Edward Conard

Top Ten New York Times Bestselling Author

  • “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
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…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
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, June 25, 2026

AI Summary. An analysis estimates the AI ecosystem generated $110bn in revenue over 12 months excluding double-counting, with the most recent month annualizing to a $175bn run rate. After separating AI-specific capital spending from the roughly $120bn hyperscalers already spent annually and depreciating compute over 6 years, revenues attributable to hyperscalers roughly cover depreciation.

Azeem Azhar, William Gildea, Hannah Petrovic, Nathan Warren, et al. Exponential View
Date Posted:

Depreciation currently absorbs ~81% of the hyperscalers’ revenue and ~68% of gross AI revenue. Depreciating AI compute assets over 6 years, Azeem Azhar argues “revenues attributable to hyperscalers just about clear the depreciation expense.”

Do AI revenues cover the depreciation on AI infrastructure spending?

Core argument: The AI ecosystem generated $110 billion in revenue over the past 12 months after removing double-counting, and the most recent month's revenues annualise to a $175 billion run rate.

Over the past 12 months, the AI ecosystem generated $110 billion in revenue when you remove double-counting. Annualising the most recent month’s revenues indicates a $175 billion revenue run rate. AI revenues cover the capital investment that’s required to build the infrastructure. Our model separates AI-oriented CapEx from ordinary CapEx across the major hyperscalers and neoclouds, the specialist AI cloud providers. This adjustment is important because hyperscalers were already spending around $120 billion annually on CapEx before ChatGPT. We capture the additional investment in AI infrastructure, then depreciate compute assets over 6 years and other infrastructure over 14 years. Our modelling shows that revenues attributable to hyperscalers just about clear the depreciation expense. Six years is defensible. That longer useful life reflects that, one, demand still exceeds available AI compute, and two, operators are getting better at managing GPU fleets. Both help. The second alone is enough to justify a longer economic life.

Takeaways by Macro Roundup® AI

  1. The AI ecosystem generated $110 billion in revenue over the past 12 months after removing double-counting, and the most recent month's revenues annualise to a $175 billion run rate.
  2. The model separates AI-oriented CapEx from ordinary CapEx across major hyperscalers and neoclouds, an adjustment that matters because hyperscalers already spent around $120 billion annually on CapEx before ChatGPT.
  3. Depreciating compute assets over 6 years and other infrastructure over 14 years, the model shows revenues attributable to hyperscalers just about clear the depreciation expense, with the 6-year life supported by demand exceeding available AI compute and improved GPU fleet management.

Related Articles:

  • Semiquincententacles — Leading artificial-intelligence labs are moving to usage-based token pricing on a cost-plus basis that includes total ownership costs, pushing token prices higher and giving some enterprises reason to migrate to cheaper open models. Frontier models remain necessary for cybersecurity, distillation training, agents, and scientific discovery, where maximum performance is required.
  • Why .400 Hitters Disappeared — and What It Means for AI — Artificial intelligence models' capability gains are shrinking in percentage terms, falling from about 15% relative to the baseline early on to roughly 10% for the same absolute increment, narrowing the gap between frontier and good-enough models. The author argues this points to a commoditizing market where price, not minor model differences, becomes the main differentiator, pressuring frontier firms' margins.
  • Four Takeaways from Microsoft’s Satya Nadella at WEF Today — Microsoft's chief executive says the price of AI model usage ("tokens") falls by roughly half every three months. Commentary argues that such rapid deflation pulls demand forward, encourages overbuilding, and commoditizes models, shifting competitive advantage to orchestration and context rather than the model layer.

AI Summary. US communities more exposed to opioid marketing experienced lower population growth, driven mainly by out-migration of college-educated adults, alongside higher fertility among non-college-educated mothers that partially offset the decline. The authors attribute the selective migration response to eroded local quality of life, including addiction, homelessness, and strained public services.

Carolina Arteaga, Victoria Barone, and Stephen Claassen National Bureau of Economic Research
Date Posted:

Commuting zones with high cancer mortality in 1996, and thus more exposed to Purdue’s OxyContin marketing, saw lower population growth via selective out‑migration of college‑educated adults, partially offset by higher fertility among non‑college mothers.

How does opioid exposure reshape local population growth and composition?

Core argument: Using 1996 cancer mortality as a proxy for where pharmaceutical companies initially concentrated OxyContin marketing, the authors find communities more exposed to the opioid epidemic experienced lower population growth, driven primarily by out-migration among college-educated adults.

