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


Monday, July 13, 2026

AI Summary. The Congressional Budget Office estimates that a permanent 0.5 percentage point increase in annual productivity growth would lower publicly held federal debt after 30 years by 39% of GDP, offsetting roughly half the projected rise from 101% of GDP to 175%. Higher revenue and slower spending growth outweigh higher interest costs.

Karen Dynan, Douglas Elmendorf and Louise Sheiner National Bureau of Economic Research
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CBO baseline projects debt-to-GDP rising from 101% in 2026 to 175% in 2056. Dynan et al. study how AI might modify that projection. In all but their most optimistic scenario, TFP grows 0.5pp faster, and AI offsets 39–49 pp of that 74pp increase.

How much would faster productivity growth reduce federal debt?

Core argument: A permanent 0.5 pp increase in annual total factor productivity growth would lower publicly held federal debt after 30 years by 39% of GDP relative to CBO's extended baseline, offsetting roughly half of the projected rise.

[In the Base Case], faster economic growth [improves the federal budget and debt outlook] through four channels. First, [higher] incomes increase federal revenue, [while] the progressive tax system [modestly] raises revenue relative to GDP. CBO [estimates] that a [permanent] 0.5 pp increase in annual TFP growth would raise revenue after [30 years] by 0.14% of GDP. Second, [although] faster growth increases [some] federal spending, spending rises [more slowly] than GDP, [reducing noninterest outlays] relative to GDP. Under our [assumptions], discretionary spending falls from 6.1% of GDP in 2025 to 4.5% in 2056. Third, because faster growth does not [change the stock of] existing debt, that debt becomes smaller relative to GDP. Fourth, [stronger] growth generally raises interest rates, increasing the [cost] of new borrowing and [refinancing] existing debt. This represents a partial offset to the [fiscal gains]. [On balance], additional annual TFP growth of 0.5 pp would lower publicly held federal debt after [30 years] by 39% of GDP relative to CBO’s extended baseline. CBO’s extended baseline shows federal debt rising from 101% of GDP in 2026 to 175% in three decades, so this hypothesized increase in growth would offset roughly half of that projected rise.

Takeaways by Macro Roundup® AI

  1. A permanent 0.5 pp increase in annual total factor productivity growth would lower publicly held federal debt after 30 years by 39% of GDP relative to CBO's extended baseline, offsetting roughly half of the projected rise.
  2. CBO's extended baseline shows federal debt rising from 101% of GDP in 2026 to 175% three decades later, and CBO estimates a permanent 0.5 pp increase in TFP growth would raise revenue after 30 years by 0.14% of GDP.

Related Articles:

  • Can AI Avert the Impending Federal Budget Crisis? — U.S. GDP per capita, about $87,000, is projected to reach $102,000 by 2035 with 1.8% annual productivity growth, or $110,000 with 2.7% growth. Because the healthcare sector has been slow to adopt AI, health spending is projected to rise from 18.3% of GDP to 21% under slower growth and 21.7% under faster growth.
  • U.S. Treasury Investors Are Long in AI — 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.
  • 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.

AI Summary. Net foreign inflows into US equities have reached a record high, driven in large part by overseas investors seeking artificial intelligence exposure unavailable in their home markets. Because most foreign equity investors leave currency risk unhedged, a pullback in these inflows if AI disappoints poses a significant downside risk to the US dollar.

Torsten Sløk Apollo
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Net foreign inflows into US equities are at a record high as investors seek AI exposure. Sløk notes that most foreign equity investors do not hedge FX risk, which implies downside risk to the dollar if net inflows slow.

Does the dollar depend on foreign inflows chasing AI stocks?

Core argument: Net foreign inflows into US equities have surged to a record high, driven in large part by overseas investors seeking AI exposure unavailable in their home markets.

Net foreign inflows into US equities have surged to a record high, driven in large part by overseas investors seeking AI exposure they cannot get in their home markets. With most foreign equity investors not hedging their FX risk, the bottom line is that if AI disappoints, the resulting pullback in these inflows would be a significant downside risk to the US dollar.

Takeaways by Macro Roundup® AI

  1. Net foreign inflows into US equities have surged to a record high, driven in large part by overseas investors seeking AI exposure unavailable in their home markets.
  2. Most foreign equity investors do not hedge their FX risk, leaving the US dollar exposed to shifts in these inflows.
  3. If AI disappoints, the resulting pullback in foreign equity inflows would pose a significant downside risk to the US dollar.

