It doesn’t pay to speak the truth in China. Gao Shanwen, the chief economist at Chinese state-owned financial firm SDIC Securities, was forbidden from speaking publicly after he questioned China’s official statistics at a public forum in Washington DC in December.
“We do not know the true number of China’s real growth figure,” Gao said on December 12 at the forum hosted by the Peterson Institute for International Economics. “My own speculation is that in the past two to three years, the real [gross domestic product growth] number on average might be around 2 percent even though the official number is close to 5 percent.” Source Dextor Roberts Trade War
Back to the Office is speeding up. Regional REIT have just released details from their annual survey of regional businesses. The survey is the largest of its kind from the largest owner of regional office assets and is based on the Company’s tenants in 112 buildings across the office portfolio.
Office active occupation is now ahead of the pre-pandemic level as companies encourage staff to return to the office. Current active office occupation has increased to 75.3% from 71.4% (February 2024), above the pre-pandemic active occupancy, estimated at 70%. Employee occupation remains high at an average of 4 days per week (February 2024: 4 days per week).
Best not to be too poor in the UK vs Europe. After adjusting incomes for the local cost of living, the 10th-percentile German household is £2,300 richer than its British counterpart, a 34% wider gap than previously understood. Source: Resolution Foundation
Billionaires. Part 1. The Billionaire Rally. Bloomberg reports that theworld’s 500 wealthiest people got vastly richer in 2024, with Elon Musk, Mark Zuckerberg and Jensen Huang leading the group of billionaires to a new milestone: A combined $10 trillion net worth. “An indomitable rally in US technology stocks played a key role in turbocharging the trio’s wealth and the fortunes of Larry Ellison, Jeff Bezos, Michael Dell and Google co-founders Larry Page and Sergey Brin. The eight tech titans alone gained more than $600 billion this year, 43% of the $1.5 trillion increase among the 500 wealthiest people tracked by the Bloomberg Billionaires Index”. Source: Dylan Sloan and Jack Witzig in Bloomberg
Billionaires, Part 2. In the Trump cabinet. The table below from Eurizon SLJ Capital summarises the Cabinet of Trump 2.0 nominees and the Department of Government Efficiency (DOGE). It shows their personal net worth and the number of workers their companies employ. Source: Eurizon.
Equal weight indices. Equal-weighted stocks outperformed market cap-weighted stocks in 8/10 decades. They were also more volatile but generated a higher Sharpe ratio. Equal weight funds may appeal to investors concerned about the concentration level of the S&P 500. Source Finominal
Romantic Partners. From social psychologist Rob Henderson. For all relationships (serious and casual), women preferred a romantic partner who was more intelligent than themselves, whereas men only desired a partner who was more intelligent for serious relationships. For women, a mate’s intelligence appears to be a nonnegotiable psychological characteristic. (source).
Sociopaths, who comprise only 3-4% of the male population and less than 1% of the female population, account for over 50% of all crimes in the U.S. (source).
According to Bloomberg, China had a $1 trillion trade surplus in 2024, up 21 percent yearly. That said, the bilateral surplus with the US fell to $361 billion—the lowest in three years—though it was well above pre-pandemic levels. The surplus with ASEAN countries reached a record level.
“The surplus jumped to an unprecedented $992 billion in 2024, according to a statement from the customs administration on Monday, 21% higher than the previous year. That was the result of record exports but also the continued weakness of imports, which have been dragged down by sluggish domestic consumption and falling commodity prices. China now sells more goods to more than 165 countries than it buys from them, according to Bloomberg calculations based on government data. The surplus with the US fell to $361 billion last year, the lowest in three years, but that was still well above the pre-pandemic levels. The surplus with the 10 Southeast Asian nations in ASEAN soared to a record, and that with the European Union rose to almost $250 billion.”
The neuroscientist and commentator (and leading new atheist) has a fascinating account of his once close but now terrible relationship with Elon Musk. It’s a valuable insight into how Elon thinks and behaves: the context is that Harris and Musk have massively fallen out over Covid.
