Edward Conard

Top Ten New York Times Bestselling Author

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

Macro Roundup


Friday, April 24, 2026

AI Summary. Gulf oil production is likely to mostly recover within a few months of a full and safe reopening of the Strait, given limited reported physical damage to oil fields and the likelihood that Saudi Arabia and the United Arab Emirates deploy spare capacity. Full recovery could take several quarters.

Daan Struyven, Ati Modak, Filippo Cuscito, Yulia Zhestkova Grigsby, et al. Goldman Sachs
Date Posted:

Assuming no further strikes on oil assets, Goldman forecasts that Gulf oil production can “mostly” recover in a few months after reopening. They caution that the longer the Strait of Hormuz is closed, the slower the production ramp will be.

How quickly does Gulf oil production recover after supply disruptions?

Core argument: Gulf oil production is likely to mostly recover within a few months of a full and safe reopening of the Strait, given limited publicly reported physical damage to oil fields in contrast to LNG assets.

We see three reasons why Gulf production is likely to mostly recover within a few months after a full and safe reopening of the Strait: The publicly reported evidence on physical damage to oil fields remains limited in contrast to LNG assets. Comments from the Saudi Aramco President and CEO in March suggested that Saudi production is likely to ramp up relatively quickly. The history of supply disruptions suggests that Saudi Arabia and the UAE are likely to deploy available spare capacity to stabilize markets. We see three reasons why a full recovery may take several quarters and risks that the recovery may be only partial after a prolonged closure. There are large differences across Gulf fields in terms of reservoir characteristics, infrastructure sophistication, maintenance, and sanctions risks (partly reflecting the differences in causes of curtailments], and today's shock is unprecedented. For instance, the share of country production with relatively low reservoir pressure is estimated to be higher in Iran and Iraq than elsewhere in the Gulf.

Takeaways by Macro Roundup® AI

  1. Gulf oil production is likely to mostly recover within a few months of a full and safe reopening of the Strait, given limited publicly reported physical damage to oil fields in contrast to LNG assets.
  2. Comments from Saudi Aramco's President and CEO in March suggested Saudi production would ramp up relatively quickly, and the history of supply disruptions suggests Saudi Arabia and the UAE would deploy available spare capacity to stabilize markets.
  3. A full recovery may instead take several quarters and could be only partial after a prolonged closure, as Gulf fields differ widely in reservoir characteristics, infrastructure sophistication, maintenance, and sanctions risks, with Iran and Iraq estimated to have higher shares of low-pressure reservoir production.

Related Articles:

  • A Q&A on Our Economic Forecasts Amid the Evolving War with Iran — The authors forecast that the drag on US growth from higher oil prices will roughly offset the boost from recent tax cuts, and have lowered their GDP growth projection by 0.5 percentage points to 2.0%. Their baseline now runs about half a percentage point below estimated potential growth, with adverse scenarios three-quarters to a full point below.
  • The Hormuz Blockade Is as Much About China as Iran — The author estimates Iran earned about $100m a day from crude sales before the war and roughly $175m a day afterward, so a US-enforced blockade would deal its economy a heavy blow. An earlier US maximum-pressure sanctions campaign cut Iranian crude earnings to no more than $10m a day without forcing Iran to yield.
  • You Can’t Print Molecules — Rebuilding after a disruption to a key shipping strait would require governments to finance defense, strategic reserves, domestic energy production, and infrastructure at the same time that inflation expectations are raising funding costs. The author argues capital will rotate out of asset-light sectors that thrived on open sea lanes and cheap energy into asset-heavy physical ones.

AI Summary. Foreign private investors now hold more US Treasury securities than foreign central banks, a structural shift in the ownership of US government debt. This makes the Treasury market more sensitive to the return expectations of price-sensitive private capital.

Torsten Sløk Apollo
Date Posted:

For the first time, foreign private buyers own more Treasuries than the foreign official sector, Slok notes, suggesting the “Treasury market [may be] increasingly sensitive to the return expectations of price-sensitive private capital.”

Does private foreign ownership make the Treasury market more sensitive to returns?

Core argument: Foreign private investors hold more US Treasuries than foreign central banks for the first time, a structural shift in the composition of overseas ownership of US government debt.

For the first time, foreign private investors hold more US Treasuries than foreign central banks. This is a structural shift that makes the Treasury market increasingly sensitive to the return expectations of price-sensitive private capital.

Takeaways by Macro Roundup® AI

  1. Foreign private investors hold more US Treasuries than foreign central banks for the first time, a structural shift in the composition of overseas ownership of US government debt.
  2. The shift toward price-sensitive private capital makes the Treasury market increasingly sensitive to the return expectations of those private investors.