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.
  • Peak Dollar Strength — Net positioning across major currencies shows markets are broadly long the US dollar. The author argues this bullishness is misplaced because the Federal Reserve is less hawkish than markets assume and falling oil prices should pull inflation down, leaving the dollar at peak strength.
  • A Slower AI Payoff Would Be Everyone’s Problem — If artificial intelligence profits arrive later than expected, committed capital spending and depreciation would still hit on schedule, squeezing margins, stretching balance sheets toward more debt and possible ratings downgrades, and repricing equities. Because a handful of large technology firms dominate the indices, the author argues the damage would spread to chips, power, data centers and the broader market.

AI Summary. Short-maturity US Treasury yields rose to multi-year highs as tensions with Iran pushed oil prices up, fueling speculation that the Federal Reserve will need to raise interest rates to combat inflation. The two-year yield climbed as much as four basis points to 4.25%, the five-year to 4.35%, and the 10-year to 4.60%.

Greg Ritchie, Matthew Burgess, and Masaki Kondo Bloomberg
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US two-year yields hit 4.25%, their highest level since the start of 2025, and the five-year rate hit 4.35%. The benchmark 10-year yield added 3bps rising to 4.60%.

Are rising oil prices pushing Treasury yields to multi-year highs?

Core argument: The US two-year Treasury yield rose as much as four basis points to 4.25%, its highest since February 2025, as renewed tensions with Iran pushed oil prices higher.

Short-maturity US Treasury yields climbed to their highest levels since early 2025 as renewed tensions with Iran pushed up oil prices, fanning speculation that the Federal Reserve will need to raise interest rates to combat inflation. The rate-sensitive two-year yield rose as much as four basis points to 4.25%, the highest since February 2025, while the five-year rate hit a similar peak of 4.35%. The benchmark 10-year yield added three basis points to 4.60%, the highest since May.

Takeaways by Macro Roundup® AI

  1. The US two-year Treasury yield rose as much as four basis points to 4.25%, its highest since February 2025, as renewed tensions with Iran pushed oil prices higher.
  2. The five-year Treasury rate reached a similar peak of 4.35%, while the benchmark 10-year yield added three basis points to 4.60%, its highest since May.
  3. Higher oil prices fanned speculation that the Federal Reserve will need to raise interest rates to combat inflation, lifting short-maturity Treasury yields.

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%.
  • Japan’s Borrowing Costs Soar to 30-Year High On Debt Fears — Japan's 10-year government bond yield reached 2.87%, its highest since 1996, in a sell-off investors attribute to a $2.3tn, 14-year government spending plan and concern the Bank of Japan will let inflation exceed its 2% target. The premium for borrowing 10 years rather than two widened to 1.4 points.
  • The Dangerous Brew That’s Rattling Bond Markets — U.S. inflation has remained above the Federal Reserve's 2% target since 2022 while government borrowing runs high and companies borrow heavily to fund AI build-out. Even so, the 30-year Treasury yield reached a 19-year high of 5.18% while the 10-year yield, at 4.67%, sat below its October 2023 level.

AI Summary. US wealth at the top follows a power law, with the richest 25 Americans holding 70% of the wealth of the top 100, and the top 100 holding 70% of the top 400's. The author argues the degree of skew depends on taxation, noting effective corporate tax rates fell from near 40% to about 12%.

Paul Krugman Krugman Wonks Out
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Krugman argues that concentrated business ownership leads wealth to follow a power law that is “highly skewed to the very top,” and that the steady reduction in corporate taxation since 1960 has sharply increased that skewness.

Does the tax system shape how concentrated top wealth becomes?

Core argument: The effective U.S. corporate tax rate has fallen from close to 40% in the 1950s to around 12%, reflecting both lower rates and expanded loopholes.

People who have much of their wealth invested in a particular business may experience large gains if that business (or the industry in which that business operates — e.g., the technology industry) does well, large losses if the business does badly. This approach can explain why the distribution of wealth, even among the very wealthy, is well described by a power law that is highly skewed toward the top. Thus the combined wealth of the 25 richest people in America is 70% of the combined wealth of the top 100, and the wealth of the top 100 is in turn 70% of the combined wealth of the top 400. But what determines the level of skewness toward the top? One major factor is surely the extent to which those who are already wealthy are able to keep the returns from their wealth and use those returns to accumulate even more wealth. And that factor, in turn, depends a lot on the tax system. In particular, the U.S. used to have high rates of taxation on corporate profits. Much of this taxation fell on the wealthy, and this reduced their ability to accumulate even more wealth. But as a result of both lower rates and of expanded loopholes, the effective corporate tax rate has fallen from close to 40% in the 1950s to around 12% (see gallery].

