Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…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 comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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 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
  • “…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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Friday, June 19, 2026

AI Summary. A stock's value can be split into steady-state value from current operations and the "present value of growth opportunities" from future value-creating investments, which has averaged 35% of the S&P 500's price historically. Lower shares of price attributed to growth opportunities have been associated with higher subsequent returns, most clearly at the extremes.

Michael Mauboussin and Dan Callahan Morgan Stanley
Date Posted:
Is Database:
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Splitting the present value (PV) of stocks’ future cash flows into current earnings capitalized forever and the “PV of growth opportunities (PVGO),” the share driven by PVGO varies substantially over time and predicts 5-year returns with a negative sign.

Does the share of stock price from future growth predict subsequent returns?

Core argument: The present value of growth opportunities (PVGO), a term coined by financial economist Stewart Myers, has averaged 35% of the S&P 500's price from 1961 to 2025, with steady-state value accounting for the other 65%.

Think about the value of prospective cash flows in two parts. The first is the continuation of what a company is doing today - e.g. you might assume that a company earning $2 per share can sustain that level on a steady-state basis. The second part is the option to make investments in the future that create value. This part is called the “present value of growth opportunities” (PVGO), a term coined by Stewart Myers, a financial economist. When the steady state is most of the stock price, expectations about future value creation are low, [and vice versa] when the PVGO is a large % of the price. Exhibit 1 shows the annual PVGO percentage for the S&P 500 from 1961 to 2025. On average, the PVGO has been 35% of the price, and the steady-state value has been 65%. At the end of 2025, this measure was well above the average. Historically, lower PVGO percentages have been associated with higher subsequent 10-year returns. Exhibit 4 shows the five-year annualized TSRs, by quintile of PVGO percentage, for the stocks of U.S. public companies with market capitalizations of $1 billion or more in 2024 USD from 1990 to 2024. The five-year median TSR was 8.7% for the quintile with the lowest PVGO percentage and 5% for the quintile with the highest PVGO percentage. The second quintile had the highest median TSR, [which] underscores that this measure is more useful at the extremes.

Takeaways by Macro Roundup® AI

  1. The present value of growth opportunities (PVGO), a term coined by financial economist Stewart Myers, has averaged 35% of the S&P 500's price from 1961 to 2025, with steady-state value accounting for the other 65%.
  2. At the end of 2025, the S&P 500's PVGO percentage stood well above its 1961–2025 average of 35%, and historically lower PVGO percentages have been associated with higher subsequent 10-year returns.
  3. Among U.S. public companies with market capitalizations of $1 billion or more from 1990 to 2024, the lowest-PVGO quintile posted a five-year median annualized total shareholder return of 8.7%, versus 5% for the highest-PVGO quintile.

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.
  • 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.
  • Bayes and Base Rates 2.0: How History Can Guide Our Assessment of the Future — Applying historical base rates to OpenAI's published sales forecasts, the authors find that no U.S. public company in roughly 18,900 firm-period observations from 1950 to 2024 achieved five-year sales growth as fast as the company projects. Reported forecasts imply compound annual growth rates ranging from 85% to 118%.

AI Summary. All of the S&P 500's gains over the year to date have come from the energy and artificial intelligence sectors, with the rest of the index trading below where it started.

Torsten Sløk Apollo
Date Posted:
Is Database:
Database

Since the start of the year, all of the S&P 500’s gains have come from the energy and AI sectors. Sløk notes “everything else is actually trading at less than where it started.”

Are all of the S&P 500's gains coming from AI and energy?

Core argument: All of the S&P 500's gains since the start of the year have come from the energy and AI sectors, according to Sløk.

Since January, the entire S&P 500's gains have come from just two corners of the market, AI and energy, while everything else is actually trading at less than where it started.

Takeaways by Macro Roundup® AI

  1. All of the S&P 500's gains since the start of the year have come from the energy and AI sectors, according to Sløk.
  2. Sløk notes that outside of AI and energy, the rest of the S&P 500 is trading below where it started the year.