“So how did we fall out? Let this be a cautionary tale for any of Elon’s friends who might be tempted to tell the great man something he doesn’t want to hear:
1. When the SARS-CoV-2 virus first invaded our lives in March of 2020, Elon began tweeting in ways that I feared would harm his reputation. I also worried that his tweets might exacerbate the coming public-health emergency. Italy had already fallen off a cliff, and Elon shared the following opinion with his tens of millions of fans :
Hey, brother— I really think you need to walk back your coronavirus tweet. I know there’s a way to parse it that makes sense (“panic” is always dumb), but I fear that’s not the way most people are reading it. You have an enormous platform, and much of the world looks to you as an authority on all things technical. Coronavirus is a very big deal, and if we don’t get our act together, we’re going to look just like Italy very soon. If you want to turn some engineers loose on the problem, now would be a good time for a breakthrough in the production of ventilators...
2. Elon’s response was, I believe, the first discordant note ever struck in our friendship:
Sam, you of all people should not be concerned about this.
He included a link to a page on the CDC website, indicating that Covid was not even among the top 100 causes of death in the United States. This was a patently silly point to make in the first days of a pandemic.
We continued exchanging texts for at least two hours. If I hadn’t known that I was communicating with Elon Musk, I would have thought I was debating someone who lacked any understanding of basic scientific and mathematical concepts, like exponential curves.
3. Elon and I didn’t converge on a common view of epidemiology over the course of those two hours, but we hit upon a fun compromise: A wager. Elon bet me $1 million dollars (to be given to charity) against a bottle of fancy tequila ($1000) that we wouldn’t see as many as 35,000 cases of Covid in the United States (cases, not deaths). The terms of the bet reflected what was, in his estimation, the near certainty (1000 to 1) that he was right. Having already heard credible estimates that there could be 1 million deaths from Covid in the U.S. over the next 12-18 months (these estimates proved fairly accurate), I thought the terms of the bet ridiculous—and quite unfair to Elon. I offered to spot him two orders of magnitude: I was confident that we’d soon have 3.5 million cases of Covid in the U.S. Elon accused me of having lost my mind and insisted that we stick with a ceiling of 35,000.
4. We communicated sporadically by text over the next couple of weeks, while the number of reported cases grew. Ominously, Elon dismissed the next batch of data reported by the CDC as merely presumptive—while confirmed cases of Covid, on his account, remained elusive.
5. A few weeks later, when the CDC website finally reported 35,000 deaths from Covid in the U.S. and 600,000 cases, I sent Elon the following text:
Is (35,000 deaths + 600,000 cases) > 35,000 cases?
6. This text appears to have ended our friendship. Elon never responded, and it was not long before he began maligning me on Twitter for a variety of imaginary offenses. For my part, I eventually started complaining about the startling erosion of his integrity on my podcast, without providing any detail about what had transpired between us.
7. At the end of 2022, I abandoned Twitter/X altogether, having recognized the poisonous effect that it had on my life—but also, in large part, because of what I saw it doing to Elon. I’ve been away from the platform for over two years, and yet Elon still attacks me. Occasionally a friend will tell me that I’m trending there, and the reasons for this are never good. As recently as this week, Elon repeated a defamatory charge about my being a “hypocrite” for writing a book in defense of honesty and then encouraging people to lie to keep Donald Trump out of the White House. Not only have I never advocated lying to defeat Trump (despite what that misleading clip from the Triggernometry podcast might suggest to naive viewers), I’ve taken great pains to defend Trump from the most damaging lie ever told about him. Elon knows this, because we communicated about the offending clip when it first appeared on Twitter/X. However, he simply does not care that he is defaming a former friend to hundreds of millions of people—many of whom are mentally unstable. On this occasion, he even tagged the incoming president of the United States.
All of this remains socially and professionally awkward, because Elon and I still have many friends in common. Which suggests the terms of another wager that I would happily make, if such a thing were possible—and I would accept 1000 to 1 odds in Elon’s favor”.
I constantly double back to the theme of contracting and ageing populations in the developed (and developing) world. I think it’s the single most important story of the next few decades and will weigh heavily on most economies.