Takeaways by Macro Roundup® AI

  1. The effective U.S. corporate tax rate has fallen from close to 40% in the 1950s to around 12%, reflecting both lower rates and expanded loopholes.
  2. The combined wealth of America's 25 richest people equals 70% of the top 100's wealth, which in turn equals 70% of the top 400's, a pattern described by a highly skewed power law.
  3. Concentrated wealth held in a single business or industry, such as technology, can bring large gains or losses, an approach that helps explain why wealth follows a power law skewed toward the top.

Related Articles:

  • Comment On “How Much Tax Do Billionaires Pay?” — After adjusting existing estimates for families filing on multiple tax returns, double-counted capital income, missing taxes, and standard income definitions, the author finds the top 400 effective tax rate exceeds the overall rate by 13 percentage points, though it remains below the rate paid by the top 0.01% ranked by income.
  • How Much Tax Do US Billionaires Pay? Evidence from Administrative Data — Using administrative tax data, the authors estimate the 400 wealthiest Americans paid a total effective tax rate of 23.8% of economic income, down from about 30% earlier in the decade and below the average rate for the full US population. The decline followed a drop in corporate taxes paid.
  • 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. China, Russia, and the US are investing more than $200bn in military space capabilities, placing hundreds of satellites in orbit over the past five years, while Europe lags due to misaligned interests, limited national budgets, and too few heavy launchers. Europe's Ariane 6 carries about 22,000 kg but is limited to roughly 10 launches a year.

Gerry Doyle and Alan Crawford Bloomberg
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Europe has very limited launch capacity relative to other great powers, limiting its ability to reconstruct satellite constellations, which are expected to be destroyed quickly in the opening hours of a general war.

Is Europe falling behind in the military space race?

Core argument: China, Russia, and the US are investing more than $200 billion in military space efforts, placing hundreds of satellites in orbit over the last half-decade and testing weapons on Earth and in space.

Satellites for observation, communications, and precise geolocation have been military necessities for years, and new weapons such as orbital interceptors and inspection systems are heading in that direction. China, Russia, and the US are pouring more than $200 billion into such efforts, putting hundreds of satellites in orbit over the last half-decade and testing weapons on Earth and in space. Missing from this intensifying race is Europe, hobbled by misaligned interests, limited national budgets, and the lack of a crucial piece of space technology: enough heavy launchers to make scores of trips to orbit each year. China’s Long March 5 and Russia’s Proton-M and Angara A5 launchers can each take about 25,000 kilograms (55,116 pounds) to orbit. The SpaceX Falcon Heavy can carry almost 64,000 kg. Ariane 6, operated by the France-based commercial launch provider Arianespace SA, can carry about 22,000 kg — but booster production and infrastructure limit it to about 10 launches per year.

Takeaways by Macro Roundup® AI

  1. China, Russia, and the US are investing more than $200 billion in military space efforts, placing hundreds of satellites in orbit over the last half-decade and testing weapons on Earth and in space.
  2. Europe's Ariane 6 can lift about 22,000 kg to orbit, versus about 25,000 kg for China's Long March 5 and Russia's Proton-M and Angara A5, and almost 64,000 kg for SpaceX's Falcon Heavy.
  3. Booster production and infrastructure limit Ariane 6, operated by Arianespace SA, to about 10 launches per year, short of the scores of trips to orbit each year Europe would need.

Related Articles:

  • The Hunt For A New Earth — Advances in rockets, telescopes, satellites, artificial intelligence and robotics, alongside rising public and private space funding in the US and China, are expanding scientists' ability to probe space, with both countries planning crewed Moon landings. PwC projects cumulative lunar economy revenues of $94bn–$127bn over the 25 years to 2050.
  • Old Space, New Space: A Commercial Revolution in Innovation? — Patent data show the largest surge in space-related patenting occurred in the 1990s, alongside spectrum allocation, licensing regimes, and telecommunications and GPS demand, with incumbent aerospace firms accounting for most space patenting and entrants a growing minority share. The authors argue government's most consequential role lies in constructing appropriable markets rather than funding technology directly.
  • Elon Musk’s Starship Heavy Could Revolutionize Warfare — The Starship heavy-lift rocket would make it possible to pre-position conventional munitions in low Earth orbit, with heat shields and inertial guidance, that could be deorbited with little warning to strike anywhere on Earth within minutes. Such a system would allow thousands of simultaneous precise strikes without aircraft or personnel at risk, removing the need to first establish air superiority.

