Edward Conard

Top Ten New York Times Bestselling Author

  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “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
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…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
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences 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
  • “…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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Monday, September 21, 2026

AI Summary. Estimated sustainable government net debt limits across 25 OECD countries average 234% of GDP under historical interest-rate and growth assumptions (221% for the US) and 214% under current rates (186% for the US). If interest rates rise systematically with debt, the model yields no solution for the US, UK, France, Italy, Greece, and Japan.

Mark Warshawsky American Enterprise Institute
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Warshawsky calculates the US has a sustainable net debt limit, “the lowest level of debt at which a country can no longer service its sovereign debt and must effectively default,” of 186% of GDP, which he forecasts will be reached in ~15 years under current policy and economic conditions.

How high can government debt rise before it becomes unsustainable?

Core argument: Sustainable net debt limits across the US and 24 other OECD countries average 234% of GDP under historical interest rate–growth differentials and 221% for the US, falling to 214% on average and 186% for the US under current, higher interest rates and growth.

Using historical, current, and dynamic interest rate-to-economic growth differentials, countries’ sustainable debt limits are calculated on a net of central bank holdings of government debt basis. Sustainable net debt limits average 234% of GDP for these countries assuming historical rates and economic growth (221% for the US), 214% assuming (higher) current interest rates and economic growth (186% for the US). If, however, interest rates were to rise systematically with debt according to conservative assumptions, there is no model solution for France, Greece, Japan, Italy, the UK, and the US, given their current high debt levels; the average sustainable limit is 178% for the other countries. A reasonable conclusion to draw for the US is that the fiscal path under current policy and trends with rising interest rates is not sustainable in the short to intermediate term. A major fiscal consolidation package will be needed soon, as interest rates rise, unless significantly higher inflation or capital controls will result.

Takeaways by Macro Roundup® AI

  1. Sustainable net debt limits across the US and 24 other OECD countries average 234% of GDP under historical interest rate–growth differentials and 221% for the US, falling to 214% on average and 186% for the US under current, higher interest rates and growth.
  2. If interest rates rise systematically with debt under conservative assumptions, the model yields no solution for France, Greece, Japan, Italy, the UK, and the US given their current high debt levels, while the average limit for the remaining countries is 178%.
  3. A reasonable conclusion is that the US fiscal path under current policy and trends with rising interest rates is not sustainable in the short to intermediate term, and a major fiscal consolidation package will be needed soon unless significantly higher inflation or capital controls result.

Related Articles:

  • Soaring Bond Yields, Gaping Deficits and Towering Debts: What Could Go Wrong? — An analysis of 22 rich countries estimates that if each refinanced its entire debt at current five-year bond yields, Britain would need the largest primary surplus to stabilize its debt-to-GDP ratio, about 1.5%, followed by Italy at 1.4%, France at 1.2% and America at 1%.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — 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.
  • 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.

AI Summary. The authors estimate that more than half of the rise in the top 1% income share since 1985 — 5.8 of 10.5 percentage points — flowed through pass-through businesses, counting roughly 3m wealthy private business owners with average net worth near $25m running law firms, dealerships, and medical practices.

Torsten Sløk Apollo
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More than half the increase in the top 1% income share since 1985 flowed through pass-through businesses to ~ 3mm private business owners with a mean net worth of ~$25mm.

Did most of the top 1% income gain come from private businesses?

Core argument: Owen Zidar and Eric Zwick find that 5.8 of the 10.5 percentage-point rise in the U.S. top 1% income share since 1985 flowed through pass-through businesses, more than half of the increase.

The income that lifted America's top 1% did not come mainly from tech or Wall Street, according to Owen Zidar and Eric Zwick. More than half of the rise in the top 1% income share since 1985, 5.8 of 10.5 percentage points, flowed through pass-through businesses. Zidar and Zwick, counted roughly 3 million wealthy private business owners, with average net worth near $25 million, running law firms, car dealerships, medical practices, commercial contractors and regional restaurant chains, the kind of businesses that make their owners wealthy and well known in their own communities without ever making them nationally famous.