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.
  • War and Interest Rates — Ten-year Treasury yields and inflation-protected Treasury yields moving together indicate markets are pricing higher real interest rates rather than an inflation premium, since higher expected inflation would raise nominal yields alone. A forecast recession would instead show up as lower real and nominal interest rates.
  • Are Government Bonds Safe in Times of War and Pandemic? — Government bonds severely underperform in wartime, in absolute terms and relative to equities, housing, and economic growth, unlike in financial crises when bonds tend to outperform stocks. The U.S. and U.K. reduced war-driven debt-to-GDP ratios without explicit default, using surprise inflation and financial repression that shifted fiscal burdens onto bondholders.

AI Summary. The authors argue the US can extend its estimated seven-month lead in artificial intelligence by closing gaps in export controls: halting all AI chip exports to China including less advanced models, curbing smuggling networks, blocking cloud and remote access to controlled chips and US models, and restricting chipmaking equipment.

Chris McGuire Financial Times
Date Posted:

Chris McGuire suggests China could have an AI model as capable as Mythos in ~7 months. He suggests US export controls could delay Chinese AI progress by a year, buying ~18 months to “harden America’s entire digital infrastructure.”

Can tighter export controls preserve the US lead in AI over China?

Core argument: Existing US export controls helped produce a seven-month American lead in AI, but the author argues gaps and loopholes must be closed to extend that lead and buy time to shore up defences.

The US can extend its lead, and buy time to shore up defences, by tightening export controls on all critical AI-enabling technology. Existing controls helped the US obtain its current seven-month lead, but they contain gaps and loopholes that must be closed. And because defences need to be updated with each new model release, this is a continuous effort, not a one-time push. For the US to maximise its lead, it must halt all exports of AI chips to China, including less advanced models such as the Nvidia H200. It must curtail China’s AI chip smuggling networks — just one instance of which diverted $2.5bn of Nvidia servers to China via south-east Asia — by requiring export licences for large-scale orders globally. It must block Chinese companies from accessing export-controlled chips through the cloud, which is currently unrestricted. It must block China’s access to US AI models themselves, either via export or remote access. And it must halt exports of semiconductor manufacturing equipment capable of producing advanced chips, including foreign-made equipment relying on US technology.

Takeaways by Macro Roundup® AI

  1. Existing US export controls helped produce a seven-month American lead in AI, but the author argues gaps and loopholes must be closed to extend that lead and buy time to shore up defences.
  2. The author calls for halting all AI chip exports to China, including less advanced models such as the Nvidia H200, and curtailing smuggling networks that in one instance diverted $2.5bn of Nvidia servers to China via south-east Asia.
  3. The author urges requiring export licences for large-scale chip orders globally, blocking Chinese access to controlled chips through currently unrestricted cloud services and to US AI models, and halting exports of advanced semiconductor manufacturing equipment, including foreign-made equipment relying on US technology.

Related Articles:

  • China and the Future Of Science — China graduates about 5x as many medical and biomedical students as the US each year, 7x as many engineers, and nearly double the number of science and engineering PhDs, while one-sixth to one-fifth of US science and engineering graduates are themselves Chinese. One study found returning Chinese scientists lead-author 2.5x more papers than peers who stay in the US.
  • Misanthropic: On Mythos, Bad Human Behaviors and Systems Vulnerabilities — Anthropic reports that its Mythos model has detected thousands of high-severity cyber vulnerabilities, including ones found by chaining multiple obscure software weaknesses, and that these hacking skills are emergent rather than a designed capability. Mythos completed a corporate network attack simulation estimated to take an expert over 10 hours, which no other frontier model had solved.
  • Anthropic Model Scare Sparks Urgent Bessent, Powell Warning to Bank CEOs — The US Treasury and Federal Reserve convened Wall Street leaders over concerns that Anthropic's Mythos artificial intelligence model and similar systems could usher in an era of greater cyber risk. The meeting aimed to ensure banks are aware of the possible risks and are taking precautions to defend their systems.

AI Summary. The White House Office of Science and Technology Policy accuses Chinese campaigns of using tens of thousands of proxy accounts and jailbreaking techniques to extract proprietary information from American artificial intelligence models. American AI companies argue such "industrial distillation" lets foreign labs cheaply close the US lead created by export controls on advanced chips.

Demetri Sevastopulo and Cristina Criddle Financial Times
Date Posted:

According to the White House, China is engaged in “deliberate, industrial-scale campaigns to distill US frontier AI systems.”