Tuesday, July 14, 2026

AI Summary. The surge of baby boomers, women, and immigrants entering the US labor force between 1960 and 1980 was difficult for the economy to absorb, and young workers' wages fell sharply after peaking in the early 1970s. The author argues those entrants kept occupying jobs and suppressing demand for new workers until retirement.

Steven Ruggles Proceedings of the National Academy of Sciences
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Accounting for both inflows and the overhang of previous labor market entrants, Ruggles predicts a labor shortage such that “Americans born in the 2020s might be the first cohort in a half century that earns significantly more than their parents did.”

How does a large influx of workers affect young workers' wages?

Core argument: Wages for young U.S. workers declined sharply after peaking in 1973, as the economy struggled to absorb the influx of workers entering the labor force between 1960 and 1980 from the baby-boom cohort, rising female participation, and increased immigration.

Figure 3A highlights the influx of workers that occurred between 1960 and 1980, as the large baby-boom cohort entered the labor force, female labor-force participation expanded, and immigration rose [see Figure 2 for a detailed breakdown]. It was difficult for the economy to absorb all the new workers, and wages for young people declined sharply after peaking in 1973. Figure 3A does not, however, provide a valid measure of labor-market competition because the baby boomers and newly employed women and immigrants did not suddenly vanish after they entered the labor force; they kept working and occupying jobs until they eventually retired decades later. The glut of workers entering the labor force in the 1970s would continue to stifle demand for new workers until their eventual exit from the labor force, a process that is still in progress. The index of employment competition shown in Figure 3B is [a better] measure of relative cohort size than 3A. It represents the cumulative net labor-market entries over the previous five decades as a % of the working-age population in the current decade. As shown in Figure 1C, we are already seeing signs of an uptick in the wages of young workers, and as the demographic shortage accelerates we may finally see real wages of the young exceed the levels of the early 1970s.

Takeaways by Macro Roundup® AI

  1. Wages for young U.S. workers declined sharply after peaking in 1973, as the economy struggled to absorb the influx of workers entering the labor force between 1960 and 1980 from the baby-boom cohort, rising female participation, and increased immigration.
  2. Decennial labor-force entries alone misstate labor-market competition, because baby boomers, newly employed women, and immigrants kept occupying jobs and stifling demand for new workers until their retirements, a process still in progress.
  3. An index of employment competition measuring cumulative net labor-market entries over the previous five decades as a percentage of the current decade's working-age population is offered as a better gauge of relative cohort size, with young workers' wages already showing an uptick.

Related Articles:

  • Baby Busts and Growth Booms: Demographic Change and the Macroeconomy — A 1pp lower birth rate 20 years earlier is associated with 22 log points higher output per worker 20 years later and 29 log points higher after 40 years, about 0.73pp faster annual growth. The authors find lower birth rates are also associated with more labor-saving patents, larger high-tech shares, and higher productivity growth.
  • Technology and the Baby Bust Paradox — Aging populations create structural incentives to automate, and the argument is that demographic change could become one of the strongest long-run drivers of artificial intelligence deployment. Technology-producing economies may benefit twice, offsetting their own labor shortages while exporting automation, robotics, and AI to other aging societies.
  • Can A Depopulating America Still Flourish? — US labor force participation among women aged 25-54 has reached all-time highs, exceeding its previous 1999 peak, yet remains over 4 points below Europe's level and nearly 6 points below Japan's. About 3.5m prime-age American women are neither working nor looking for work, without children at home or husbands, compared with roughly 7m such men.

AI Summary. The US consumer price index fell 0.4% from the prior month, driven by a decline in gasoline prices, while the measure excluding food and energy was flat, according to Bureau of Labor Statistics data. Annual gauges remained elevated, with headline prices up 3.5% and the core measure up 2.6%.

Mark Niquette Bloomberg
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US headline CPI declined in June for the first time in six years, falling 0.4% from May, led by the decline in gasoline prices; core was ~ unchanged. Headline and core CPI are up 3.5% and 2.6% y/y respectively. Real wages rose after 2 months of decline.