Takeaways by Macro Roundup® AI

  1. Owen Zidar and Eric Zwick find that 5.8 of the 10.5 percentage-point rise in the U.S. top 1% income share since 1985 flowed through pass-through businesses, more than half of the increase.
  2. Zidar and Zwick count roughly 3 million wealthy private business owners with average net worth near $25 million, running law firms, car dealerships, medical practices, commercial contractors and regional restaurant chains.
  3. The income that lifted America’s top 1% did not come mainly from tech or Wall Street, according to Zidar and Zwick, but from businesses whose owners are well known locally without becoming nationally famous.

Related Articles:

  • What’s Missing in the Fed’s Data about Ultrarich Portfolios — The Federal Reserve's Distribution of Financial Accounts defines "private business" narrowly as proprietor's equity in noncorporate, nonfinancial businesses, excluding S-corporations, other private corporations, and private equity and hedge fund partnerships, which are lumped into "corporate equities." The Survey of Consumer Finances instead shows private business is roughly 45–50% of top 0.1% wealth.
  • They’re Rich but Not Famous—and They’re Suddenly Everywhere — An analysis of Federal Reserve data estimates about 430,000 U.S. households are worth $30m or more, including roughly 74,000 worth at least $100m, with growth in the number of very rich households outpacing overall population growth over recent decades. Nearly 72% of the top 0.1%'s wealth consists of corporate equities, mutual fund shares, and private businesses.
  • Capitalists in the Twenty-First Century — Most income at the top of the US distribution is non-wage income, primarily profits from closely-held, mid-market firms in skill-intensive industries owned by working-age individuals. The authors find private business profit falls by three-quarters after an owner retires or dies prematurely, indicating most top earners are "working rich" deriving income from human capital.

AI Summary. The cost of hiring the largest crude oil tankers from the Persian Gulf to Asia has risen 12-fold in months to a record $1.1m a day, reflecting the danger of crossing the Strait of Hormuz. Rates on routes far from the Middle East have also climbed 400–500%.

Javier Blas Bloomberg
Date Posted:

The cost of hiring a VLCC from the Gulf to Asia has risen to $1.1mm a day, up from ~$100,000 at the start of the year. Costs on other routes not directly impacted by the US-Iran war, such as the Gulf of Mexico to Asia, have also surged 400–500% y/y.

Are soaring oil tanker rates driving the next inflation shock?

Core argument: Hiring a Very Large Crude Carrier from the Persian Gulf to Asia has risen 12-fold in a few months to a record $1.1 million a day, against the $100,000 a day shipowners earlier this year considered a superb price.

The cost of hiring the largest tankers, Very Large Crude Carriers (VLCC), from the Persian Gulf to Asia — a benchmark route — has risen 12-fold in just a few months to a record high of $1.1 million a day. Earlier this year, most shipowners would have considered $100,000 a day a superb price and $50,000 a good one. The $1-million-a-day price tag reflects the danger of crossing the Hormuz waterway and the fact that few shipowners are willing to take the risk. But costs elsewhere, even far from the Middle East, have also ballooned. The route from the Gulf of Mexico to Asia is about $338,000 a day, up 400% from a year ago; from West Africa to China stands at about $486,000 a day, an increase of nearly 500%.

Takeaways by Macro Roundup® AI

  1. Hiring a Very Large Crude Carrier from the Persian Gulf to Asia has risen 12-fold in a few months to a record $1.1 million a day, against the $100,000 a day shipowners earlier this year considered a superb price.
  2. The $1-million-a-day rate reflects the danger of crossing the Hormuz waterway and the fact that few shipowners are willing to take the risk.
  3. Tanker rates far from the Middle East have also ballooned, with the Gulf of Mexico to Asia route at about $338,000 a day, up 400% from a year earlier, and West Africa to China at about $486,000 a day, up nearly 500%.