Is large-scale theft of American AI models eroding US competitive advantage?

Core argument: White House Office of Science and Technology Policy director Michael Kratsios said Chinese campaigns were leveraging tens of thousands of proxy accounts to evade detection and using jailbreaking techniques to expose proprietary information.

Michael Kratsios, director of the White House Office of Science and Technology Policy said Chinese campaigns were “leveraging tens of thousands of proxy accounts to evade detection and using jailbreaking techniques to expose proprietary information.” American AI companies, including Anthropic and OpenAI, have increasingly voiced concern about distillation by Chinese groups, which they argue enables foreign labs to close the competitive advantage that the US enjoys because of export controls on advanced American chips. Kratsios said distillation was a vital part of the AI ecosystem when used legitimately to make lighter-weight models but “industrial distillation” used to undermine American research and development was “unacceptable.” He added that while models created by “surreptitious, unauthorised distillation campaigns” did not match the performance of the original models, they can benefit foreign groups because of the significantly lower cost.

Takeaways by Macro Roundup® AI

  1. White House Office of Science and Technology Policy director Michael Kratsios said Chinese campaigns were leveraging tens of thousands of proxy accounts to evade detection and using jailbreaking techniques to expose proprietary information.
  2. Kratsios said distillation is a vital part of the AI ecosystem when used legitimately to make lighter-weight models, but "industrial distillation" used to undermine American research and development is "unacceptable.".
  3. American AI companies including Anthropic and OpenAI argue that distillation by Chinese groups lets foreign labs close the competitive advantage the US gains from export controls on advanced American chips, while Kratsios said such models underperform the originals but cost significantly less.

Related Articles:

  • Misanthropic: On Mythos, Bad Human Behaviors and Systems Vulnerabilities — Anthropic reports that its Mythos model has detected thousands of high-severity cyber vulnerabilities, including ones found by chaining multiple obscure software weaknesses, and that these hacking skills are emergent rather than a designed capability. Mythos completed a corporate network attack simulation estimated to take an expert over 10 hours, which no other frontier model had solved.
  • Anthropic Model Scare Sparks Urgent Bessent, Powell Warning to Bank CEOs — The US Treasury and Federal Reserve convened Wall Street leaders over concerns that Anthropic's Mythos artificial intelligence model and similar systems could usher in an era of greater cyber risk. The meeting aimed to ensure banks are aware of the possible risks and are taking precautions to defend their systems.
  • Does Gemini Show That Scaling Still Works? No. — The author argues that frontier model pre-training is becoming uneconomic, delivering only marginal capability gains for enormous spending on chips, power, and compute. Meaningful advances have shifted to post-training, inference-time compute, and tool-augmented reasoning rather than raw model size.

AI Summary. Intel's annual revenue of $53bn is about $25bn below its 2021 peak, with Wall Street projecting 3% growth in 2026. Its foundry unit generated $5.4bn in revenue, up 16%, but relies almost exclusively on Intel's own product divisions for orders while seeking outside customers.

Ian King Bloomberg
Date Posted:

Intel’s shares hit a record high, eclipsing their 2000 dot-com peak. The USG has a ~10% stake in the firm.

Does a record share price mean a chipmaker regained industry leadership?

Core argument: Intel's annual revenue of $53 billion last year sat roughly $25 billion below its 2021 peak, and Wall Street projects 3% growth in 2026, even as its shares eclipsed their dot-com peak following a strong sales forecast.

[Intel] has a long way to go to restore its former chip-industry glory. Its annual revenue of $53 billion last year was roughly $25 billion shy of the company’s peak revenue, achieved in 2021. Wall Street projects 3% growth in 2026. The Intel Foundry Services division — the company’s factory unit — generated revenue of $5.4 billion, up 16%. That unit currently relies almost exclusively on Intel product divisions for orders, though it is seeking outside customers. Its PC chip division had revenue of $7.7 billion, and the data center unit posted sales of $5.1 billion. All of those totals topped Wall Street estimates. Intel has so far failed to field the type of AI accelerator that’s made Nvidia the richest in the chip industry and the most valuable publicly traded company in the world.

Takeaways by Macro Roundup® AI

  1. Intel's annual revenue of $53 billion last year sat roughly $25 billion below its 2021 peak, and Wall Street projects 3% growth in 2026, even as its shares eclipsed their dot-com peak following a strong sales forecast.
  2. Intel Foundry Services generated $5.4 billion in revenue, up 16%, while relying almost exclusively on Intel's own product divisions for orders as it seeks outside customers.
  3. Intel's PC chip division posted $7.7 billion in revenue and its data center unit $5.1 billion, both topping Wall Street estimates, though Intel has not fielded the type of AI accelerator that made Nvidia the world's most valuable publicly traded company.