There’s plenty of research on these big trends, not least from the McKinsey Global Institute, which poses the question of whether policymakers are aware of the consequences. The report from the McKinsey Global Institute finds that falling fertility rates are propelling major economies toward population collapse in this century, the first wave hitting advanced economies and China but later engulfing younger regions within one or two generations. It concludes that the current set-up of our economies cannot support existing income and retirement norms, so countries will need to raise fertility rates to avert depopulation, or something must give.
Falling fertility rates are propelling major economies toward population collapse in this century. Two-thirds of humanity lives in countries with fertility below the replacement rate of 2.1 children per family. By 2100, populations in some major economies will fall by 20 to 50 percent, based on UN projections.
Age structures are inverting—from pyramids to obelisks—as the number of older people grows and the number of younger people shrinks. The first wave of this demographic shift is hitting advanced economies and China, where the share of people of working age will fall to 59 percent in 2050, from 67 percent today. Later waves will engulf younger regions within one or two generations. Sub-Saharan Africa is the only exception.
Consumers and workers will be older and increasingly in the developing world. Seniors will account for one-quarter of global consumption by 2050, double their share in 1997. Developing countries will provide a growing share of global labor supply and of consumption, making their productivity and prosperity vital for global growth.
The current calculus of economies cannot support existing income and retirement norms—something must give. In first wave countries across advanced economies and China, GDP per capita growth could slow by 0.4 percent annually on average from 2023 to 2050, and up to 0.8 percent in some countries, unless productivity growth increases by two to four times or people work one to five hours more per week. Retirement systems might need to channel as much as 50 percent of labor income to fund a 1.5-time increase in the gap between the aggregate consumption and income of seniors. Later wave countries, take note.
In confronting the consequences of demographic change, societies enter uncharted waters. Absent action, younger people will inherit lower economic growth and shoulder the cost of more retirees, while the traditional flow of wealth between generations erodes. Long-standing work practices and the social contract must change. More fundamentally, countries will need to raise fertility rates to avert depopulation—a societal shift without precedent in modern history.
Going single and its consequences
Sticking with the demographic theme, the FT’s excellent John Burn-Murdoch reckons that the recent declines in fertility are due more to a decline in marriage and cohabitation rather than couples’ decisions to have smaller families. “The central demographic story of modern times is the rising rates of singledom.”
“Most of the fall in birth rates is coming not from the decisions made by couples, but from a marked fall in the number of couples. Had US rates of marriage and cohabitation remained constant over the past decade, America’s total fertility rate would be higher today than it was then. The central demographic story of modern times is not just declining rates of childbearing but rising rates of singledom: a much more fundamental shift in the nature of modern societies. The drop in relationship formation is steepest among the poorest. The trend is global. From the US, Finland, and South Korea to Turkey, Tunisia and Thailand, falling birth rates are increasingly downstream of a relationship recession among young adults. Baby bonuses put the cart before the horse when a growing share of people are without a partner. Even in parts of Sub-Saharan Africa, similar trends may be under way.”
The Male Flight from College
Pivoting slightly from the demographic theme into sexual differences + education The Atlantic’s Helen Lewis highlights a great note from feminist Celeste Davis about college enrolment and young men.
White flight is a term that describes how white people move out of neighborhoods when more people of color move in. White flight is especially common when minority populations become the majority. That neighborhood then declines in value.
Male flight describes a similar phenomenon when large numbers of females enter a profession, group, hobby or industry—the men leave. That industry is then devalued.
[…] A sociologist studying gender in veterinary schools, Dr. Anne Lincoln says that in an attempt to describe this drastic drop in male enrollment, many keep pointing to financial reasons like the debt-to-income ratio or the high cost of schooling.
But Lincoln’s research found that “men and women are equally affected by tuition and salaries.”
Her research shows that the reason fewer men are enrolling in veterinary school boils down to one factor: the number of women in the classroom.
According to Helen Lewis :
[This is a ] Super-interesting piece about how male college enrollment has risen much more slowly than female college enrollment over the last few decades—suggesting that the problem is not only high fees or the lack of a career bonus from attending, or even school practices that turn off boys, but something simpler and harder to deal with. Straight men don’t like being in female-dominated environments.