Related Articles:

  • 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.
  • Goldman Says Gulf Oil Exports at Two-Thirds of Pre-War Level — Goldman Sachs estimates Persian Gulf crude and oil product exports have recovered to about 15–16m barrels a day, roughly two-thirds of pre-war levels and above a trough of 5–6m barrels a day, limiting the Iran war's impact on global crude prices. Transits through the Strait of Hormuz are likely close to US officials' estimates of 8–10m barrels a day.
  • Fighting Words: The Energy Transition in 2026 — Estimates based on primary energy overstate how much electricity is needed to replace oil in passenger cars, since electric motors convert 80%-90% of electricity into motion versus about 18% for gasoline cars. Measuring useful final energy net of waste heat avoids this "primary energy fallacy": the US consumed 45 exajoules of useful final energy versus 95 exajoules of primary energy.

AI Summary. China's urban unemployment rate for 16- to 24-year-olds excluding students reached 18.9%, the highest since the statistics agency revised its methodology to exclude students. A record influx of university graduates is entering a job market weighed down by weak domestic demand and growing adoption of artificial intelligence.

Xinyi Wu South China Morning Post
Date Posted:

China’s youth unemployment (16–24) climbed to 18.9% in August, a level which it had previously hit last summer. 12.7 million new university graduates entered the workforce this summer, ~4% more than last year.

Is a record wave of graduates pushing China's youth unemployment higher?

Core argument: China’s urban unemployment rate for 16–24-year-olds excluding students rose to 18.9% in August from 17.9% in July, according to the National Bureau of Statistics.

China’s urban youth unemployment rose last month, as a record influx of university graduates struggles to find work in a job market weighed down by weak domestic demand and the growing adoption of artificial intelligence. The jobless rate for those aged 16 to 24, excluding students, rose to 18.9% in August from 17.9% in July, according to data released by the National Bureau of Statistics. This figure, as well as the identical number from August last year, represents the highest reading since Beijing revised its calculation methodology to exclude students in 2023, following a peak of 21.3% under the old rubric reported in June of that year.

Takeaways by Macro Roundup® AI

  1. China’s urban unemployment rate for 16–24-year-olds excluding students rose to 18.9% in August from 17.9% in July, according to the National Bureau of Statistics.
  2. A record influx of university graduates is struggling to find work in a Chinese job market weighed down by weak domestic demand and the growing adoption of artificial intelligence.
  3. The 18.9% reading, matching August of the previous year, is the highest since Beijing revised its methodology in 2023 to exclude students, after a 21.3% peak under the old measure in June of that year.

Related Articles:

  • The Year of the Trojan Fire Horse: China’s Imbalanced Economy and Unrelenting Mercantilism — About 30% of Chinese industrial companies are unprofitable "zombies" kept alive by subsidies far larger than those elsewhere, rather than exiting amid falling industrial producer prices. Countries with large increases in manufactured imports from China also saw slowdowns in domestic manufacturing, including declining manufacturing shares of output across most of Southeast Asia.
  • Social Media in China Is Getting Really Dark — Posts across Chinese social media platforms including RedNote, Douyin and Weibo describe low wages, scarce jobs, falling property values and fear about the future, with some users turning hardship into dark humor or mocking official propaganda. The volume of pessimistic and sarcastic posts is striking given that China's internet censorship has grown more ruthless over the past decade.
  • China’s Great Jobs Squeeze — China's "flexible employment" — a loosely defined official category spanning part-time work, self-employment, and new work forms — is estimated at 320mn people, up from 280mn a year earlier, with more than 53mn working as food delivery or ridesharing drivers. Analysts argue this reflects broad labour-market weakness, as low aggregate demand weakens workers' bargaining power.