To measure exposure to opioid shocks, we use 1996 cancer mortality as a proxy for local exposure to the opioid epidemic. The size of the cancer pain market in the mid-1990s was a key determinant of where pharmaceutical companies initially concentrated their marketing efforts for opioids. Using this quasi exogenous variation in local exposure to Purdue Pharma’s marketing of OxyContin, we show that communities more exposed to the epidemic experienced lower population growth, driven primarily by increased out-migration among college-educated adults. In the opposite direction, the opioid epidemic induced substantial increases in fertility, concentrated among non-college educated mothers, which by the end of our period partially offset these population declines. Mortality rises sharply in proportional terms [but] the modest absolute increase has only a minimal effect on population growth. These shifts reveal how the epidemic contributed to growing regional demographic divergence within the United States. Beyond disrupting labor-market opportunities, it eroded the amenity value of places. Communities most exposed to the crisis were characterized by rising addiction, homelessness, neighborhood disorder, and a strain on public services, reducing local quality of life. This deterioration in local amenities helps explain why the migration response we document is both sizable and selective.

Takeaways by Macro Roundup® AI

  1. Using 1996 cancer mortality as a proxy for where pharmaceutical companies initially concentrated OxyContin marketing, the authors find communities more exposed to the opioid epidemic experienced lower population growth, driven primarily by out-migration among college-educated adults.
  2. The opioid epidemic induced substantial fertility increases concentrated among non-college-educated mothers, which by the end of the study period partially offset population declines.
  3. Mortality rose sharply in proportional terms but the modest absolute increase had only minimal effect on population growth, and the authors attribute the sizable, selective migration response to eroded local amenities including rising addiction, homelessness, neighborhood disorder, and strained public services.

Related Articles:

  • Republican Support and Economic Hardship: Enduring Effects of the Opioid Epidemic — The authors estimate that geographic exposure to prescription-opioid marketing raised drug-related mortality and reliance on public transfer programs, and continuously increased the Republican vote share in House, presidential, and gubernatorial elections. They estimate a one-standard-deviation increase in exposure raised the Republican House vote share by 4.5 percentage points.
  • Democracy and the Opioid Epidemic — Using US commuting zone data and the concentration of early prescription opioid marketing in cancer pain markets, the authors estimate that exposure to the opioid epidemic substantially increased the Republican vote share in congressional and presidential elections, with a one standard deviation rise in initial cancer mortality corresponding to 13.8 percentage points.
  • The Rise in American Pain: The Importance of the Great Recession — The authors find that the rise in reported pain among Americans was almost entirely concentrated in the 2007–2010 recession period rather than following a smooth upward trend, with the disproportionate increase among the less educated also occurring primarily then. The authors state they find this jump difficult to explain.

AI Summary. The United States became a net oil exporter in late 2019, and oil and oil product spending fell from near 8% of GDP in 1980 to 3% in 2024. The authors estimate a 15% global oil supply disruption would now cut annualized U.S. real GDP growth by 0.3pp, versus 1.7pp in the rest of the world.

Lutz Kilian, Michael Plante and Alexander Richter Federal Reserve Bank of Dallas
Date Posted:
Is Database:
Database

Kilian, et al find that the impact of an energy shock on US real GDP growth has fallen to 1/20th of what it would have been in 1980, due both to the declining share of oil in GDP and the US transition from net importer to net exporter.

How much do oil supply shocks still hurt US growth?

Core argument: A world oil supply reduction of the size seen in the 2026 Iran War would have cut annualized U.S. real GDP growth by 5.6pp in 1980 but reduces it by only 0.3pp today, one-twentieth of the 1980 decline.

The 2026 disruption of global oil supplies has been more than twice as large as the peak disruption during the 1973 oil crisis, the largest oil supply shortfall on record before 2026. It has been widely noted that the shale oil revolution has allowed the U.S. to greatly reduce its dependence on imports of crude oil and refined products. Whereas the U.S. economy had been a major net importer of oil and oil products since the 1970s, the U.S. became a net exporter in late 2019, if only by a small margin (Chart 2, panel A). In addition, oil and oil product expenditures as a share of GDP substantially declined from a high near 8% in 1980 to 3% in 2024 (Chart 2, panel B). Reduction of world oil supply [as in the 2026 Iran War] would have caused annualized U.S. real GDP growth to decline by 5.6pp in 1980; the same event today reduces growth by only 0.3pp, one-twentieth of the 1980 decline (Chart 3). Our analysis demonstrates that the US contraction in response to a geopolitical oil supply disruption was similar to that in the rest of the world in 1980. This is no longer the case. A global oil supply disruption of 15% today causes a decline in annualized real GDP growth of 1.7pp in the rest of the world, compared with only 0.3pp in the U.S.—roughly one-sixth of the response in the rest of the world.