Related Articles:

  • SpaceX and OpenAI Are Ending Wall Street’s Era of Stock Scarcity — JPMorgan projects that share sales will add roughly $1.5tn of stock to the US equity market over the next two years even after buybacks, which would be the strongest net equity issuance since at least the late 1990s. Equity has grown cheaper relative to debt as a funding source.
  • Chart of the Day: U.S. Households at Record Equity Allocation Heading into AI IPOs — U.S. households hold a record share of their assets in equities, exceeding the dot-com and Nifty Fifty eras, while price-earnings multiples sit near all-time highs and fewer than 10 stocks account for almost 40% of the S&P 500's market value. The author argues equity ownership has become structural rather than discretionary, making markets simultaneously more stable and more fragile.
  • 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. Trade responds to exchange-rate changes with a lag of roughly 8 to 12 quarters, and after the dollar fell from its mid-1980s peak the US trade deficit dropped from about 3% to about 1% of GDP while Japan's surplus fell from 4% to 2%. The author argues currency appreciation, not fiscal consolidation, drove that rebalancing.

Brad Setser and Shahin Vallée Council On Foreign Relations
Date Posted:

The dollar strength in the post-pandemic period is above the level associated with the tech bubble. The broad real dollar fell ~20% btw 2001 and 2005. Setser argues for Asian currency appreciation vis-a-vis the dollar to facilitate trade rebalancing.

Can currency moves, rather than fiscal consolidation, shrink trade imbalances?

Core argument: The U.S. overall trade deficit fell from around 3% of GDP to around 1% of GDP between 1987 and 1990, following the Plaza agreement and the dollar's move off its 1985 highs.

Trade adjusts to changes in exchange rates with a lag (usually thought to be 8 quarters but some work suggests that it might now be more like 12 quarters. The Plaza agreement didn’t bring the U.S. deficit down immediately, but by 1987 the real U.S. trade deficit was clearly shrinking. The overall trade deficit fell from around 3% of U.S. GDP to around 1% of U.S. GDP) between 1987 and 1990. This fall occurred even with strong demand growth in the US in 1988 and 1989, so it wasn’t just a function of underlying shifts in the global pattern of demand growth. Net exports contributed positively to U.S. growth once the dollar had clearly moved off its 1985 highs across the cycle. Japan’s surplus also fell from 4% of GDP to 2% of GDP—with a large reduction in its bilateral surplus with the U.S. This suggests that currency appreciation, not fiscal consolidation, was the primary driver of rebalancing in the 1980s.

Takeaways by Macro Roundup® AI

  1. The U.S. overall trade deficit fell from around 3% of GDP to around 1% of GDP between 1987 and 1990, following the Plaza agreement and the dollar's move off its 1985 highs.
  2. Japan's surplus fell from 4% of GDP to 2% of GDP, with a large reduction in its bilateral surplus with the U.S., suggesting currency appreciation rather than fiscal consolidation was the primary driver of 1980s rebalancing.
  3. Trade adjusts to exchange rate changes with a lag usually thought to be 8 quarters, though some work suggests it may now be closer to 12 quarters, and the U.S. deficit narrowed even amid strong U.S. demand growth in 1988 and 1989.

Related Articles:

  • The Real Problem With Global Trade — Asia's $1.5tn trade surplus is larger as a share of world output than at any point since 1945 and is the only large surplus in the global economy. Exchange rates have a meaningful impact on trade balances: China's surplus reached about 10% of its output amid renminbi depreciation, then fell below 2% after a 40% real appreciation.
  • The Dollar has Further to Fall — The author argues the dollar has considerably further to fall, noting Federal Reserve data show its real value nearly two standard deviations above its average since 1973, a level matched only twice before, each followed by depreciations of 25-30%. Financing the $1.1tn US current account deficit requires matching net capital inflows.
  • Understanding Global Imbalances — The US, China, Germany, and Japan account for roughly two-thirds of global current account imbalances, with the US deficit at 4% of GDP financed by capital inflows into dollar assets. The average duration of a surplus or deficit spell roughly doubled since the 1980s, building large net foreign asset and liability positions.