AI Summary. China's Communist Party accused two former top military leaders, Zhang Youxia and Liu Zhenli, of forming cliques, being disloyal to the party, and corruption involving "exceptionally large" sums as it moved to expel them. The Center for Strategic and International Studies counted 36 generals and lieutenant generals officially purged.

Edward White Financial Times
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The CCP formally moved to expel two generals who had been the last two professional officers on China’s Central Military Commission and were purged at the start of the year.

Is China purging its top military leaders for disloyalty?

Core argument: China’s Communist Party accused former Central Military Commission first vice-chair Zhang Youxia and fellow former CMC member Liu Zhenli of forming “cliques and factions” and being “disloyal and dishonest to the party” as it moved to expel them.

China’s Communist Party accused two of Xi Jinping’s former top generals of disloyalty as it moved to expel them from its ranks on Monday, underlining the political nature of Xi’s purge of the military. Zhang Youxia, the former first vice-chair of the Central Military Commission and fellow former CMC member Liu Zhenli, “formed cliques and factions, and were disloyal and dishonest to the ⁠party,” official media said on Monday. The Center for Strategic and International Studies said in February that 36 generals and lieutenant generals had been officially purged since 2022, while a further 65 officers were missing or potentially purged.

Takeaways by Macro Roundup® AI

  1. China’s Communist Party accused former Central Military Commission first vice-chair Zhang Youxia and fellow former CMC member Liu Zhenli of forming “cliques and factions” and being “disloyal and dishonest to the party” as it moved to expel them.
  2. State news agency Xinhua and Chinese state television reported that Zhang Youxia and Liu Zhenli were involved in corruption involving “exceptionally large” sums.
  3. The Center for Strategic and International Studies said 36 generals and lieutenant generals had been officially purged since 2022, with a further 65 officers missing or potentially purged.

Related Articles:

  • Xi the Destroyer — China's leadership overhauling the senior ranks of its military signals relative comfort with the country's external environment, including cross-strait dynamics, as US commitments to Taiwan appear uncertain and Taiwanese politics shift in Beijing's favor. The author argues the purge shows Xi using cross-strait calm to prepare the military for possible conflict over Taiwan.
  • The Sinister Disappearance Of China’s Bosses — China's liuzhi detention system operates alongside normal policing, requiring no court approval and denying detainees lawyers, with windowless cells, constant lighting and round-the-clock supervision. Stock-exchange filings show 39 executives at listed companies disappearing into the system by the end of September, exceeding the prior year's record.
  • China’s Military Says Top General Undermined Xi Jinping’s Authority — China's military newspaper has accused two top generals — the vice chair of the Central Military Commission and the People's Liberation Army's chief of staff — of trampling the "chairman responsibility system" that gives China's leader supreme decision-making power over the armed forces, alongside corruption charges.

Tuesday, September 22, 2026

AI Summary. Negative free cash flow is fine, and desirable, when returns on invested capital exceed the cost of capital. Consensus forecasts imply combined free cash flow at Amazon, Alphabet, Microsoft, Meta, and Oracle swings from over $170bn to about -$265bn before recovering to just over $500bn, with returns on incremental capital staying above the cost of capital.

Michael Mauboussin and Dan Callahan Morgan Stanley
Date Posted:

Mauboussin and Callahan expect the hyperscalers’ combined free cash flow to fall from $170B in 2024 to negative $265B in 2027, before recovering. They argue that this is desirable so long as returns on the firms’ capex exceed their cost of capital of ~8%.

Is negative free cash flow acceptable when returns exceed capital costs?

Core argument: The combined trailing-four-quarter free cash flow of Amazon, Alphabet, Microsoft, Meta Platforms, and Oracle is estimated to fall from more than $170 billion in the first quarter of 2024 to a trough near -$265 billion in the third quarter of 2027, then recover to just over $500 billion in 2030.

