nearly 40% of output. Its trade surplus is flowing into outbound direct investment and foreign lending rather than US bonds.
  • US Notches One of Its Biggest Annual Trade Gaps Since 1960 — The US goods and services trade deficit reached $901.5bn for the year, one of the largest in data going back to 1960. US companies increased imports of computers and accessories by nearly $145bn from the prior year, an acceleration in demand that reflects large-scale artificial intelligence investment.
  • The Dangerous Triumph Of Neo-Mercantilism — Neo-mercantilism is thriving in both China, which pairs infant-industry promotion with large trade surpluses, and in a United States focused on external deficits and protecting domestic markets. The author argues this will likely fracture the world economy, and that a new multilateral treaty could include a mechanism to combat large structural trade surpluses.

AI Summary. Bank of America payments data show about 3% of its households paid for artificial intelligence services, with median spending of $20 per household, up 10.4% from a year earlier, an adoption rate that remains low relative to subscriptions such as music or on-demand video. Bank of America Global Research projects the US addressable market could scale to $75bn annually.

Taylor Bowley and Joe Wadford Bank of America
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Bank of America internal data suggests ~3% of American households are spending money on AI services in early 2026, a 38% increase from 2024. They forecast the US consumer market could scale to $75B annually.

How many households pay for AI services?

Core argument: Roughly 3% of Bank of America households paid for AI services in 2026, with median household spending of $20 as of February, up 10.4% year-over-year, according to Bank of America payments data.

Approximately 3% of Bank of America households paid for AI services in 2026, with each household spending a median amount of $20 as of February – an increase of 10.4% year-over-year, according to Bank of America payments data. We identify AI services using industry-research merchant names and track transactions via card or automated clearinghouse. Essentially, AI services are digital tools or features that use artificial intelligence – such as machine learning or language models – to assist, automate, or enhance tasks, decisions, or content generation for users, whether offered as standalone products or embedded within broader applications. As AI increasingly becomes embedded in our daily lives, and higher-tier subscriptions emerge, BofA Global Research expects the US addressable market could scale to $75 billion annually, supported by rising consumer willingness to pay for convenience and time-saving utility. Yet, compared to other subscriptions such as music or videos on demand, AI adoption is still relatively low.

Takeaways by Macro Roundup® AI

  1. Roughly 3% of Bank of America households paid for AI services in 2026, with median household spending of $20 as of February, up 10.4% year-over-year, according to Bank of America payments data.
  2. BofA Global Research expects the US addressable market for consumer AI services could scale to $75 billion annually, supported by rising consumer willingness to pay for convenience and time-saving utility as higher-tier subscriptions emerge.
  3. Consumer AI adoption remains relatively low compared with other subscriptions such as music or video on demand, based on Bank of America's identification of AI merchants through industry research and tracking of card and automated clearinghouse transactions.

Related Articles:

  • Everyone’s Looking For A Bubble. No One Sees The Stampede — A proprietary model estimates monthly artificial intelligence revenue grew roughly 18-fold in two years, from $772m to $13.8bn, with AI accounting for an estimated 23% of Google Cloud, 10% of Azure and 5% of Amazon Web Services. The model's ratio of investment to revenue fell from 6.1x to 4.7x, still historically high.
  • Chart of the Day: The Hateful Eight is 85% of S&P 500 Decline — Eight mega-cap technology companies — Microsoft, Nvidia, Google, Apple, Amazon, Meta, Tesla, and Oracle — account for 85% of the S&P 500's decline, subtracting roughly 576 index points, while the remaining ~490 companies collectively added about 100 points. Because of their outsized index weights, benchmark performance reflects a handful of firms rather than broad market breadth.
  • The Macro Implications of the AI Capex Boom — Artificial intelligence capital spending is estimated to add roughly 1.4 percentage points to US growth in one year and about 1.5 points the next, comparable to business investment's contribution during the tech bubble. A material part of that estimate reflects profits at Nvidia and a few other chipmakers that are unlikely to be recycled back into the economy.