Takeaways by Macro Roundup® AI

  1. A world oil supply reduction of the size seen in the 2026 Iran War would have cut annualized U.S. real GDP growth by 5.6pp in 1980 but reduces it by only 0.3pp today, one-twentieth of the 1980 decline.
  2. A 15% global oil supply disruption today lowers annualized real GDP growth by 1.7pp in the rest of the world versus 0.3pp in the U.S., roughly one-sixth of the response, whereas the contractions were similar in 1980.
  3. The U.S. became a net exporter of oil and oil products in late 2019, by a small margin, after being a major net importer since the 1970s, and oil and oil product expenditures fell from near 8% of GDP in 1980 to 3% in 2024.

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.
  • 12 Insights About Venezuela And The “Donroe Doctrine” — Petroleum supplies 90% of US transport energy consumption and about 33% of industrial production, mainly high-temperature heat and feedstocks, with passenger cars, SUVs and light trucks accounting for roughly 60% of transport energy use. The oil intensity of GDP is gradually declining in most of the world, though the US retains the highest oil intensity among major economies.
  • 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 Summary. Since 2017 the Japanese bond market has fallen 66% in value, the German and French markets 35%, and the US market 24%, while China's is the only major bond market up over that period. Few investors in advanced economies hold Chinese government bonds, particularly since Russian reserves were frozen.

Charles Gave Gavekal
Date Posted:

As measured by total real returns in dollars, the only major sovereign 10 year bond that has had a positive return since January 2017 is China’s. The 10-year JGB is down 66%, equivalent French and German debt is down 35%, and the US 10-year has declined 24%.

Have major advanced-economy bond markets lost value while China's gained?

Core argument: The Japanese bond market has lost 66% of its value since January 2017, a steeper decline than the German and French markets at 35% and the US market at 24%.

The Japanese bond market has effectively collapsed in value, down 66% since January 2017, while the German and French bond markets are down 35% and the US bond market is down 24%. The only major bond market that is up since 2017 is China’s. However, it is well understood that few investors in the OECD own CGBs, particularly since Russian reserves were frozen in 2022.

Takeaways by Macro Roundup® AI

  1. The Japanese bond market has lost 66% of its value since January 2017, a steeper decline than the German and French markets at 35% and the US market at 24%.
  2. China's is the only major bond market that is up since 2017.
  3. Few OECD investors hold Chinese government bonds, particularly since the freezing of Russian reserves in 2022.

Related Articles:

  • 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%.
  • Why Global Imbalances Matter — Countries running persistent trade surpluses, such as China, Germany and Japan, have built their economies around an excess supply of tradeable goods and services, leaving them dependent on deficit countries to absorb it. That dependence gives deficit countries bargaining power and exposes surplus countries to pressure to expand domestic demand.
  • The Emergence Of A New Anchor — Renminbi bonds have outperformed other major bond markets over horizons ranging from year-to-date to the past 10 years, and most countries now trade more with China than with the US. The author argues the world is not deglobalizing but "de-Westernizing," with greater trade with China making countries more willing to save in renminbi.

AI Summary. Of roughly 1,900 startups valued at $1bn or more in a Stanford-maintained database, 332 had raised money at or below their peak valuation and 383 had disclosed no new funding in the prior three years. Research firm Pitchbook expects net valuation cuts of $500bn–$1tn as these firms reprice, seek buyers, or fail.

Economist Staff The Economist
Date Posted:
Is Database:
Database

As of May of this year, 17% of unicorns in a Stanford database had raised funds at a valuation at or below their peaks; ~ half the firms in the database were valued under their peak valuation, implying significant write-downs going forward.

How many billion-dollar startups are struggling to justify their valuations?

Core argument: By May 2026, 332 of the 1,900 unicorns in Ilya Strebulaev's Stanford database had raised money at or below their peak valuation, and 212 of those were valued at under $1bn.