AI Summary. US officials have told Dutch chipmaking-equipment maker ASML they are concerned one of its most advanced extreme ultraviolet lithography machines may have reached China in violation of US-led export restrictions. ASML disputes this, saying all 314 operating and 26 decommissioned machines are accounted for and that the systems cannot be relocated or run without its involvement.

Mackenzie Hawkins and Jenny Leonard Bloomberg
Date Posted:

The Commerce Department has notified ASML that one of its extreme ultraviolet lithography (EUV) machines “may” be in China. The firm pushed back at the suggestion, noting the machines require constant upkeep from ASML employees.

Has an advanced chipmaking machine reached China despite export controls?

Core argument: ASML says 314 of its EUV lithography machines are in operation worldwide and 26 have been decommissioned, with none in China, rejecting Howard Lutnick's suggestion that one reached the country.

In a series of recent meetings, Howard Lutnick outlined concerns to ASML’s senior leaders that one of its top-of-the-line machines may have made its way into China, in violation of US-led export restrictions. ASML has pushed back on Lutnick’s suggestion, explaining that none of these tools — which are the size of a school bus, are manufactured in limited quantities, and require constant upkeep from ASML employees — are in China. There are 314 EUV machines in operation around the world, 26 that have been decommissioned — and none in China, according to [ASML]. ASML can automatically detect “any interruption, abnormal behavior, or loss of connectivity,” in its EUV portfolio, and that customers “cannot remove, transport and relocate EUV systems without ASML involvement due to specialized handling procedures.”

Takeaways by Macro Roundup® AI

  1. ASML says 314 of its EUV lithography machines are in operation worldwide and 26 have been decommissioned, with none in China, rejecting Howard Lutnick's suggestion that one reached the country.
  2. Howard Lutnick told ASML's senior leaders in a series of meetings that one of the company's top-of-the-line machines may have reached China in violation of US-led export restrictions.
  3. ASML says it can automatically detect any interruption, abnormal behavior, or loss of connectivity across its EUV portfolio, and that customers cannot remove, transport, or relocate EUV systems without ASML involvement.

Related Articles:

  • ASML’s China Chip Business Faces New Curbs From Netherlands — The Netherlands plans to limit ASML's ability to service and supply spare parts for its semiconductor-making equipment in China, with licenses covering its top-end deep ultraviolet lithography machines expected not to be renewed. Because the machines are sold with essential maintenance agreements, withdrawing support could render some of them inoperable.
  • The Goal for China’s Chip Giant: Cut Out the U.S. — Huawei's Mate 60 smartphone contained a system-on-chip made with SMIC technology comparable to the 7-nanometer process, despite Chinese chipmakers lacking access to ASML's most advanced lithography machines. Semiconductor engineers say the chips were likely made by exposing silicon to light multiple times, a technique that worsens yields and raises costs and becomes harder at more advanced nodes.
  • 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.

AI Summary. The U.S. Air Force has agreed to deals with Anduril and General Atomics for autonomous drone jet fighters designed to help manned warplanes strike targets deep in enemy territory. The larger General Atomics FQ-42 carries missiles internally, while Anduril's FQ-44 carries munitions externally on its wings; costs are classified.

Marcus Weisgerber Wall Street Journal
Date Posted:

Anduril and General Atomics have been awarded contracts by the Air Force for two collaborative combat aircraft (CCA) or long-range autonomous drones designed to work alongside manned aircraft in highly contested environments.

Is the Air Force buying autonomous drones to support manned fighters?

Core argument: The U.S. Air Force's latest budget request includes more than $1 billion in fiscal 2027 and in excess of $9.5 billion over the next five years for these autonomous drone jet fighters.