[The Present Value of] FCF determines long-term shareholder value. Negative FCF is desirable if returns on investment exceed the cost of capital. Strong demand for GenAI has compelled Amazon, Alphabet, Microsoft, Meta Platforms, and Oracle to accelerate infrastructure spending. The combined trailing-four-quarter FCF for the hyperscalers is estimated to decline from more than $170 billion in Q1 2024 to a trough of about -$265 billion in Q3 2027, then recover to just over $500 billion in 2030. The paths vary substantially. We assessed return on the marginal dollar invested via return on incremental invested capital (ROIIC). Oracle is expected to show the largest improvement and Meta the largest decline from peak to trough. All ROIICs from Q1 2025 on are above the cost of capital — confirming that negative FCF is acceptable provided ROIC remains above the cost of capital.

Takeaways by Macro Roundup® AI

  1. The combined trailing-four-quarter free cash flow of Amazon, Alphabet, Microsoft, Meta Platforms, and Oracle is estimated to fall from more than $170 billion in the first quarter of 2024 to a trough near -$265 billion in the third quarter of 2027, then recover to just over $500 billion in 2030.
  2. Strong demand for generative AI has compelled the hyperscalers to accelerate infrastructure spending, and negative free cash flow is fine, even desirable, provided a company can finance its operations and returns on investment exceed the cost of capital.
  3. Return on incremental invested capital for the hyperscalers is above the cost of capital from the first quarter of 2025 onward, with Oracle expected to show the largest improvement and Meta the largest peak-to-trough decline.

Related Articles:

  • Competition for Capital — Capital spending by the highest-rated corporate borrowers has grown more than 35% year-over-year for ten straight quarters, with artificial-intelligence-related issuers accounting for a quarter of US investment-grade gross supply and 44% of US convertible bond issuance. Higher capital costs and greater capital intensity have pushed dominant capital-spending hyperscalers' forward price-earnings ratios near the market average.
  • 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.
  • The Summer I Turned Pretty — A warning sign in a boom cycle is when companies closest to final demand weaken while capital spending beneficiaries keep thriving, as when telecom operators' shares rolled over while communications equipment stocks kept rising. Semiconductor stock prices and free cash flow are soaring while large cloud providers' shares stagnate and their free cash flow plummets.

AI Summary. An analysis estimates that at identical debt and primary balance levels, predicted sovereign credit ratings differ widely, with Germany at 11, Ireland at 9, and the Baltic states at 2. Estimated debt tolerance thresholds range from 272% of output for Singapore and 248% for Germany to 161% for the US, 135% for France, and 89% for Italy.

Olivier Blanchard, Daniel Leigh, and Prachi Mishra International Monetary Fund
Date Posted:

The sovereign ratings of advanced economies differ widely across countries after controlling for debt and primary balances. Sovereign ratings put far more weight on debt levels relative to projected primary balances than the authors’ model predicts.

How much does debt tolerance vary across countries at equal debt levels?

Core argument: Illustrative “debt tolerance” levels — the debt ratio above which a country is predicted to lose a rating of 9 with p=50%, given zero forecast primary balances and the 2020 time effect — reach 272% for Singapore and 248% for Germany.

Germany has an expected rating of 11, while, at the same level of debt and primary balances, Ireland has a predicted rating of 9, and the Baltic countries have a predicted rating of 2. Even given debt, and the forecast evolution of primary balances over the next five years, investors may question what will happen over a longer horizon. Uncertainty about interest rates and primary balances can vary, and the composition of the investors’ pool can vary. Yet, the differences are striking. Figure 7 shows a “debt tolerance” level - the level of debt above which a country is predicted to lose its rating of 9 with p= 50% (given zero forecast primary balances and the year 2020 time effect). At one end, the highest illustrative debt ratio tolerance levels are for Singapore (272%) and Germany (248%). In the middle are the US (161%), France (135%), and Italy 89%. At the low end are the Baltics, with ratios <0.