AI Summary. Energy-supply disruptions push countries toward domestic production — fossil fuels, renewables, or nuclear — because reliance on imports is seen as risky, weakening long-term demand for liquefied natural gas. In Pakistan, where imports grew about 50% a year on average before an energy price spike priced it out, solar installations surged and imports ran a fifth below their earlier peak.

Carol Ryan Wall Street Journal
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Supply chain risk and higher prices may drive long-term demand destruction for LNG, as Asian buyers stay with coal and turn to renewable power as they seek to generate more energy domestically.

Do energy supply disruptions weaken long-term demand for liquefied natural gas?

Core argument: Pakistan's LNG imports grew an average 50% a year from 2015 to 2021 but ran a fifth below their 2021 peak last year, after the country was effectively priced out of the market during the 2022 energy crisis.

A legacy of the war is likely to be a focus on producing more energy at home. Countries may invest in local production if they have oil, gas or coal resources, or double down on renewable energy or nuclear power. Ramping up reliance on imports will be seen as risky, which isn’t a good sign for LNG demand. Take what happened in Pakistan. Between 2015 and 2021, the country’s LNG imports rose 50% a year on average until Pakistan was effectively priced out of the market during the 2022 energy crisis. Consumers and companies switched to renewable energy. Solar installations began to tick up in 2023 and exploded over the next two years, data from BloombergNEF shows. As battery costs have fallen, short-duration energy storage can now offset the intermittence of wind and solar for some users. Pakistan’s LNG imports last year were a fifth below their 2021 peak.

Takeaways by Macro Roundup® AI

  1. Pakistan's LNG imports grew an average 50% a year from 2015 to 2021 but ran a fifth below their 2021 peak last year, after the country was effectively priced out of the market during the 2022 energy crisis.
  2. Pakistani consumers and companies switched to renewable energy, with solar installations beginning to tick up in 2023 and expanding sharply over the following two years, according to BloombergNEF data.
  3. A likely legacy of the war is a focus on domestic energy production — oil, gas, coal, renewables or nuclear — with growing reliance on imports seen as risky, which is not a good sign for LNG demand.

Related Articles:

  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.
  • The Most Amazing Climate Policy Figure — U.S. carbon dioxide emissions from fossil fuels moved closely with GDP from 1992 to about 2005, after which the two decoupled, with GDP continuing to rise while emissions fell.
  • How Natural Gas Became America’s Most Important Export — The US went from an irrelevant supplier of liquefied natural gas to the world's largest in about seven years, and BloombergNEF estimates its export capacity will expand 60%, with nearly 1 in 3 tankers of the fuel originating in the US by the end of the decade.

AI Summary. U.S. crude oil production rose 3%, or 350,000 barrels per day, to an annual record of 13.6m barrels per day, with the Lower 48 states excluding the Gulf accounting for 83% of output. Active rigs fell 5% and wells drilled fell 1% as West Texas Intermediate prices dropped from $77 to $65 a barrel, but efficiency gains still lifted production.

Naser Ameen Energy Information Administration
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American crude production expanded 3% in 2025 to a new record of 13.6mm bpd. The rig count fell 5% in the lower 48 states as productivity improved.

Did US crude output hit a record despite fewer rigs?

Core argument: U.S. crude oil production rose 3%, or 350,000 b/d, in 2025 to an annual record of 13.6 million b/d, with the Lower 48 excluding the Gulf of America supplying 11.3 million b/d, or 83% of the total.

