AI And Publishing: Some Semi-Informed Comments

It is safe to say that technologies lumped under “Artificial Intelligence” (AI) will have an effect on the publishing and writing process, but I believe that much of this will be continuation of trends that have been in place for more than a decade. Since I largely ignore developments in AI, so these comments are agnostic with respect to specific technologies. As a bit of a spoiler, one place where AI is taking over an economic niche is in the production of scam electronic books (e-books).

Secular Employment Shifts

The Payrolls Employment Report in the United States released earlier this week was stronger than expected (although there were downward revisions of 2024-2025 levels). There were some attempts to downplay the strength by arguing that job growth was concentrated in areas associated with caring for old and sick people.

Fed Balance Sheet Unwinding

I ran across this article by David Beckworth that discusses the issues with the reduction of the Fed’s balance sheet (called “Quantitative Tightening” or QT). The issue raised is not one that I spent much time thinking about: the previous expansion of the Fed’s balance sheet (“Quantitative Easing” or QE) has led to behavioural changes in banks (and their clients) as well as regulators.

"Sell The Dollar": Think Price, Not Flows

The “sell the dollar” trade is coming up in the chatter I see. I think that economists love making international trade and finance more complicated than it should be, but that is partly a side effect of needing to publish new articles on a continuous basis. My simplistic input on this topic is that people need to stop thinking about “global rebalancing” in terms of flows, price changes can do the job.

My guess is that the focus on flows draws from the experience of developing markets, with countries with less developed financial sectors. If a handful of rich people directly control most of the assets in a country, it is a lot easier to generate catastrophic herding behaviour. When financial assets are in the hands of professional investors, there is a more diffuse response, as many professional investors are liability matchers that have the capacity to go against the herd.

Liberation Day 2.0

The latest crisis of the weekend was the announced tariffs on selected European countries for their decision to base a tripwire force in Greenland. Since Canada was not initially in the tripwire force, we were spared.

The most likely scenario appears to be that Trump is distracted by something else, and this trade war largely fizzles out — although last year’s trade deals may be victims. This appears to be a “I’m taking my ball and going home!” act by someone who is mad at an unexpected loss. However, everybody in Europe cottoned on to what the Canadian Liberals figured out last year (and the Conservatives most emphatically did not) — running against Trump on a nationalistic platform is an easy “I win” button for popularity. European retaliation could goad Trump, but given how he treated the U.K. since last year, rolling over is not a good strategy.

Debt/GDP Math Refresher

One of the joys about writing about bond markets is that I always get questions in real life about whatever crisis du jour is being spread about bond markets. The thing to keep in mind: if you are a developed country with a freely-floating currency that you control, it takes a concentrated dose of stupidity to create crisis in your government bond market. Unfortunately, concentrated doses of stupidity are in great supply in the 2020s.

However, if we avoid stupidity, do we need to worry about debt levels? The answer is: one needs to worry about inflation created by fiscal and other policies (looking at you, tariff policy), but the debt-to-GDP ratio will take care of itself.

Coup In Venezuela

The White House sponsored a coup in Venezuela, with some loss of life. They captured President Maduro, leaving Vice President Delcy Rodriguez as the interim leader.

I have zero expertise in Venezuelan politics, but that might put me in the same boat as the brain trust in the White House that engineered the coup. I just want to comment on why it is unlikely to matter much for the oil market.