The U.S. Air Force has agreed to deals with two companies for a new fleet of autonomous drone jet fighters designed to help manned warplanes strike targets deep in enemy territory. The Air Force had been evaluating the Anduril and General Atomics drones since 2024. The General Atomics drone, called the FQ-42, is larger than Anduril’s drone, called FQ-44. One of the differences between the two is that the FQ-42 carries missiles in an internal weapons bay while the FQ-44 carries munitions externally on its wings. Officials didn’t disclose the financial terms of the deal or how many aircraft were being bought. An Air Force spokeswoman said the cost was classified. The service’s latest budget request includes more than $1 billion for these specific drones in fiscal 2027, and in excess of $9.5 billion over the next five years.

Takeaways by Macro Roundup® AI

  1. The U.S. Air Force's latest budget request includes more than $1 billion in fiscal 2027 and in excess of $9.5 billion over the next five years for these autonomous drone jet fighters.
  2. The Air Force agreed to deals with Anduril and General Atomics for autonomous drone fighters designed to help manned warplanes strike targets deep in enemy territory, after evaluating both companies' aircraft since 2024.
  3. General Atomics' FQ-42 is larger than Anduril's FQ-44 and carries missiles in an internal weapons bay, while the FQ-44 carries munitions externally on its wings.

Related Articles:

  • Ukraine Hits Moscow With Largest-Ever Drone Attack — Ukraine struck Moscow with nearly 200 drones in its largest-ever attack on the city, hitting the capital's largest oil refinery, with Moscow's mayor saying air defences downed at least 194 drones. The strike demonstrates Ukraine's growing capacity to hit deep behind Russian lines with largely homegrown long-range drones.
  • The U.S. Wants to Break China’s Drone Dominance. Here’s Where It Will Struggle — Fielding a drone fleet able to compete with China requires the U.S. to break China's monopoly on batteries and motors and to cut the cost of other components, where weak domestic demand is a key obstacle. Chinese producers hold 80% of the U.S. commercial drone market, and experts warn building mass-production infrastructure could take a decade or more.
  • Ukraine Drone Strikes Hit Nuclear Bombers Deep Inside Russia — Ukraine used drones smuggled into Russia aboard trucks and released remotely from mobile wooden structures to strike strategic airfields as distant as eastern Siberia. An official in Ukraine's Security Service said more than 40 Russian aircraft, including Tu-95 and Tu-22 M3 long-range bombers and A-50 surveillance planes, were damaged, with losses assessed at at least $2bn.

Monday, June 22, 2026

AI Summary. The authors estimate that surprises in US monetary policy spill over into exchange rates, with dollar-denominated reserves substantially mitigating depreciation pressures while non-dollar and gold reserves are associated with smaller effects. Aggregate reserve size alone does not capture external resilience; currency composition and access to dollar liquidity facilities are empirically relevant.

Joshua Aizenman, Jamel Saadaoui, Gazi Salah Uddin and Naoki Yago National Bureau of Economic Research
Date Posted:

When US dollar interest rates rise, currencies fall less if countries have a Fed swap line, substantial dollar FX reserves, or, to a lesser extent, gold. Sanctions and dollar access risk are pushing some reserve managers towards gold.

Does reserve currency composition determine how exchange rates absorb US monetary shocks?

Core argument: Using high-frequency exchange rate data and reserve currency composition for 18 countries, the authors find US monetary policy surprises spill over to exchange rates through dollar liquidity and capital flow channels.

This paper shows that US monetary policy surprises exert significant spillover effects on exchange rate through dollar liquidity and capital flow channels. Using high-frequency exchange rate data and detailed currency composition of reserves for 18 countries, we show that estimated reserve-buffer effects depend on their composition. Dollar-denominated reserves substantially mitigate depreciation pressures, while non-dollar reserves have smaller estimated effects. Gold reserves are also associated with smaller exchange-rate responses, though less strongly than liquid FX holdings due to differences in immediacy and usability. Our results highlight an empirical complementarity between reserve holdings and access to international liquidity facilities such as central bank swap and repo lines. These arrangements are associated with a smaller role for reserve depletion during periods of dollar funding stress. Aggregate reserve size alone does not capture all dimensions associated with external resilience; currency composition and access to dollar liquidity facilities are empirically relevant for exchange-rate responses to US monetary shocks. These findings are consistent with recent large-scale purchases and sales of gold reserves by emerging economies amid sanctions-related restrictions and geopolitical concerns about access to dollar liquidity.