That chimes with something that Laura McInerney has often said to me about the discussion about “not having enough women in STEM subjects”, which is that we are looking at this the wrong way. (I’m paraphrasing here, so get mad at me for the generalisations, not her.) Maybe it’s not that girls don’t want to study science and tech, per se, but that boys don’t want to study anything else. They have “bunched” in STEM.
The author of this piece, Celeste Davis, has a controversial and intriguing proposal: “If you actually wanted a solution for boys to want to go to college, bring back male-only colleges. Watch college suddenly become really popular for boys again.”
One of the most significant challenges facing modern governments is spending money wisely. According to one of my favourite political scientists, Francis Fukuyama, this is incredibly challenging in the defence space. He focuses on how gold plating defence procurement has been a disaster in the US - sound familiar to British readers??
This gold-plating problem has been recognized for years in defense procurement. The F-16 fighter, which over the decades has proven to be one of the most useful aircraft in the inventories of many countries, was initially sidelined because it was too simple. The Navy didn’t like the fact that it had only one engine, and the Air Force wanted a larger, heavier airframe for the range of roles it envisioned. It required special lobbying by General Chuck Boyd and his “fight Mafia” to convince Congress to support a lightweight plane like the F-16.
Something similar happens when civilian agencies procure software. They act as if they are buying a single big product that will be good for at least the next decade or two. The list of requirements grows into a large, complex contract. The actual RFP and bidding process are regulated by the Federal Acquisition Regulations, a document spanning hundreds of pages of detailed requirements that mandate things like seeking bids from female- and minority-owned businesses and the like. The contractor finally selected is empowered in turn to produce the product with relatively little ongoing input from the procuring agency, and the software package is delivered after a lot of time has passed.
The problem with this approach is of course that technology moves way too fast, and many of the original requirements are already outdated by the time the product is delivered. Moreover, the contractor focuses on fulfilling the contract rather than interacting with eventual users to modify requirements on the fly. Government agencies that have bought big software packages under the old procurement model have run into huge problems. These include the FBI, the IRS, the State Department, and of course the biggest debacle of the past generation, the Department of Health and Human Services procurement of healthcare.gov under Obamacare.
Companies in the private sector buy large software packages as well, but the process is often very different. Software is usually introduced in alpha or beta forms where users can begin interacting with it, and only after a period of feedback is version 1.0 ready. That version, however, is expected to have bugs and require fixes, fixes that occur continuously over the succeeding months and years based on immediate user feedback. The software designer is more of a service provider that maintains the software rather than a builder who produces a single product.
Part of the problem is lack of technical capacity at the procuring agency. The government needs to be able to interact on a continuous basis with users of their services, and know enough about the technical design to be able to recommend changes to the software provider. This in turn is related to a different problem, which is the separation of implementation from policymaking, and the significantly higher prestige attached to the latter activity.
People who go into government want to be policymakers. They want to be the ones who roll out the new healthcare benefit or passport system or small business subsidy. Since many officials are short-term political appointees, they aren’t going to be around to see how their innovations are implemented. Public policy programs in the United States reinforce this mindset; they train young people interested in going into government to be policy makers, not policy implementers. The latter is a lesser activity that can be hived off to a contractor.
I saw a vivid example of this problem recently. A student of mine who had gotten an MBA from Stanford went to work for the Small Business Administration. She found that the SBA’s website was not particularly user-friendly, so she took it on herself to fix it since she had a decent tech background. Her supervisor told her that fixing websites was the job of contractors, and that she would never get promoted doing such menial work.
The truth of the matter is that implementation is part of policymaking; if a policy can’t be properly implemented, it shouldn’t be rolled out in the first place since it will simply contribute to the narrative of ineffective and incompetent government.
The Defense Department and the Armed Services need to change their procurement model as well and move away from thinking about big once-in-a-decade or once-in-a-generation technology acquisitions. If the U.S. military is going to move towards small, inexpensive autonomous weapons, it needs to open up the bidding process to the thousands of startups that can contribute. It needs to behave more like the Ukrainians. The latter have developed a domestic drone industry on the basis of continuous feedback between operators in the field and the people who write the software and design the platforms. In the current war with Russia, software gets updated every few days, or sometimes within hours of an engagement.