Related Articles:

  • Crises at Boeing and Intel Are a National Emergency — Intel and Boeing, once benchmarks for high-quality, demanding manufacturing, declined because of their own mistakes rather than cheap foreign competition. Because leading U.S. tech firms' software and devices depend on advanced semiconductors fabricated under contract, especially by Taiwan Semiconductor Manufacturing Co., Chinese subjugation of Taiwan could leave the U.S. tech sector at Beijing's mercy.
  • Washington’s Growing Portfolio: Tracking U.S. Government Investments — The U.S. government has invested $20.9bn across sixteen deals taking direct ownership stakes, expanding beyond its traditional toolkit of grants, loans, and tax incentives. The Department of Defense leads with seven deals, the Department of Commerce has six including a 10% stake in Intel, and partners have mobilized an additional $4.75bn.
  • Industrial Policy and Economic Security — Industrial policy justified on national security grounds requires weighing how much economic inefficiency is worth tolerating, since costs incurred today make a country poorer and therefore less able to project power later. The calculation is difficult because security gains are probabilistic and long-term economic costs are speculative.

AI Summary. Across nearly every 10-year period measured, US construction cost indexes rose faster than overall consumer price inflation, with the main exception being a two-decade stretch in which most indexes rose more slowly than inflation or declined against it. Earlier periods of the 20th century show cost increases as large as or larger than recent ones.

Brian Potter Construction Physics
Date Posted:

Multiple measures show real construction costs have “virtually never fallen” since 1875, with the striking exception of 1975–95—consistent with input cost and productivity series. The upward drift is not new; if anything, it has moderated over time.

Do construction costs usually rise faster than overall inflation?

Core argument: Across nearly every 10-year period measured, virtually every construction cost index rose faster than CPI.

Let’s look at the average annual growth rate for each index over 10-year periods, minus the average growth rate of CPI for the same period. This will let us see how construction costs are changing with respect to inflation over specific periods: positive values mean construction costs are rising faster than inflation, negative means construction costs are rising slower than inflation. We see that in almost every period of time, construction costs are rising faster than overall inflation for virtually every cost index. The major exception is the period from 1975 to 1995, where most indexes show lower rates of increase or even declines against overall inflation. We also see that historic rates of cost increase seem to be as bad or worse than modern ones. For four of the five 10-year periods between 1915 and 1965, the Turner Cost index rose more than a percentage point faster than overall inflation, whereas for the periods from 1995 to 2025 it rose less than a percentage point.

Takeaways by Macro Roundup® AI

  1. Across nearly every 10-year period measured, virtually every construction cost index rose faster than CPI.
  2. The Turner Cost index rose more than a percentage point faster than overall inflation in four of the five 10-year periods between 1915 and 1965, versus less than a percentage point for the periods from 1995 to 2025.
  3. The period from 1975 to 1995 is the major exception, with most construction cost indexes showing lower rates of increase or even declines against overall inflation.

Related Articles:

  • Stagnant Construction Productivity Is a Worldwide Problem — Construction labor productivity has been roughly flat or declining since the 1990s across most of Western Europe, Japan, and Korea, a pattern consistent with the flat US trend. Countries often held up as models — Sweden and Japan for prefabrication, China for infrastructure — show little or unremarkable construction productivity improvement.
  • Five Decades of Decline: U.S. Construction Sector Productivity — U.S. construction labor productivity in 2023 was essentially unchanged from 1948, with real output per worker in 2020 more than 30% below its 1970 level, even as aggregate U.S. labor productivity tripled between 1950 and 2020. Construction accounted for about 4.5% of U.S. GDP in 2024.
  • Why Has Construction Productivity Stagnated? The Role of Land-Use Regulation — Homes built per construction worker boomed after World War II and fell after 1970, a decline the authors link to local land-use regulation that limits project size and keeps construction firms small and less productive. They estimate US residential builders would be roughly 60% more productive if their size distribution matched manufacturing.

Monday, April 27, 2026

AI Summary. The authors find U.S. government debt has a large positive productivity beta, because the tax code makes federal revenue highly sensitive to productivity growth while spending commitments change little, leaving bondholders implicitly long productivity growth. They argue greater market confidence in sustained productivity gains from AI could substantially reprice government debt, lowering nominal yields.