Takeaways by Macro Roundup® AI

  1. Using high-frequency exchange rate data and reserve currency composition for 18 countries, the authors find US monetary policy surprises spill over to exchange rates through dollar liquidity and capital flow channels.
  2. Dollar-denominated reserves substantially mitigate depreciation pressures while non-dollar reserves show smaller estimated effects, and gold reserves are associated with smaller exchange-rate responses than liquid foreign exchange holdings, reflecting differences in immediacy and usability.
  3. The authors find access to central bank swap and repo lines empirically complements reserve holdings and is associated with a smaller role for reserve depletion during periods of dollar funding stress.

Related Articles:

  • The Boost From the Hard Assets Rotation — Analysts estimate that each 1bp increase in gold's share of US financial portfolios, driven by incremental purchases, raises gold prices by 1.5%, and with gold exchange-traded fund allocations at only about 0.2% of US private sector financial portfolios, further diversification is the main upside risk to a $5,400 gold price forecast.
  • Global Debt Report 2026 — Gross central government borrowing across OECD countries rose 7% to a record $17tn, about 23% of GDP, and is projected to reach roughly $18tn, or 24% of GDP. The United States and Japan account for close to 80% of the area's refinancing requirements, with the US share rising from 57% to 70%.
  • Gold Overtakes Euro as Global Reserve Asset, ECB Says — Gold has overtaken the euro as a global reserve asset, with central bank gold holdings reaching 36,000 tons, near the mid-1960s peak of 38,000 tons, helped by a 30% rise in the gold price. The European Central Bank finds countries geopolitically close to China and Russia accumulated gold more than others.

AI Summary. The euro has traded at a premium against the dollar relative to the Euro zone–US two-year forward interest rate differential since reciprocal tariffs were introduced, a decoupling that is milder for the British pound and absent for the Australian and Canadian dollars. The author argues that US and Chinese efforts to weaken their currencies will worsen euro overvaluation.

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues the US and China are successfully “muscling their currencies down,” which in turn has led to “massive” Euro overvaluation. He expects the dollar to weaken vis-à-vis the Euro in H2.

Is the euro overvalued as other countries push their currencies down?

Core argument: EUR/USD tracked the Eurozone–US 2y2y forward rate differential closely through 2024 and early 2025 but decoupled after the April 2 rollout of reciprocal tariffs, trading at a premium to that differential ever since.

We’re in a beggar-thy-neighbor world where the US and China are successfully muscling their currencies down. This means the [Euro] has to appreciate by default, so Euro overvaluation is going to get worse before it gets better. The blue line in the top left chart is EUR/$. The black line is the differential of 2y2y forward interest rates in the Euro zone versus the US. I like using 2y2y forward rates because they’re a proxy for where terminal rates will be in any hiking or easing cycle. The striking thing about this chart is that EUR/$ moved very closely with the rate differential in all of 2024 and in early 2025, but then decoupled after the rollout of reciprocal tariffs on April 2. EUR/$ has been trading at a premium relative to the 2y2y forward differential ever since. The top right chart looks at whether there’s a similar decoupling for GBP/$. There is, but it’s much less noticeable. There’s no decoupling of this sort for AUD/$ in the bottom left chart and also nothing comparable going on for $/CAD in the bottom right chart.

Takeaways by Macro Roundup® AI

  1. EUR/USD tracked the Eurozone–US 2y2y forward rate differential closely through 2024 and early 2025 but decoupled after the April 2 rollout of reciprocal tariffs, trading at a premium to that differential ever since.
  2. With the US and China muscling their currencies down, the euro appreciates by default, so euro overvaluation is likely to worsen before it improves.
  3. GBP/USD shows a similar but much less noticeable decoupling from rate differentials, while AUD/USD and USD/CAD show no comparable decoupling.