By May 2026, 332 of the 1,900 unicorns in a database maintained by Ilya Strebulaev of Stanford University had raised money at a valuation at or below their peak. Of those, 212 were valued at under $1bn. As many as 383 had disclosed no new funding in the previous three years; 41 of these had lost unicorn status. As Mr Strebulaev notes, data on startups are notoriously noisy. Some unicorns may have raised no money because they did not need it. But others may be struggling to justify mythical valuations. It seems that a fair proportion of unicorns have joined the undead. Nearly half of the firms in Mr Strebulaev’s database valued at less than their peak raised money in 2021. From late next year, their investors will start demanding results. Pitchbook expects net cuts in valuations of between $500bn and $1trn as firms reprice, scramble to find a buyer, or go bust. That is quite a cull: Pitchbook puts the total value of unicorns below the ten most valuable at around $5trn.

Takeaways by Macro Roundup® AI

  1. By May 2026, 332 of the 1,900 unicorns in Ilya Strebulaev's Stanford database had raised money at or below their peak valuation, and 212 of those were valued at under $1bn.
  2. As many as 383 unicorns in Strebulaev's database had disclosed no new funding in the previous three years, and 41 of them had lost unicorn status, though Strebulaev notes startup data are notoriously noisy and some firms may not have needed capital.
  3. Pitchbook expects net valuation cuts of between $500bn and $1trn as firms reprice, scramble to find a buyer, or go bust, against roughly $5trn in total value for unicorns below the ten most valuable.

Related Articles:

  • Trampled Underfoot by a Stampede of Unicorns — A database trawl counts 1,727 private companies valued above $1bn globally, and if private market valuations are accurate, the largest of them have outperformed public markets since the pandemic. Several, led by SpaceX and OpenAI, plan initial public offerings, which can signal trouble ahead since insiders are choosing to sell.
  • The Deep End: 2025 Alternative Investments Review — In venture capital, only consistently investing with top-quartile managers outperformed the S&P 500, while the median manager at best matched public equity markets and fourth-quartile managers destroyed value relative to equities. Fees are part of the issue: an 11.7% annualized NASDAQ 100 return falls to 7.4% under a 2%/20% fee structure.
  • Valuing AI: Extreme Bubble, New Golden Era, or Both — By the investment firm's definition of a bubble — a price two standard deviations above an asset class's long-term real trend — U.S. equities are in bubble territory and extremely overpriced on historically effective valuation metrics, with a cyclically adjusted price-earnings ratio of 40 and a record share of the market trading above 10x sales.

Friday, June 26, 2026

AI Summary. Memory and storage chip costs used across consumer electronics have risen, with Nintendo, Microsoft and Sony raising device prices and Apple's chief executive saying higher prices are coming. Average hourly earnings for electrical and wiring-installation contractors rose 6.5% year over year, versus 3.6% for all private-sector workers.

Justin Lahart Wall Street Journal
Date Posted:

Higher electricity costs and increased memory chip demand from the AI buildout are fueling inflation. Consumer prices for computer software and accessories were up ~15% y/y in May.

Is the data-center buildout raising consumer electronics prices and wages?

Core argument: Average hourly earnings for electrical and wiring-installation contractors rose 6.5% in April from a year earlier, compared with 3.6% for all private-sector workers, with such workers in demand from data-center construction.

Memory and storage chips are used in a broad array of consumer-electronics products that includes everything from videogame consoles to cars. Nintendo, Microsoft and Sony have all raised prices on devices. Higher price tags are coming to Apple products, too, according to Chief Executive Tim Cook, who told The Wall Street Journal that the jump in costs was unlike anything he had seen “in any area in over 40 years.” The AI build-out could also add to labor costs. Wages for workers who are in demand from data-center construction have been picking up: Average hourly earnings for electrical and wiring-installation contractors were up 6.5% in April from a year earlier, which compared with 3.6% for all private-sector workers.

Takeaways by Macro Roundup® AI

  1. Average hourly earnings for electrical and wiring-installation contractors rose 6.5% in April from a year earlier, compared with 3.6% for all private-sector workers, with such workers in demand from data-center construction.
  2. Nintendo, Microsoft and Sony have all raised prices on devices, and memory and storage chips are used in products ranging from videogame consoles to cars.
  3. Apple Chief Executive Tim Cook told The Wall Street Journal that higher price tags are coming to Apple products and that the jump in costs was unlike anything he had seen "in any area in over 40 years.".