U.S. crude oil production grew by 3%, or 350,000 barrels per day (b/d), in 2025, setting a new annual production record of 13.6 million b/d. Production from the Lower 48 states excluding the Gulf of America (L48) accounted for 11.3 million b/d, or 83% of the total U.S. crude oil production in 2025. The rest of the production came from Federal Gulf of America (GOA) and Alaska. In 2025, the number of active rigs per month in L48 was 5% less than in 2024 and 1% fewer wells were drilled. Despite less rig activity and fewer wells, efficiency improvements that we saw in 2024 continued through 2025 and resulted in a slight increase in crude oil production, with new wells producing 2.9 million b/d of crude oil and wells drilled prior to 2025 producing 8.3 million b/d. Rig and well activity fell in 2025 compared with 2024 because West Texas Intermediate (WTI) crude oil prices fell from $77/barrel (b) in 2024 to $65/b in 2025.

Takeaways by Macro Roundup® AI

  1. U.S. crude oil production rose 3%, or 350,000 b/d, in 2025 to an annual record of 13.6 million b/d, with the Lower 48 excluding the Gulf of America supplying 11.3 million b/d, or 83% of the total.
  2. Active rigs per month in the Lower 48 excluding the Gulf of America fell 5% in 2025 versus 2024 and 1% fewer wells were drilled, as West Texas Intermediate prices dropped from $77 per barrel to $65 per barrel.
  3. Efficiency improvements continuing from 2024 resulted in a slight increase in U.S. crude oil output in 2025 despite reduced drilling, with new wells producing 2.9 million b/d and wells drilled before 2025 producing 8.3 million b/d.

Related Articles:

  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.
  • Power Politics: Energy Self-Sufficiency in a Modern Mercantilist World — China leads in adding power to the grid, with more than 30,000 miles of ultra-high-voltage transmission lines versus zero in the US and lead times for large transformers of 48 weeks against a US average of 143 weeks. This positions China to accommodate new demand sources such as artificial intelligence.
  • AI is Changing Oil Country—and Pumping Up Profits — The U.S. produces 60% more oil per day with 40% fewer workers than a decade ago, with annual productivity gains roughly 7x those of the average U.S. business. In the Permian, the break-even oil price has fallen to $40 a barrel from over $90, and AI tools that predict the most productive drilling locations should push it lower.

Thursday, April 2, 2026

AI Summary. An analysis classifying $4.4tn of $7tn in federal spending by age finds retirees aged 65 and older receive $2.7tn, 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2tn for working-age adults and $449bn for those under 26. Social Security and Medicare account for 80% of age-assignable spending on older adults.

Kent Smetters University of Pennsylvania
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In 2025, of the 62.5% of Federal spending that is age-assignable on a per-capita basis, US retirees aged 65+ were given $43,700, working-age adults 26–64 got $7,300, and children and young adults got $4,300.

How is federal spending distributed across age groups?

Core argument: Retirees aged 65 and older receive $2.7 trillion of federal spending in fiscal 2025, equal to 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2 trillion for working-age adults aged 26–64.

We trace spending items within 52 general spending categories, totalling $7T for the 2025 Fiscal Year. We are able to classify a total of $4.4T across three broad age categories and assign the remaining $2.6T to an all-ages residual. Retirees (adults age 65 and older) receive $2.7T, equal to 38.6% of total federal outlays and 61.9% of age-assignable spending. Working-age adults (ages 26-64) receive $1.2T (27.9% of age-assignable), and children and young adults (under age 26) receive $449B (10.3%). The dominance of the retiree category reflects two programs above all others: Social Security and Medicare. Social Security directs $1.3T to retirees, and Medicare sends $835B. Together, they account for 80% of all age-assignable spending on older adults. But the retiree total extends beyond these two entitlements. Federal employee retirement benefits ($169B), housing assistance for older households, Medicaid long-term-care spending, and VA medical care all contribute, making the federal budget more retiree-focused than a Social Security–only lens would suggest.

