I’ve trawled through hundreds of articles, listened to hours of podcasts, written copious analytical notes, and then selected the best pieces for you. Welcome to the inaugural Macro Hive Weekly Brief.
First to stand out was a podcast on the use of biological processes in technology with an important section on the use of viruses as a way to replace cobalt and lithium in batteries. The use of these technologies could be revolutionary as certain commodities (like cobalt) may no longer be needed in production processes. Plus, as a nascent field, countries that lagged in AI/big data could become leaders in this new frontier (watch China).
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Policymakers in various parts of the world are responding to climate change (cancer), so we need to start identifying shifts in environmental policy as well as the more usual monetary, fiscal, and credit policy changes. Some sectors like the auto sector have already been hit, but others like insurance, construction, and utilities are likely to follow. (Bilal, June 3) Euro-area Too Dependent On World Trade (2 min read)
The big problem for the Euro-area is that it is geared heavily to international trade. And in a world of escalating trade war rhetoric, this means it will always lose out. (Bilal, May 31)
Asia Power Index 2019 Lowy Institute’s new deep dive report shows the United States remains the pre-eminent power but has become a net underachiever in 2019. A 10-point lead over China in 2018 has narrowed to 8.6 points in 2019. Their more detailed report some excellent data on topics such as the number of supercomputers per country.
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The answer is no. As the author writes “Japan shows that all of mainstream theory and policy is wrong. It is the best example of a country that always chooses the anti-MMT policy response to every ill that ails the country.” Trump Is Slowing US Economic Growth
Harvard Prof Robert Barro finds tax cuts added 1% to growth, but regulations are not decreasing, the trade war is hurting the US and nothing has happened on infrastructure. All bark but no bite? What does the yield curve tell us about growth?
Excellent Bank of England blog finds that, historically, the yield curve slopes contain some predictive power in forecasting the level of economic growth in the US and the UK. However, over time, the slope has gradually lost some of their predictive power. Korea, the “Germany” of Northeast Asia…
I like this note by Brad Setser as shines a light on a development many of us have missed. He argues that Korea, like Germany, has lots of fiscal space, but isn’t using it. He also observes that the surplus of China’s neighbors has soared over the past ten years, and now is substantially larger than it was prior to the global crisis. Will the EU become an empire?
If the EU is trying to offset the power of China and the US, then it is acting like an empire. This leaves Britain becoming an anti-imperialist bastion. China Cannot Weaponize Its U.S. Treasury Bonds
The ever reliable observer of Chinese affairs, Michael Pettis, argues that dumping US bonds as a weapon in the trade war could backfire on China. It may simply improve the US trade balance or it could end inflating domestic bubbles as capital is kept in China. Why Tiny Magnets Could Be China’s Destructive New Trade-War Weapon
Nearly two-thirds of U.S. permanent magnet imports come from China, and magnets are central in many production processes. Therefore, if China restricts sales of magnets, it could harm the US manufacturing sector. Around 5m tonnes of lithium deposits found in southwest China
The find could help China become less reliant on lithium imports as its electric vehicle industry grows rapidly. Currently, Bolivia has world’s largest reserves of lithium is Bolivia at 21 million tonnes. Germany’s military manoeuvres
Germany is considering a break from military non-confrontation. Officials are contemplating sending a warship through the Taiwan Strait — joining the US and France in challenging Beijing’s claims to what the West regards as an international waterway. Four charts show how much China’s economy has changed in 30 years
Some great charts. In 1989, Shenzhen was a small town with barely any income generation – today it’s a mega-city with a local GDP of $324bn (= Denmark or Colombia or Malaysia)
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