Related Articles:

  • US Workers Lose Buying Power After War Drives Up Prices — Inflation has outstripped wage growth in key private-sector industries including healthcare, finance, and retail for two straight months, largely because of a surge in energy prices driven by the Iran war. Gasoline prices have fallen since an interim US-Iran peace deal but remain nearly $1 a gallon above pre-conflict levels.
  • Electric Fury — Rising US electricity costs are burdening consumers and stirring voter anger, with the rapid build-out of artificial intelligence data centers, tariffs, and upgrades to an aging grid pushing power prices higher at rates unseen in decades. Utility bills have moved to the center of US politics alongside grocery prices.
  • America’s Electricity Gap — US power consumption has risen more in the past two years than in the previous 15 combined, yet supply has not kept pace and electricity prices have climbed more in four years than in the prior 14. The US Energy Information Administration projects generation to grow another 4.6%, with commercial users including data centers driving most added demand.

AI Summary. Half of the 18 Federal Reserve policymakers submitting interest rate projections penciled in at least one rate hike, and the median projection for core inflation rose to 2.5%. The authors still expect no hikes and argue that reduced Federal Reserve transparency could make financial conditions and economic outcomes more volatile.

Jan Hatzius Goldman Sachs
Date Posted:

GS notes “half of 18 participants submitting rate projections penciled in one or more rate hikes in the remainder of 2026”, though GS is holding its projection at zero. Warsh’s opposition to forward guidance was not a surprise, but its intensity was.

Does less central bank transparency make financial conditions more volatile?

Core argument: Half of the 18 FOMC participants submitting interest rate projections penciled in one or more rate hikes for the remainder of 2026, and the median core PCE inflation projection for 2027Q4 rose to 2.5%.

The first FOMC meeting under Chairman Warsh was more hawkish than expected. Half of the 18 participants that submitted interest rate projections penciled in one or more rate hikes in the remainder of 2026, and the median projection for core PCE inflation in 2027Q4 rose to 2.5%. While this has increased the upside risks, our baseline forecast remains for no hikes.We think [hikes] are less likely than markets are pricing [Exhibit 5]. We had expected Warsh’s refusal to provide either a “dot” or verbal guidance about upcoming rate decisions, but his broader comments on Fed communications with financial markets went further: “So I think financial markets perform best when they react to incoming data.The more that markets are paying attention to what's happening in the real economy, deciding what’s good data and what’s less good data, the more financial markets can price what they believe is the most likely and what are the tail risks.” Since the Fed essentially controls short-term interest rates and the interest rate path matters for asset pricing, it is inevitable that markets ask how the Fed will react to incoming information. A significant reduction in Fed transparency could make financial conditions—and thus economic outcomes—more volatile as market assumptions about the Fed’s thinking become subject to fewer reality checks.

Takeaways by Macro Roundup® AI

  1. Half of the 18 FOMC participants submitting interest rate projections penciled in one or more rate hikes for the remainder of 2026, and the median core PCE inflation projection for 2027Q4 rose to 2.5%.
  2. The baseline forecast remains for no rate hikes, with hikes judged less likely than markets are pricing despite upside risks raised by the first FOMC meeting under Chairman Warsh.
  3. Warsh said financial markets perform best when they react to incoming data, though a significant reduction in Fed transparency could make financial conditions and economic outcomes more volatile.

Related Articles:

  • Home Alone: Inflation And The New Fed Chair — Current readings on labor market tightness, manufacturing price pressures, supply chain tightness and the output gap resemble conditions that have historically preceded Federal Reserve rate increases rather than cuts, and futures markets are pricing in hikes. Averaging several monetary policy rules implies a policy rate of 4.00%–4.85% versus the current 3.50%–3.75%.
  • US Daily: June FOMC Recap: Hikes Look More Likely but Are Still Not Our Base Case — Nine Federal Reserve policymakers projected an interest-rate increase in 2026 and the median projection for core inflation in 2027 rose to 2.5%, a hawkish surprise that lifted market pricing for the end-2026 policy rate by 0.2 percentage points. The authors still expect the Federal Reserve to leave its policy rate unchanged this year.
  • The Case for Higher U.S. Rates — Underlying U.S. inflation continues to run faster than the Federal Reserve's target and may be accelerating slightly, while growth, consumer spending, and a healthy job market keep wages rising about 1 percentage point faster than in the years just before the pandemic. On that evidence, the author argues rate increases, not cuts, are the appropriate policy.