Takeaways by Macro Roundup® AI

  1. Retirees aged 65 and older receive $2.7 trillion of federal spending in fiscal 2025, equal to 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2 trillion for working-age adults aged 26–64.
  2. Children and young adults under age 26 receive $449 billion, or 10.3% of age-assignable federal spending, out of $4.4 trillion classified by age within a $7 trillion budget, with $2.6 trillion assigned to an all-ages residual.
  3. Social Security directs $1.3 trillion and Medicare $835 billion to retirees, together 80% of age-assignable spending on older adults, with federal employee retirement benefits ($169 billion), housing assistance, Medicaid long-term care, and VA medical care contributing further.

Related Articles:

  • The Great “Transfer”-mation — Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
  • 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.
  • The Budgetary Impact of the Abandonment of Federalism — Federal spending on activities originally regarded as state, local, or private-sector responsibilities is estimated to have risen from 2% of GDP in 1950 to 14% in 2019, exceeding the entire growth in federal spending over that period and reaching two-thirds of all federal outlays. Aid to individuals accounts for 80% of that increase, grants to states the remaining 20%.

AI Summary. US registered nurses earn a median annual wage of $93,600 versus $49,500 for all occupations, while nurses with advanced degrees, such as nurse practitioners, earn $132,050, according to the Labor Department. The Labor Department projects advanced-degree nursing employment will grow 35% over a decade, against 3% for all occupations and 5% for registered nurses.

Jeanne Whalen Wall Street Journal
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The median annual wage for a nurse in 2024 was $93,600; those with an advanced degree earned $132,050. The Labor Department forecasts that employment of nurses with advanced degrees will increase 35% btw 2024 and 2034 relative to job growth of 3%.

Is nursing one of the highest-paying, fastest-growing career paths?

Core argument: The median annual wage for U.S. registered nurses is $93,600, compared with $49,500 across all occupations, according to the Labor Department.

The median annual wage for registered nurses in the U.S. is $93,600, compared with $49,500 for all occupations, according to the Labor Department. For nurse practitioners and others with advanced degrees, it is $132,050. The Labor Department projects that employment of advanced-degree nurses will increase by 35% from 2024 to 2034, eclipsing the expected 3% growth across all occupations. Registered-nurse employment is projected to rise 5% over that period.

Takeaways by Macro Roundup® AI

  1. The median annual wage for U.S. registered nurses is $93,600, compared with $49,500 across all occupations, according to the Labor Department.
  2. Nurse practitioners and other nurses with advanced degrees have a median annual wage of $132,050, according to the Labor Department.
  3. The Labor Department projects employment of advanced-degree nurses will rise 35% from 2024 to 2034, against 5% for registered nurses and 3% across all occupations.

Related Articles:

  • Has the United States Bent the Health Care Cost Curve? — The authors estimate that a slowdown in US health care spending reflects technology-associated changes in health and site of care (21% of the slowdown, double that in Medicare), more elastic long-run supply (6%), market changes reducing and making demand more elastic (11–27%), improved population health (7%), and slower price growth net of upcoding (24%).
  • Sick as a Dog — US healthcare stocks tracked technology-sector returns from 1989 to 2019 with lower volatility (15% vs 24%), but have since stagnated as technology advanced. Major pharmaceutical firms trade at forward price-to-earnings ratios of 8x–9x, biotech carries one of the market's largest valuation discounts, and 80% of biotech initial public offerings since 2018 have collapsed.
  • Saved by Medicaid: New Evidence on Health Insurance and Mortality from the Universe of Low-Income Adults — Using linked Census and tax records for 37m low-income adults, the authors estimate that state Medicaid expansions raised enrollment by 12 percentage points and cut mortality among low-income adults by 2.5%, implying a 21% reduction in the mortality hazard of new enrollees. They estimate direct budgetary costs of $5.4m per life saved and $179,000 per life-year saved.

AI Summary. The US Energy Information Administration reports that 83% of liquefied natural gas and 84% of crude oil shipped through the Strait of Hormuz was bound for Asia. Asian governments including Thailand, Vietnam, Indonesia, and Pakistan are urging fuel conservation through remote work, carpooling, cycling, and reduced air conditioning use.