Takeaways by Macro Roundup® AI

  1. Illustrative “debt tolerance” levels — the debt ratio above which a country is predicted to lose a rating of 9 with p=50%, given zero forecast primary balances and the 2020 time effect — reach 272% for Singapore and 248% for Germany.
  2. The United States has an illustrative debt tolerance ratio of 161%, compared with 135% for France and 89% for Italy, while the Baltic states’ ratios fall below zero.
  3. At the same levels of debt and primary balances, Germany has an expected rating of 11, Ireland a predicted rating of 9, and the Baltic countries a predicted rating of 2.

Related Articles:

AI Summary. China has spent a record $158.8bn importing more than 1,000 tonnes of gold over an eight-month span, up from $96.5bn for 886 tonnes across the prior full year, with its central bank and local investors buying bullion amid geopolitical tensions and weak returns on domestic assets.

William Sandlund Financial Times
Date Posted:

China has spent $158.8B importing more than 1,000 tonnes of gold in the first 8 months of the year, exceeding the 886 tonnes imported in 2025.

Is China buying record amounts of imported gold?

Core argument: China spent a record $158.8bn importing more than 1,000 tonnes of gold in the first eight months of the year, compared with $96.5bn for 886 tonnes across all of 2025.

China has spent a record sum importing more than 1,000 tonnes of gold this year as the central bank and local investors pour cash into bullion amid rising geopolitical tensions abroad and poor returns on local assets. The world’s second-largest economy spent $158.8bn on gold in the first eight months of the year. That compared with spending of $96.5bn for all of 2025 on 886 tonnes of gold. The jump comes after China reined in gold purchases last year during an intense rally that sent bullion prices soaring from about $2,625 a troy ounce at the start of 2025 to a peak of $5,595 in January. China is also the world’s biggest producer of bullion, with the total for last year standing at 384 tonnes, according to the World Gold Council.

Takeaways by Macro Roundup® AI

  1. China spent a record $158.8bn importing more than 1,000 tonnes of gold in the first eight months of the year, compared with $96.5bn for 886 tonnes across all of 2025.
  2. China’s central bank and local investors are pouring cash into bullion amid rising geopolitical tensions abroad and poor returns on local assets.
  3. The import surge follows China reining in gold purchases last year during a rally that lifted bullion from about $2,625 a troy ounce at the start of 2025 to a peak of $5,595 in January.

Related Articles:

  • De-reservification, Not De-dollarization — Much of the official-sector inflow into the U.S. now comes from investors who are not traditional reserve managers, and those flows remain heavily tilted toward the dollar and toward risk assets rather than Treasuries. The author argues this shift in the global investor base helps explain why Treasuries trade at a discount while the dollar retains a premium.
  • Financial Innovation and the International Monetary System — The dollar accounts for 59% of cross-border payments messaged through SWIFT, far ahead of the euro's 14%, and its share of foreign exchange turnover has risen gradually to about 90% of the 200% total since 2010. Official holdings of U.S. Treasuries have leveled off near $4tn while foreign private holdings rose from $1tn to over $5tn.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — Two market-based measures suggest the safety premium investors pay to hold US Treasuries has compressed toward zero and at times reversed: the spread between top-rated corporate bonds and Treasuries after stripping out default risk, and the gap between currency-hedged foreign G10 government yields and Treasury yields at the same maturity, where longer-maturity comparisons now favor foreign bonds.

AI Summary. Selling U.S. stocks does not escape dollar risk if proceeds sit in dollar-denominated bank deposits, money market funds, or bonds, and shifting abroad introduces other risks, including currencies also subject to debasement. The author argues the U.S. advantages that drew heavy institutional allocations — free markets, rule of law, innovation, strong capital markets — largely remain intact.

Howard Marks Oaktree Capital
Date Posted:

Howard Marks warns that, while the fiscal outlook will likely drive dollar depreciation, moving out of US assets introduces other risks. He cautions American investors against abandoning domestic investments at scale.

Does selling U.S. stocks let investors escape dollar risk?