AI Summary. SpaceX's $25bn bond offering has weakened in secondary trading, with paper losses relative to Treasuries totaling roughly $305m. Traders attribute the selling to fast-money accounts seeking quick profits rather than buy-and-hold investors, though the company also won investment-grade ratings despite expectations of years of negative cash flow.

Caleb Mutua, Ying Luthra, and Brian Smith Bloomberg
Date Posted:

SpaceX’s $25B bond sale is unraveling in the secondary markets. The sharp selloff suggests “fast-money accounts… piled into the deal,” highlighting how difficult investors still find it to price AI-era companies with unconventional risk profiles.

Why are losses mounting on a record corporate bond sale?

Core argument: Paper losses on SpaceX's $25 billion bond offering totaled roughly $305 million as of late Thursday relative to Treasuries, with traders saying they cannot recall another recent deal that widened this sharply in the secondary market.

SpaceX’s blockbuster bond sale is weakening so quickly in the secondary market that traders say they can’t recall another recent deal that widened this sharply. Paper losses on SpaceX’s $25 billion offering have mounted since the debt began trading and totaled roughly $305 million as of late Thursday relative to Treasuries. Traders say the moves suggest fast-money accounts, rather than traditional buy-and-hold investors, piled into the deal looking to flip it for a quick profit. Even if there are more technical reasons behind the selling, the virtually unprecedented magnitude points to SpaceX’s unique profile. The company won investment grades despite expectations for years of negative cash flow and a dependence on Elon Musk that Fitch Ratings deemed a ‘key rating constraint.’

Takeaways by Macro Roundup® AI

  1. Paper losses on SpaceX's $25 billion bond offering totaled roughly $305 million as of late Thursday relative to Treasuries, with traders saying they cannot recall another recent deal that widened this sharply in the secondary market.
  2. Traders say the moves suggest fast-money accounts seeking to flip the SpaceX deal for a quick profit, rather than traditional buy-and-hold investors, piled into the offering.
  3. SpaceX won investment-grade ratings despite expectations for years of negative cash flow and a dependence on Elon Musk that Fitch Ratings deemed a "key rating constraint.".

Related Articles:

  • AI Set to be Largest CapEx Cycle Ever … and Soon Majority Externally Financed — Hyperscaler and data-center investment is tracking toward $1.5tn annually by 2030, which in real terms would exceed the 2005-06 housing boom, the 1990s fiber peak, and the 1882 railroad peak combined. External debt and equity are projected to fund close to 90% of the buildout, making it dependent on credit markets.
  • Semiquincententacles — Leading artificial-intelligence labs are moving to usage-based token pricing on a cost-plus basis that includes total ownership costs, pushing token prices higher and giving some enterprises reason to migrate to cheaper open models. Frontier models remain necessary for cybersecurity, distillation training, agents, and scientific discovery, where maximum performance is required.
  • Investors Seek Protection From Risk Of AI Debt Bust — Trading volumes in credit default swaps — insurance-like contracts against debt defaults — tied to major US technology companies including Alphabet, Amazon, Broadcom, CoreWeave, Meta, Microsoft and Oracle have risen 90%, according to clearinghouse DTCC data. The increase is most pronounced for Oracle and CoreWeave, both raising billions in debt for data centre capacity.

AI Summary. OpenAI is leaning toward delaying its initial public offering until next year, according to people involved in the company's deliberations. Advisers have cautioned that retail investor enthusiasm may be limited, following a decline in SpaceX's stock after its public offering and choppy markets in which technology stocks have dragged down indexes.

Rob Copeland and Mike Isaac New York Times
Date Posted:

OpenAI’s IPO may be pushed to 2027 after advisors reported to the firm that its offering “may not find much enthusiasm from retail investors” due to the downward slide of SpaceX after its successful offering.

Is a major AI company delaying its public offering amid weak markets?

Core argument: OpenAI is leaning toward delaying its initial public offering until next year, according to three people involved in the company's deliberations, a shift away from its most aggressive aspirations.

OpenAI is leaning toward holding off its initial public offering until next year, three people involved in the company’s deliberations said. A cascade of recent developments has caused OpenAI’s executives to shift away from their most aggressive aspirations. Top of mind is what has happened to Elon Musk’s SpaceX after its I.P.O. this month. Since then, SpaceX’s stock has been on a downward slide. Global markets have also been choppy in recent weeks, with tech stocks dragging down indexes as investors question whether A.I. companies will live up to their sky-high promises. That has caused OpenAI’s advisers, in conversations with the company over the past week, to caution that it may not find much enthusiasm from retail investors for its own shares, two of the people involved said.