Related Articles:

  • Currency Moves Can Drive Rebalancing — Trade responds to exchange-rate changes with a lag of roughly 8 to 12 quarters, and after the dollar fell from its mid-1980s peak the US trade deficit dropped from about 3% to about 1% of GDP while Japan's surplus fell from 4% to 2%. The author argues currency appreciation, not fiscal consolidation, drove that rebalancing.
  • The Dollar has Further to Fall — The author argues the dollar has considerably further to fall, noting Federal Reserve data show its real value nearly two standard deviations above its average since 1973, a level matched only twice before, each followed by depreciations of 25-30%. Financing the $1.1tn US current account deficit requires matching net capital inflows.
  • China’s Currency is Now Facing Substantial Appreciation Pressure — China's yuan faces appreciation pressure while Beijing maintains its commitment to currency stability, testing trading partners' willingness to absorb China's growing export surplus. If nominal appreciation is limited to a few percentage points, the real effective exchange rate stays at its depreciated level and China is likely to keep gaining global market share.

AI Summary. Nasdaq volatility relative to the S&P 500 has spiked to its highest level in many years, as investors pay far more for downside protection on artificial intelligence stocks than on the broad market. Perceived market fragility is concentrated in growth stocks while overall S&P 500 volatility remains relatively calm.

Torsten Sløk Apollo
Date Posted:

Sløk argues that the increase in Nasdaq 100 volatility, as measured by the VXN, relative to S&P 500 volatility, as measured by VIX, suggests investors are getting worried about technology stocks.

Are options markets pricing more risk in tech than the broad market?

Core argument: Nasdaq volatility relative to the S&P 500 has spiked to its highest level in many years, as investors demand far more options protection on AI names than on the broad market.

Nasdaq volatility relative to the S&P 500 has spiked to its highest level in many years. The jump reflects investors demanding far more protection on AI names than on the broad market, signaling that perceived market fragility is now heavily concentrated in growth stocks while overall S&P volatility stays relatively calm.

Takeaways by Macro Roundup® AI

  1. Nasdaq volatility relative to the S&P 500 has spiked to its highest level in many years, as investors demand far more options protection on AI names than on the broad market.
  2. Perceived market fragility is concentrated in growth stocks, with overall S&P 500 volatility staying relatively calm even as demand for protection on AI names climbs.

Related Articles:

  • Opportunities and Expectations: The Present Value of Growth Opportunities in Valuation — A stock's value can be split into steady-state value from current operations and the "present value of growth opportunities" from future value-creating investments, which has averaged 35% of the S&P 500's price historically. Lower shares of price attributed to growth opportunities have been associated with higher subsequent returns, most clearly at the extremes.
  • US Stock Market To Stop Shrinking For First Time In 23 Years — Goldman Sachs estimates that net supply of US equity — new shares issued less shares removed by buybacks and take-privates — will be roughly flat in 2026 after being negative since 2003, with a larger influx expected in 2027 as lock-up periods on this year's initial public offerings expire.
  • 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. A surge in US business formation is being driven by solo entrepreneurs, with growth in AI tool usage and in solopreneur activity in high-AI-adoption sectors suggesting artificial intelligence accounts for a meaningful portion of the increase. The authors argue AI is lowering barriers to starting and growing a business by expanding what one-person firms can do.

Ernie Tedeschi, Marisa Rama and Chris Cruickshank Stripe Economics
Date Posted:
Is Database:
Database

New US business applications have surged since late 2024, driven mainly by “likely nonemployer” filings representing “solopreneurs” rather than businesses expected to hire. Data suggest AI may be enabling this by filling capability gaps without hiring.

Is AI driving the surge in one-person business formation?

Core argument: The recent surge in US business formation is not reflected in high-propensity applications, but the evidence points toward a structural increase in genuine small business activity over 2025 and 2026, driven by solopreneurs.