Did a monthly drop in consumer prices leave annual inflation elevated?

Core argument: The US consumer price index fell 0.4% from May, its first decline since 2020, dragged down by the biggest drop in gasoline prices since 2022, according to Bureau of Labor Statistics data.

The consumer price index fell 0.4% from May, dragged down by the biggest decline in gasoline prices since 2022, according to Bureau of Labor Statistics data. Excluding food and energy, the index was flat from the prior month. While the monthly inflation figures were tame, annual gauges continued to point to elevated inflation: The headline index was up 3.5% from a year earlier and the core measure was 2.6% higher. A separate report Tuesday combined the inflation figures with recent wage data. Thanks to the drop in gasoline prices, Americans saw real average hourly earnings rise 0.1% from a year earlier after declines in the prior two months.

Takeaways by Macro Roundup® AI

  1. The US consumer price index fell 0.4% from May, its first decline since 2020, dragged down by the biggest drop in gasoline prices since 2022, according to Bureau of Labor Statistics data.
  2. Core CPI, excluding food and energy, was flat from the prior month, while annual gauges remained elevated, with headline CPI up 3.5% and the core measure up 2.6% from a year earlier.
  3. Real average hourly earnings for Americans rose 0.1% from a year earlier, aided by the drop in gasoline prices, after declines in the prior two months.

Related Articles:

  • Inflation and Debt — Congressional Budget Office long-term projections show sustained primary deficits of 2% of GDP driving the debt-to-GDP ratio steadily higher, a path the agency itself labels unsustainable. Closing a 2% of GDP fiscal gap is economically straightforward for a growing country at peace, but inflation or default would not resolve the problem, since prospective deficits still require continued borrowing.
  • Fiscal Narratives for US Inflation — Fiscal theory attributes the deflation of the deep recession to a fall in real interest rates that lowered real interest costs on government debt, an effect that outweighed large deficits. The predicted deflation spiral and the hyperinflation forecast from quantitative easing both failed to materialize.
  • Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections — An analysis of U.S. counties estimates that where wages grew faster than prices, voters supported the incumbent party more, while counties with larger real wage losses than average shifted more toward the opposition. A one-standard-deviation larger real wage loss is associated with shifts of roughly 0.10 and 0.19 percentage points in vote share and margin.

AI Summary. China's trade surplus with the European Union reached a record, rising 27% year-on-year to $32.9bn in a single month, with its surplus with Germany more than doubling while falling 81% with France. Over the first half of the year, Chinese exports to the bloc rose 17% to $312.3bn while imports rose 9% to $135.6bn.

Bloomberg Staff Bloomberg
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China’s trade surplus with the European Union increased 27% y/y to $32.9B in June. China’s surplus with Germany more than doubled.

Is China's trade surplus with the European Union reaching record levels?

Core argument: China's trade surplus with the EU rose 27% from a year earlier to $32.9 billion in June, with exports to the bloc reaching a record, according to Chinese customs data.

China’s trade surplus with the European Union climbed to a fresh high, keeping the issue of growing imbalances high on the agenda as the bloc weighs new measures to shield local industries. With exports to the EU soaring to a record, China’s surplus with the bloc rose 27% from a year earlier to $32.9 billion in June, according to Chinese customs data released on Tuesday. The country’s surplus with Germany more than doubled year-on-year while plunging 81% with France. For the first half of the year, China imported $135.6 billion of goods from the EU, up 9% from a year earlier. Meanwhile its exports amounted to $312.3 billion during the period, a gain of 17%.

Takeaways by Macro Roundup® AI

  1. China's trade surplus with the EU rose 27% from a year earlier to $32.9 billion in June, with exports to the bloc reaching a record, according to Chinese customs data.
  2. China exported $312.3 billion of goods to the EU in the first half of the year, up 17%, while importing $135.6 billion from the bloc, up 9%.
  3. China's surplus with Germany more than doubled from a year earlier while its surplus with France fell 81%, as the EU weighs new measures to shield local industries.

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.
  • 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.
  • China Shock 2.0 The Cost Of Germany’s Complacency — An analysis published by Bloomberg attributes roughly 40% of Germany's shortfall in economic output to lost export markets, another 40% to higher energy prices, and the remaining 20% to weak domestic demand, bureaucracy and other factors. The author argues German politics overemphasizes bureaucracy while China's pressure on the country's industrial base erodes export demand.