Takeaways by Macro Roundup® AI

  1. OpenAI is leaning toward delaying its initial public offering until next year, according to three people involved in the company's deliberations, a shift away from its most aggressive aspirations.
  2. SpaceX's stock has slid since its initial public offering this month, a development that is top of mind for OpenAI's executives.
  3. OpenAI's advisers cautioned the company that it may not find much enthusiasm from retail investors for its shares, according to two people involved, as choppy global markets and falling tech stocks reflect investor questions about whether A.I. companies will meet their promises.

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.
  • Semiquincententacles — Leading artificial-intelligence labs are moving to usage-based token pricing on a cost-plus basis that includes total ownership costs, pushing token prices higher and giving some enterprises reason to migrate to cheaper open models. Frontier models remain necessary for cybersecurity, distillation training, agents, and scientific discovery, where maximum performance is required.
  • The State of the AI Economy — An analysis estimates the AI ecosystem generated $110bn in revenue over 12 months excluding double-counting, with the most recent month annualizing to a $175bn run rate. After separating AI-specific capital spending from the roughly $120bn hyperscalers already spent annually and depreciating compute over 6 years, revenues attributable to hyperscalers roughly cover depreciation.

AI Summary. Statistical comparisons with other advanced economies estimate that UK goods trade volumes would be 10–15% higher had they grown in line with the average of other major economies, a decline prior studies link to a 2–4% reduction in output through weaker productivity. The authors also estimate a roughly 10% business investment shortfall, implying an output hit of just over 2%.

James Moberly and Sven Jari Stehn Goldman Sachs
Date Posted:

A GS analysis suggests that the UK’s GDP is somewhere between 4 and 6% below a counterfactual path where Brexit did not take place, though GS conjectures that the largest growth effects are likely behind us.

How much output has leaving a trade bloc cost Britain?

Core argument: UK goods trade volumes would be 10–15% higher had they grown in line with the average of other G7 economies, reflecting higher trade frictions outside the EU, with a smaller shortfall in services trade.

We start by examining empirically how much UK real GDP has underperformed other advanced economies since 2016 using a “Doppelgänger” analysis.This method uses statistical techniques to find the best combination of other countries that match the path of UK real GDP before the referendum and uses this same combination to project what might have happened thereafter. Studies consider three mechanisms through which Brexit could have lowered long-term output: (1) international trade, (2) business investment and (3) immigration. We estimate that goods trade volumes would be 10-15% higher in a counterfactual in which volumes had grown in line with the average of other G7 economies, reflecting higher trade frictions outside of the EU (Exhibit 4, left), and to a less extent service trade (Exhibit 4, right). Previous studies suggest that a decline in trade intensity of this magnitude could have reduced GDP by 2-4% through reduced productivity. Second, UK investment growth fell below its pre-2016 trend (Exhibit 5, left). Our Doppelgänger estimates for investment point to a shortfall of around 10% relative to other economies. At least some of this underperformance likely reflected Brexit uncertainty. (Exhibit 5, right). Our estimates on the business investment channel imply an output hit of just over 2% by end-2025. Third, Brexit has affected immigration flows into the UK.

Takeaways by Macro Roundup® AI

  1. UK goods trade volumes would be 10–15% higher had they grown in line with the average of other G7 economies, reflecting higher trade frictions outside the EU, with a smaller shortfall in services trade.
  2. Previous studies suggest a decline in trade intensity of that magnitude could have reduced UK GDP by 2–4% through lower productivity.
  3. "Doppelgänger" estimates point to a UK business investment shortfall of around 10% relative to other economies, implying an output hit of just over 2% by end-2025.

Related Articles:

  • The Economic Impact of Brexit — The authors estimate that Brexit reduced UK GDP by 6% to 8%, investment by 12% to 18%, and employment and productivity each by 3% to 4%, with effects accumulating gradually. Survey data indicate these impacts reflect elevated uncertainty, reduced demand, diverted management time, and greater misallocation of resources.
  • The Great Bond Car Wreck — in Slow Motion — Long-term government bond yields have risen simultaneously across the US, Japan, the UK and France, which Barclays attributes to too much debt, too little fiscal discipline, and no political appetite to address either. Equities have been resilient, though the 10-year Treasury yield now exceeds the S&P 500 earnings yield by the widest margin since the dot-com bust.