While the recent surge in US business formation is not reflected in high-propensity applications, the evidence points toward a structural increase in genuine small business activity over 2025 and 2026, driven by solopreneurs. Preliminary evidence of growth in AI tool usage and solopreneur growth in high-AI-adoption sectors suggests that advances in AI are responsible for a meaningful portion of this growth. We believe AI is lowering barriers to business formation and growth by expanding the capabilities of solopreneurs, further improving tools and platforms that cater to new businesses, and creating a new set of opportunities for entrepreneurs to pursue. Whether the magnitude of this effect is as large as the most optimistic readings of the data suggest remains to be seen, but we believe we might be in the early innings of a fundamental acceleration in business formation—which could have ripple effects throughout the economy.

Takeaways by Macro Roundup® AI

  1. The recent surge in US business formation is not reflected in high-propensity applications, but the evidence points toward a structural increase in genuine small business activity over 2025 and 2026, driven by solopreneurs.
  2. Preliminary evidence of growth in AI tool usage and solopreneur growth in high-AI-adoption sectors suggests that advances in AI are responsible for a meaningful portion of this growth.
  3. AI appears to be lowering barriers to business formation and growth by expanding solopreneur capabilities, improving tools and platforms serving new businesses, and creating opportunities for entrepreneurs, with possible ripple effects throughout the economy.

Related Articles:

  • Solopreneurs, Solow, and the SaaSpocalypse — For three decades after commercial electricity delivery began in 1882, inflation-adjusted output per worker grew just 0.5% annually, accelerating to more than double that pace only after factories were redesigned around electric motors rather than retrofitted from steam. The author argues a near-term absence of productivity acceleration from AI is not evidence none is coming.
  • AI-Native Firms∗ — The authors find AI-native U.S. startups are 25% smaller than non-AI startups in the same industry and cohort, with 13% higher engineer shares, roughly 15% lower shares of entry-level workers and managers, flatter hierarchies, and comparable valuations. They argue embedding AI into products lets firms scale knowledge work without large teams.
  • Which Entrepreneurs Boost Productivity? — The authors find that a minority of entrepreneurs are "transformative" — generating disproportionate productivity gains, scoring high on IQ tests, being well-educated, and hiring research and development workers. They argue that economies with more such entrepreneurs and R&D workers sustain higher long-run productivity growth.

AI Summary. Venture capital funding for defence technology start-ups working on drones, autonomous vessels and battlefield artificial intelligence has reached $12.3bn, almost double the comparable prior-year period and above the $9.95bn raised in the previous full year, according to data compiled by PitchBook. US start-ups captured $11.4bn of that total, with Anduril Industries alone accounting for nearly half.

Sylvia Pfeifer and Ivan Levingston Financial Times
Date Posted:

Defence startups have raised $12.3B in H1, outpacing the ~$10B invested in the sector in 2025. American start-ups capture 93% of the investment, though Anduril’s recent $5B round accounted for nearly half of that.

Is venture capital funding for defence tech start-ups surging?

Core argument: Defence technology start-ups have raised $12.3bn from venture capital funds since the start of 2026, almost double the same period last year and more than the $9.95bn raised in all of last year, according to PitchBook data compiled for the Financial Times.

Investors are pouring billions into defence technology start-ups as wars in Ukraine and the Gulf turn drones, autonomous vessels and battlefield AI into one of this year’s hottest venture capital bets. Companies in the sector have raised $12.3bn from VC funds since the start of 2026, almost double the amount raised in the same period last year and more than the $9.95bn achieved in the whole of last year, according to data compiled for the Financial Times by PitchBook. The boom is heavily concentrated in the US. American start-ups captured $11.4bn of the total — although Anduril Industries alone accounted for almost half of that.

Takeaways by Macro Roundup® AI

  1. Defence technology start-ups have raised $12.3bn from venture capital funds since the start of 2026, almost double the same period last year and more than the $9.95bn raised in all of last year, according to PitchBook data compiled for the Financial Times.
  2. US start-ups captured $11.4bn of the $12.3bn raised by defence tech companies, with Anduril Industries alone accounting for almost half of the American total.
  3. Wars in Ukraine and the Gulf have turned drones, autonomous vessels and battlefield AI into one of this year's hottest venture capital bets.

Related Articles:

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