Howard Kung, Hanno Lustig and James Paron Stanford University
Date Posted:
Is Database:
Database

AI‑driven productivity gains would raise the fundamental value of bonds as well as equities. Persistently higher growth would strengthen the fiscal backing of Treasurys, giving bonds a positive “AI beta,” and improving the US’s debt‑to‑GDP trajectory.

How does faster productivity growth raise the value of government debt?

Core argument: The authors find U.S. government debt has a large positive productivity beta, because the tax code makes revenue highly sensitive to productivity growth as households creep into higher tax brackets while spending commitments barely change in the short run.

We find that U.S. government debt has a large positive productivity beta: its fundamental value seems highly sensitive to the long-run productivity growth outlook. [Given] the tax code, government revenue is highly sensitive to productivity growth while its spending is not. When the economy grows faster, the government collects more tax revenue, as households creep into higher tax brackets, but its spending commitments barely change in the short run. Bondholders are long in a levered claim to GDP and short in a portfolio of inflation-indexed bonds. This means that bondholders are implicitly long productivity growth: they benefit when growth surprises to the upside, and they suffer when growth disappoints. As a result, if investors revise their estimate of productivity growth upwards, they should mark up their valuation of government debt, even if they anticipate higher real rates. If the market became more confident that AI would deliver sustained productivity gains, the repricing of government debt could be substantial. Nominal yields would decline because investors expect inflation to be lower, as predicted by the fiscal theory of the price level. In addition, the supply of Treasurys would decline as well, which would put upward pressure on the convenience yields on Treasurys. Finally, the nominal term premium would likely compress as the government’s fiscal position improves, reducing the risk of higher inflation in bad states of the world.

Takeaways by Macro Roundup® AI

  1. The authors find U.S. government debt has a large positive productivity beta, because the tax code makes revenue highly sensitive to productivity growth as households creep into higher tax brackets while spending commitments barely change in the short run.
  2. Treasury bondholders are effectively long a levered claim on GDP and short a portfolio of inflation-indexed bonds, so they benefit when productivity growth surprises to the upside and suffer when growth disappoints.
  3. The authors argue that greater market confidence in sustained AI-driven productivity gains could reprice government debt substantially, with nominal yields falling on lower expected inflation, Treasury supply declining, convenience yields pressured upward, and the nominal term premium likely compressing.

Related Articles:

  • The Budget and Economic Outlook: 2026 to 2036 — The Congressional Budget Office projects the federal deficit will grow from $1.9tn (5.8% of GDP) to $3.1tn (6.7%) over a decade, above the 3.8% averaged over the past 50 years, with rising net interest costs driving much of the increase. Federal debt held by the public is projected to rise from 101% to 120% of GDP.
  • Attention (And Money) Is All You Need: Why Universities Are Struggling to Keep AI Talent — The annual compensation gap between top industry and academic artificial intelligence researchers widened from roughly $294,000 to $1.5m, coinciding with accelerating academic out-migration toward large incumbent technology firms. Researchers who move to industry cut paper production by about 63% while increasing patent filings nearly sixfold, consistent with a shift from open science toward proprietary innovation.
  • One Hundred Years in the U.S. Stock Markets — Over a century, U.S. publicly traded stocks generated roughly $91tn in shareholder wealth enhancement, with returns strongly positively skewed and dominated by a relatively small number of high-performing firms. Because most possible outcomes fall below the mean in a skewed distribution, the authors argue financial planning should focus on median outcomes or the full distribution.

AI Summary. Earnings per share for S&P 500 companies are estimated to grow more than 13% year over year for a sixth straight quarter, with sales growth and improving margins accompanying the gains. Share buybacks are contributing less to earnings growth than in many quarters, with the gap between earnings-per-share and net income growth just under 1 percentage point.

Theo Francis Wall Street Journal
Date Posted:

Q1 results from 139 S&P 500 firms that have reported so far show earnings per share increasing 16.1% y/y, while revenue grew 9.7%. Profits and sales increasing together suggest the bottom line of American firms is strong.

Are corporate profits growing from real expansion rather than buybacks?

Core argument: LSEG estimates year-over-year earnings-per-share growth will exceed 13% for a sixth straight quarter, with sales expected to rise more than in any quarter since the fall of 2022.

Year-over-year growth in earnings per share is expected to exceed 13% for the sixth quarter running, according to estimates from financial-data firm LSEG. Sales are expected to rise more than in any quarter since the fall of 2022. For much of the S&P 500, margins are improving. The gap between profit and sales growth remains below late-2024 highs, suggesting real expansion behind much of the profit growth, in addition to cost cutting, productivity improvements and other efficiency gains. Another notable development: Rising earnings are getting the smallest assist from share buybacks that they have in many quarters. When companies buy back shares, they boost their earnings-per-share figure without actually raising net income—the bottom line. The difference between those two measures of profit is now at its smallest in more than two years, a gap of just under 1 percentage point, or half what it was six months ago.