Sam Fleming, Adam Shaw, Joseph Cotterill, Amy Borrett, et al. Financial Times
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Governments, largely in Asia, have introduced fuel-conservation measures in response to the energy shock. Prior energy shocks lead to permanent shifts in spending patterns, suggesting this shock might speed electrification.

Are Asian economies most exposed to energy supply disruptions?

Core argument: The US Energy Information Administration reports that 83% of liquefied natural gas and 84% of crude oil shipped through the Strait of Hormuz in 2024 was bound for Asia, leaving Asian economies at the sharp end of the crisis.

Asian economies are at the sharp end of the crisis. According to the US Energy Information Administration, 83% of liquefied natural gas and 84% of crude oil shipped through the Strait of Hormuz in 2024 was bound for Asia. Thailand is encouraging remote work for civil servants and asking residents to reduce usage of air conditioning. Vietnam is promoting cycling and carpooling. Indonesia, south-east Asia’s largest economy, has asked civil servants to work from home once a week and has urged the public to use liquefied petroleum gas and other fuel wisely. Pakistan recently kicked off its domestic cricket league with matches in empty stadiums, as many in the cash-strapped country attempt to conserve fuel.

Takeaways by Macro Roundup® AI

  1. The US Energy Information Administration reports that 83% of liquefied natural gas and 84% of crude oil shipped through the Strait of Hormuz in 2024 was bound for Asia, leaving Asian economies at the sharp end of the crisis.
  2. Thailand is encouraging remote work for civil servants and reduced air conditioning use, Vietnam is promoting cycling and carpooling, and Indonesia has asked civil servants to work from home once a week and urged the public to use fuel wisely.
  3. Pakistan opened its domestic cricket league with matches in empty stadiums as many in the cash-strapped country attempt to conserve fuel.

Related Articles:

  • Oil Flash Note — Persian Gulf oil cargoes reach Asia in about 10–20 days, Europe and Africa in 20–35 days, and the US Gulf Coast in 35–45 days, so a supply disruption unfolds as a rolling shock moving westward. Asia feels the squeeze first, with Europe affected more by rising costs and competition than outright shortages.
  • The Oil Market Is Moving Into Demand Destruction Mode — The author estimates the oil market needs to destroy at least 8m barrels a day of demand, more than the combined consumption of Germany, France, the UK, Italy, and Spain. Because the US, Canada, Europe, Japan, and China make up nearly 55% of use, the burden would fall on Africa, Latin America, and much of Asia.
  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.

AI Summary. Sovereign credit ratings in the war-zone countries have not changed, but market-based measures of default risk have risen across much of the Middle East, with larger increases in Qatar, the United Arab Emirates and Turkey than in Saudi Arabia and Kuwait. The United States has also seen its default-risk spread surge, and global sovereign spreads rose about 12%.

Aswath Damodaran Musings on Markets
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CDS spreads across the Middle East have risen in response to the war. Damodaran notes going forward, petrodollars will be redirected from the AI buildout and “Premier League clubs” to “building pipelines and securing the flow of oil.”

Are markets pricing more sovereign default risk than credit ratings show?

Core argument: Global sovereign credit default swap spreads rose about 12% in the first quarter of 2026, with Middle Eastern spreads climbing as war worries mounted, even though no country in the war zone has seen a sovereign rating change.

None of the countries in the war zone have seen their sovereign rating change (yet), these countries have market estimates of sovereign default risk in the form of sovereign CDS spreads, I looked at the movement in those spreads during the course of the month. Not surprisingly, market measures of default risk are more sensitive to war effects, and have risen for much of the Middle East, as worries have mounted, with bigger increases in Qatar, the UAE and Turkey than in Saudi Arabia and Kuwait. The United States has also seen a surge in its sovereign CDS spread, and the global sovereign CDS spreads have risen about 12% in the first quarter of 2026. Using these sovereign CDS spreads as measures of default spreads for this part of the world may yield more realistic equity risk premiums.