Core argument: Selling U.S. stocks for banks, money market funds, or bonds denominated in dollars does not escape the risk under discussion, according to the author.

If you sell your U.S. stocks, where will you put your money? A bank? A money market fund? Bonds? If they’re denominated in dollars, you haven’t escaped the risk under discussion. Moving into non-dollar or non-U.S. assets introduces other risks. Many companies elsewhere in the developed world have poorer growth prospects than leading U.S. companies and less scale (and thus fewer economies of scale). Most institutional investors have been heavily allocated to the U.S. to date, with great success, and the reasons for that – the free-market system, pro-business climate, economic vitality, spirit of innovation and adaptability, technological and managerial expertise, rule of law, moderate regulation, excellent higher education, strong capital markets – largely remain intact. No other country possesses these things to the same extent. Taking money out of the U.S. entails risks that could easily render it unsuccessful, especially if it’s done to avoid a problem whose reckoning may be so far off.

Takeaways by Macro Roundup® AI

  1. Selling U.S. stocks for banks, money market funds, or bonds denominated in dollars does not escape the risk under discussion, according to the author.
  2. Many developed-market companies outside the U.S. have poorer growth prospects and less scale than leading U.S. firms and often operate in more heavily regulated, less business-friendly jurisdictions, while emerging-market growth potential is more uncertain to realize.
  3. The reasons institutional investors have allocated heavily to the U.S. — free markets, pro-business climate, innovation, rule of law, moderate regulation, higher education, and strong capital markets — largely remain intact, in the author’s view.

Related Articles:

  • World’s Unusually High Dollar Exposure Risks Fueling Selloff — Pension funds and insurers in Canada, Denmark, Australia, Taiwan, Japan and Finland hedged just 41% of their foreign-currency exposure, the lowest share since at least 2015. With some of the largest holders of US assets carrying little protection against a weaker dollar, the currency is at risk of steeper declines if sentiment turns.
  • 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.
  • The Global Balance Sheet 2026: Imbalance And Divergence — Only 20% of global household wealth growth came from net new investment in real assets such as machinery, housing, infrastructure and intellectual property, down from a 30% average over the prior quarter century. Nearly 60% came from asset prices rising faster than inflation and negative net worth in other sectors.

AI Summary. China accounted for 40% of global container exports on a three-month rolling average, up 2.5 percentage points in nine months, according to the European Union Chamber of Commerce in China. The chamber's president argues this shows global trade imbalances are growing faster than expected.

Joe Leahy Financial Times
Date Posted:

China’s trade surplus is on track to surpass its 2025 surplus of $1.2T. China accounted for 40% of global container exports on a rolling average over the past 3 months, a 2.5pp increase over the previous 9 months.

Are trade imbalances growing faster than expected as China's export share rises?

Core argument: China accounted for 40% of global container exports on a rolling three-month average, according to Jens Eskelund, president of the European Union Chamber of Commerce in China.

China accounted for 40% of global container exports on a rolling average over the past three months, according to the head of the European business chamber in the country, underscoring how the world’s second-largest economy is relying on trade to power economic growth. That figure also represented a 2.5 percentage point increase in just nine months, suggesting that global trade imbalances were growing more quickly than expected, said Jens Eskelund, president of the European Union Chamber of Commerce in China. “I had thought that it was perhaps only towards 2030 that China would get up close to 40%,” said Eskelund. “That of course also means that the imbalances are growing very, very considerably.”

Takeaways by Macro Roundup® AI

  1. China accounted for 40% of global container exports on a rolling three-month average, according to Jens Eskelund, president of the European Union Chamber of Commerce in China.
  2. China’s share of global container exports rose 2.5 percentage points in nine months, which Eskelund said suggests global trade imbalances are growing more quickly than expected.
  3. Eskelund said he had expected China to approach a 40% share of global container exports only toward 2030, and that the imbalances are growing very considerably.

Related Articles:

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