Takeaways by Macro Roundup® AI

  1. LSEG estimates year-over-year earnings-per-share growth will exceed 13% for a sixth straight quarter, with sales expected to rise more than in any quarter since the fall of 2022.
  2. The gap between earnings-per-share growth and net income growth has narrowed to just under 1 percentage point, half its level six months ago and the smallest in more than two years, as buybacks give earnings their least assist in many quarters.
  3. Margins are improving for much of the S&P 500, and the gap between profit and sales growth remains below late-2024 highs, suggesting real expansion behind much of the profit growth alongside cost cutting, productivity improvements and other efficiency gains.

Related Articles:

  • Competitive Advantage Period: The Neglected Value Driver — Data indicate persistence in returns on invested capital has increased since 2000, with large companies the main beneficiaries; the information technology sector's aggregate return was 19% versus a 10.8% median from 1970 to 2024. Of about 13,800 U.S. public firms listing from 1976 to 2019, 18% survived.
  • The Big Money in Today’s Economy Is Going to Capital, Not Labor — Labor's share of total economic output in the US fell from 58% in 1980 to 51.4%, while profits' share rose from 7% to 11.7%. Contributing factors include weakened union and outsourcing-related bargaining power, a shift toward shorter-lived capital such as computers, software and intellectual property, and automation, with labor's share of factory value added falling from 66% to 45%.
  • End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns — The authors estimate that declining interest and corporate tax rates accounted for over 40% of real corporate profit growth from 1989 to 2019, while falling risk-free rates explain the entire expansion in price-to-earnings multiples. Real earnings before interest and taxes grew slightly more slowly than in 1962–1989, at 2.2% versus 2.4% per year.

AI Summary. A proposed California ballot measure would impose a one-time 5% tax on the assets of state residents with at least $1.1bn, dedicating most of the revenue to health care. The union leading the campaign argues the tax is needed to offset federal cuts to Medicaid and other health insurance programs.

Laurel Rosenhall New York Times
Date Posted:

The SEIU claims it has collected enough signatures to get its proposed 5% wealth tax on Californians with at least $1.1B on the ballot. Several other ballot measures are gathering signatures that could undermine the proposed tax.

Will voters approve a one-time billionaire wealth tax funding health care?

Core argument: A proposed California ballot measure would impose a one-time 5% tax on the assets of state residents holding at least $1.1 billion, dedicating most of the revenue to health care.

If approved to go on the ballot, the proposal will kick off an expensive election fight that will tap into voter anxieties about economic inequality as well as concerns from business leaders that California could lose its luster as a cradle of technological innovation. The measure calls for placing a one-time 5% tax on the assets of California residents with at least $1.1 billion, and would dedicate most of the revenue to health care. The union leading the campaign, the Service Employees International Union-United Healthcare Workers West, argues that the tax is necessary to make up for cuts to Medicaid and other federal health insurance programs by the Trump administration last year.

Takeaways by Macro Roundup® AI

  1. A proposed California ballot measure would impose a one-time 5% tax on the assets of state residents holding at least $1.1 billion, dedicating most of the revenue to health care.
  2. The Service Employees International Union-United Healthcare Workers West, which leads the campaign and says it has the signatures needed for the ballot, argues the tax is needed to offset Trump administration cuts to Medicaid and other federal health insurance programs.
  3. Placing the measure on the ballot would launch an expensive election fight tapping voter anxieties about economic inequality and business leaders' concerns that California could lose its standing as a cradle of technological innovation.

Related Articles:

  • The Net Present Value of the Billionaire Tax Act: An Assessment of the Fiscal Effects of California’s Proposed Wealth Tax — A proposed one-time 5% California tax on the worldwide net worth of individuals above $1bn would have positive net present value only if its revenue exceeds the present value of income taxes lost to departing billionaires. The authors' simulations yield negative net present value in 71% of draws, averaging -$24.7bn.
  • What’s Missing in the Fed’s Data about Ultrarich Portfolios — The Federal Reserve's Distribution of Financial Accounts defines "private business" narrowly as proprietor's equity in noncorporate, nonfinancial businesses, excluding S-corporations, other private corporations, and private equity and hedge fund partnerships, which are lumped into "corporate equities." The Survey of Consumer Finances instead shows private business is roughly 45–50% of top 0.1% wealth.
  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — A debate on U.S. fiscal policy argues that spending increases, rather than the tax increases needed to fund them, slow growth, and that higher taxes would reduce the expected value of America's innovative risk-taking. The argument holds that cutting debt below 100% of GDP is critical.