AI Summary. Dubai-based port operator DP World is in talks to build a new multipurpose port and a container terminal on the United Arab Emirates' east coast at Fujairah, which would bypass the Strait of Hormuz and reduce reliance on its Jebel Ali hub. The project's structure and financing have yet to be finalized.

Nicolas Parasie, Andrew England and Alice Hancock Financial Times
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DP World is planning on building a new port on the UAE’s east coast, bypassing the Strait of Hormuz, within 18 months.

Can a new east coast port bypass the Strait of Hormuz?

Core argument: DP World is planning a new multipurpose port and a container terminal at Fujairah on the United Arab Emirates' east coast that would bypass the Strait of Hormuz and reduce Dubai's dependence on its flagship Jebel Ali hub.

DP World is planning to build a new port and a container terminal on the United Arab Emirates’ east coast that would reduce Dubai’s dependence on its flagship Jebel Ali hub and bypass the Strait of Hormuz. The Dubai-based port operator is in talks to develop a brand new multipurpose port in the coastal area of Fujairah and a new terminal at the existing harbour in the same emirate, people familiar with the matter said. DP World was now discussing a term sheet with government officials, with the new project’s structure and financing yet to be finalised, the people said. The new port could be completed as soon as within a year and a half, a senior company official said.

Takeaways by Macro Roundup® AI

  1. DP World is planning a new multipurpose port and a container terminal at Fujairah on the United Arab Emirates' east coast that would bypass the Strait of Hormuz and reduce Dubai's dependence on its flagship Jebel Ali hub.
  2. A senior DP World official said the new Fujairah port could be completed as soon as within a year and a half.
  3. DP World is discussing a term sheet with government officials, with the project's structure and financing yet to be finalised, according to people familiar with the matter.

Related Articles:

  • Disappearing Gulf Capital: The Iran War Risk Wall Street Isn’t Watching — Saudi Arabia has withdrawn large financial commitments including a $200m gift to New York's Metropolitan Opera and support for the LIV golf league, and no equally large sovereign capital pool—Japan, Norway, or Singapore—is positioned to replace Gulf funds. A pullback could push US artificial intelligence firms toward greater reliance on debt issuance.
  • 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.
  • U.S. Economy Less Vulnerable To Geopolitical Oil Price Shocks Than In The Past — 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.

AI Summary. The US has deployed Saronic Corsairs, 24-foot uncrewed speedboats built in Texas that travel more than 1,000 miles, carry payloads up to 1,000 pounds, and cost less than $1m each. Their maker, Saronic, raised $1.75bn at a $9.25bn valuation from investors including 8VC, Caffeinated Capital, and Andreessen Horowitz.

Shelby Holliday and Alistair MacDonald Wall Street Journal
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The US successfully used three drone boats to attack an Iranian submarine and ship maintenance facility. This is the American military’s first combat use of one-way sea attack drones, which have largely been pioneered by Ukraine.

Are low-cost uncrewed speedboats becoming a new naval weapon?

Core argument: The Saronic Corsair sea drones used in the attack on Iran are 24-foot speedboats that can travel more than 1,000 miles and carry payloads of up to 1,000 pounds, costing less than $1 million apiece.

The vessels deployed in [the] attack, known as Saronic Corsairs, are 24-foot-long speedboats that can travel more than 1,000 miles and carry payloads of up to 1,000 pounds. They arrived in the Middle East in late March after the war started, according to a U.S. official. The boats are made in Texas by Saronic, an American company co-founded by a former Navy SEAL. They cost less than $1 million apiece and are designed to carry out a range of missions, according to a company spokesperson. Saronic has risen fast in the defense-tech industry and is backed by prominent investors, including Joe Lonsdale’s 8VC, Caffeinated Capital and Andreessen Horowitz. Earlier this year, the company said it had raised $1.75 billion at a $9.25 billion valuation.

Takeaways by Macro Roundup® AI

  1. The Saronic Corsair sea drones used in the attack on Iran are 24-foot speedboats that can travel more than 1,000 miles and carry payloads of up to 1,000 pounds, costing less than $1 million apiece.
  2. The Corsairs arrived in the Middle East in late March after the war started, according to a U.S. official, and are made in Texas by Saronic, co-founded by a former Navy SEAL.
  3. Saronic said it had raised $1.75 billion at a $9.25 billion valuation, with backers including Joe Lonsdale's 8VC, Caffeinated Capital and Andreessen Horowitz.

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