Takeaways by Macro Roundup® AI

  1. Global sovereign credit default swap spreads rose about 12% in the first quarter of 2026, with Middle Eastern spreads climbing as war worries mounted, even though no country in the war zone has seen a sovereign rating change.
  2. Sovereign CDS spreads rose more in Qatar, the UAE and Turkey than in Saudi Arabia and Kuwait, and the United States also saw a surge in its sovereign CDS spread.
  3. Using sovereign CDS spreads as default spread measures for the Middle East may yield more realistic equity risk premiums, since market measures of default risk are more sensitive to war effects than ratings.

Related Articles:

  • Testing Resilience — Inflation across the G20 is projected to run 1.2 percentage points higher than previously expected at 4% before easing to 2.7% the following year, while core inflation in G20 advanced economies is anticipated to weaken from 2.6% to 2.3%. These projections assume energy market disruption moderates, with oil, gas and fertiliser prices declining gradually.
  • Saudi Arabia’s Hurdles at Home are Reshaping the Mideast Financial Order — Saudi Arabia is running a deep budget deficit and has become the largest sovereign bond issuer in emerging markets, with more than $14bn of deals, as it funds an economic transformation plan expected to cost $2tn. The United Arab Emirates and Qatar have pledged larger US investment commitments relative to their economies and have more fiscal headroom.
  • Pandora’s Bog: The Global Energy Shock of 2026 — Gulf liquefied natural gas is only 3% of global gas consumption, but because commodity prices are set at the margin, its loss pushes gas import prices higher in Europe and Asia as China, Korea, India and Pakistan seek replacement supplies on the spot market. Undamaged Qatari facilities would need 3-4 months to reach full loading.

AI Summary. The Trump administration is preparing a $1.5tn defence spending request to Congress for next year, alongside a Pentagon request for an extra $200bn to fund the war in Iran. Research from the Royal United Services Institute estimates US and coalition forces expended more than 11,200 munitions costing about $26bn in the first 16 days.

Sylvia Pfeifer, Christian Davies and Steff Chávez Financial Times
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The Trump administration is expected to request $1.5T in defense spending for 2027, a 56% increase from 2025. The US just approved $16B in defence sales to Gulf states, largely from RTX, Lockheed, and Northrop Grumman.

Does wartime munitions use concentrate revenue gains among large defense manufacturers?

Core argument: US and coalition forces expended more than 11,200 munitions at an estimated $26bn in the first 16 days of the Iran war, according to research published by the Royal United Services Institute.

In Washington, the Trump administration is putting the finishing touches to a request to Congress later this week for $1.5tn in defence spending for next year. The Pentagon has asked the White House to submit a request to Congress for an extra $200bn to help fund the war in Iran at the same time. In the first 16 days, the US, together with coalition forces, burned through more than 11,200 munitions at an estimated cost of $26bn, according to research published by the Royal United Services Institute. Among these were more than 1,200 RTX Patriot missile-defence systems, hundreds of its long-range Tomahawk missiles and more than 300 Lockheed-built Thaad interceptors. RTX, Lockheed and fellow defence major Northrop Grumman are expected to be the biggest beneficiaries of the $16.5bn worth of foreign military sales to Gulf states that have been approved by the US State Department since the start of the war.

Takeaways by Macro Roundup® AI

  1. US and coalition forces expended more than 11,200 munitions at an estimated $26bn in the first 16 days of the Iran war, according to research published by the Royal United Services Institute.
  2. The Trump administration is finalizing a request to Congress for $1.5tn in defence spending for next year, while the Pentagon has asked the White House to seek an extra $200bn to fund the war in Iran.
  3. RTX, Lockheed Martin and Northrop Grumman are expected to be the biggest beneficiaries of $16.5bn of foreign military sales to Gulf states approved by the US State Department since the start of the war.

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