AI Summary. Rare-earths producer Lynas has begun making samarium oxide at its Malaysian refinery, a mineral used in heat-resistant magnets for fighter jets and missiles that had been refined almost exclusively in China. A U.S. Geological Survey report identified samarium as the highest-risk mineral for supply disruption.

Jon Emont Wall Street Journal
Date Posted:

Lynas, an Australian miner, has started processing heavy rare-earth elements. In March, Lynas announced a preliminary $96mm deal in which the USG would directly purchase Lynas’s rare earths, suggesting China’s rare-earth controls are a wasting asset.

Can a new refinery outside China supply military-grade rare earths?

Core argument: Lynas produces samarium oxide at its Kuantan, Malaysia complex, a rare earth used in heat-resistant magnets for jet fighters and missiles that had been refined almost exclusively in China.

For more than a decade, Lynas has had a refinery in Kuantan, a Malaysian chemical-industry center. But it only produced light rare earths, which tend to be more common, while it sold heavy rare earths to China for processing. Last year, as the U.S.-China trade war was at its peak, Lynas finished a new heavy rare-earths processor in Kuantan. Last month, Lynas began producing samarium oxide, a difficult-to-source rare earth in high military demand that is used in heat-resistant magnets for jet fighters and missiles. The mineral had been refined almost exclusively in China, causing a scramble among defense suppliers last year when China cut off exports in April. A report from the U.S. Geological Survey last year found samarium was the highest-risk mineral for disruption, with shortages potentially costing U.S. industry billions of dollars.

Takeaways by Macro Roundup® AI

  1. Lynas produces samarium oxide at its Kuantan, Malaysia complex, a rare earth used in heat-resistant magnets for jet fighters and missiles that had been refined almost exclusively in China.
  2. A U.S. Geological Survey report found samarium was the highest-risk mineral for supply disruption, with shortages potentially costing U.S. industry billions of dollars.
  3. Lynas completed a new heavy rare-earths processor in Kuantan after more than a decade of producing only light rare earths there and selling heavy rare earths to China for processing.

Related Articles:

  • Mad Libs: Just Fill In The Blanks — China expanded its rare earth export controls to require licenses for any product containing more than 0.1% by value of Chinese rare earths or made with equipment containing them, with a presumption of denial for military uses and scrutiny of advanced semiconductor uses. Aggressive enforcement would affect industries from chips and autos to aerospace, defense and medical equipment.
  • China Hatches Plan to Keep U.S. Military From Getting Its Rare-Earth Magnets — China is designing a "validated end-user" system that would fast-track rare-earth and other restricted material export approvals for U.S. firms while excluding companies tied to the U.S. military. The arrangement would let China ease export flows while keeping the materials away from U.S. military suppliers.
  • How Japan Built a Rare-Earth Supply Chain Without China — Japan has reduced its reliance on Chinese rare earths, with industry estimates putting China's share of Japanese rare-earth imports at roughly 60% to 70%, down from 90% or more. Japan's alternative chain runs from an Australian open-pit mine through a separation plant in Malaysia to Japanese magnet makers supplying automakers.

AI Summary. Nissan and its parts suppliers have developed electric-vehicle motor technology that cuts the rare-earth minerals used in the motor of its new Leaf by more than 90% versus the first-generation model, reducing reliance on minerals mainly produced by China. The reduction targeted heavy rare earths such as dysprosium and terbium, which improve heat resistance.

Shuhei Ochiai and Yoshika Kaku Nikkei Asia
Date Posted:

Nissan was able to reduce the intensity of rare earths in the new LeafEV motor by more than 90% relative to the first-generation Leaf released in 2010.

Can carmakers cut rare earth use in EV motors sharply?

Core argument: Nissan has cut the rare earths used in the motor of its new Leaf EV by more than 90% compared with the first-generation Leaf released in 2010, with the reduction concentrated in heavy rare earths.

Nissan Motor and parts makers have developed technology for electric vehicle motors that significantly cuts the Japanese carmaker's reliance on rare-earth minerals that are mainly produced by China. The technology has allowed Nissan to reduce rare earths used in the motor of its new Leaf EV by more than 90% compared with the first-generation Leaf released in 2010. Specifically, the use of heavy rare earths was lowered. EV motors use dysprosium and terbium to enhance heat resistance.

Takeaways by Macro Roundup® AI

  1. Nissan has cut the rare earths used in the motor of its new Leaf EV by more than 90% compared with the first-generation Leaf released in 2010, with the reduction concentrated in heavy rare earths.
  2. Nissan Motor and parts makers developed EV motor technology that significantly reduces the carmaker's reliance on rare-earth minerals that are mainly produced by China.
  3. EV motors use dysprosium and terbium to enhance heat resistance.

Related Articles:

  • How to Fight an Economic War — China earned about $3.4bn from exporting rare-earth elements and magnets in a year, while the U.S. Geological Survey estimates a 30% disruption to U.S. supply of the rare-earth element neodymium alone would cut U.S. GDP by 2.2%, over $600bn. This asymmetry gives Chinese export controls their leverage.
  • China Slams Dozens of Japanese Companies With Export Curbs — China froze exports of "dual-use" materials with both civilian and military applications, including rare earth magnets, to 20 Japanese companies and placed 20 more on a new watch list. The move deepens a dispute with Tokyo and shows Beijing using its dominance in critical supply chains to exert diplomatic pressure.
  • New Rare-Earth Supply Falls Short of Rising Global Demand From EVs and Defense, BI Says — Demand for key rare earth elements is projected to grow about 7% annually through 2030, driven by electric-vehicle motors, consumer electronics and military uses. Output from non-Chinese producers is projected to more than quadruple with government funding support, and China's dominance of the industry is projected to slip by 2030.

AI Summary. China's National Development and Reform Commission has prohibited foreign investment in the artificial intelligence company Manus and required the parties to cancel Meta's acquisition of it. Unwinding the deal would be complex because Meta has already integrated Manus into some of its tools, and Beijing has signaled penalties if the transaction is not fully reversed.

Arjun Neil Alim and Tim Bradshaw Financial Times
Date Posted:

In a late-stage intervention, China has blocked Meta’s $2B purchase of Manus. Manus had relocated to Singapore following a funding round led by top American venture capital firms.

Is China blocking a foreign takeover of a domestic AI company?

Core argument: China's National Development and Reform Commission said it would prohibit "foreign investment" in AI group Manus and has "required the relevant parties to cancel" Meta's $2bn acquisition of the company.

China’s powerful National Development and Reform Commission (NDRC) said on Monday it would prohibit “foreign investment” in Manus and in accordance with the law has “required the relevant parties to cancel the acquisition transaction”. To undo the deal at this stage, Meta could have to spin off its acquisition to a new buyer, sell it back to its former investors or find new backers. Any such process would be complex, as Meta has already integrated Manus into some of its tools, the FT has reported. A person familiar with the matter said Beijing had told the two companies that the deal must be unwound completely, including returning funds, re-registering the company’s ownership and halting the Meta’s use of the Manus algorithm. The person said that if the parties failed to fully undo the acquisition, Beijing could impose penalties on Meta, limit its China-related business and possibly pursue criminal charges for individuals involved.

Takeaways by Macro Roundup® AI

  1. China's National Development and Reform Commission said it would prohibit "foreign investment" in AI group Manus and has "required the relevant parties to cancel" Meta's $2bn acquisition of the company.
  2. Beijing told Meta and Manus the deal must be unwound completely, including returning funds, re-registering the company's ownership and halting Meta's use of the Manus algorithm, according to a person familiar with the matter.
  3. Unwinding the transaction would be complex because Meta has already integrated Manus into some of its tools, with options including spinning off the acquisition to a new buyer, selling it back to former investors or finding new backers, the FT has reported.

Related Articles:

  • China and the Future Of Science — China graduates about 5x as many medical and biomedical students as the US each year, 7x as many engineers, and nearly double the number of science and engineering PhDs, while one-sixth to one-fifth of US science and engineering graduates are themselves Chinese. One study found returning Chinese scientists lead-author 2.5x more papers than peers who stay in the US.
  • White House Accuses China Of ‘Industrial-Scale’ Theft Of AI Technology — The White House Office of Science and Technology Policy accuses Chinese campaigns of using tens of thousands of proxy accounts and jailbreaking techniques to extract proprietary information from American artificial intelligence models. American AI companies argue such "industrial distillation" lets foreign labs cheaply close the US lead created by export controls on advanced chips.
  • China’s Manus Follows DeepSeek in Posing Challenge to US AI Lead — Chinese startup Manus AI launched a preview of what it calls a general AI agent that can screen resumes, build trip itineraries, and analyze stocks from basic user instructions, claiming better performance than OpenAI's Deep Research on some measures. The company has not published technical papers, code, or model weights alongside the release.