According to Ailsa Craig and Marek Poszepczynski, portfolio managers at International Biotechnology Trust (IBT), the current obesity drug boom is just beginning!
“Obesity has long been a significant global health challenge, particularly in the western world, due to the implications it can have for associated conditions such as heart disease, diabetes and certain cancers.
Until recently, treatments have focused on lifestyle changes and pharmacological interventions like appetite suppressants and fat absorption inhibitors. However, these early drugs often had limited efficacy and significant side effects, leading to a persistent demand for more effective solutions.
Pioneering progress
In the last few years, a new class of drugs known as GLP-1 receptor agonists have shown considerable success in the fight against obesity. These therapies have demonstrated remarkable efficacy and safety profiles, revolutionising the anti-obesity medication (AOM) landscape.
These innovative therapies target crucial receptors in the gastrointestinal tract, effectively making patients feel less hungry. Novo Nordisk and Eli Lilly have led the market with Semaglutide (marketed as Ozempic for diabetes and Wegovy for obesity) and Tirzepatide (marketed as Mounjaro for diabetes and Zepbound for obesity) respectively. These drugs not only improve glycaemic control but also promote substantial weight loss, offering a dual benefit for patients with obesity and type 2 diabetes.
Both drugs are administered via weekly injections, making them costly and onerous to deliver to patients. Furthermore, concerns are growing over the longer-term outcomes for patients after they have ceased treatment. Initially, patients tend to lose a mix of fat and muscle but, post-medication, many revert to prior habits and find that their regained weight is predominantly fat.
Market expectations for these treatments have been extremely high, with sustained demand growth anticipated. According to recent market analysis, the market was valued at approximately $3.2 billion in 2023 and is projected to reach $11.3 billion by 2028, growing at a compound annual growth rate (CAGR) of 28.9% during this period.
Nevertheless, investors should be mindful of the risks posed by continued supply constraints and uncertainty lingers over who should ultimately bear the cost of these treatments. Meanwhile, these high expectations are already reflected in the valuations of the major players, which represents an additional layer of risk should their growth falter. Indeed, recent share price weakness from both businesses may imply that future expectations are already starting to moderate.
Furthermore, existing market leadership should not be taken for granted in an area of biotechnology that is currently seeing a significant amount of innovation.
The next generation
The future of obesity treatment looks highly promising, with the development of next generation therapies. There are currently 79 clinical stage programmes being carried out across at least 41 unique biochemical mechanisms, and these numbers continue to rise.
Among the most exciting new developments are combination therapies that activate multiple pathways, such as GLP-1 combined with gastric inhibitory polypeptide (GIP) receptors, amylin, glucagon or leptin. These combinations aim to boost efficacy, improve patient outcomes and offer more comprehensive weight management solutions. Additionally, new targets such as amylin, mitochondrial uncoupling and cannabinoid-1 (CB1) reverse antagonists are being explored, promising to deliver innovative new approaches to more effective long-term obesity management.
Innovative delivery methods, including oral formulations and longer-acting injectables, are also in development, aiming to improve patient adherence and convenience. The focus on personalised medicine, leveraging genetic and metabolic profiling, is expected to tailor treatments to individual needs, further enhancing their effectiveness.
Capturing the opportunity
Rather than backing individual treatments, we are adopting a lower risk approach by taking smaller positions across a range of the most promising assets. This is an approach we have successfully taken over the years, in other therapeutic areas at a similar stage of maturity.
Investors should also be prepared for further merger and acquisition (M&A) activity in this part of the biotech universe. Several large pharmaceutical companies do not yet have an obesity franchise and may look to acquire exposure, given the anticipated growth and continued investor enthusiasm for this market. Existing players may also look to bolster their positions, as reflected in Novo Nordisk’s acquisition of Inversago Pharma. This deal highlights the strategic importance of emerging obesity therapies that target novel mechanisms, as well as the inherent value in innovative solutions.
For investors, the obesity drug market presents significant opportunities. The sector is poised for continued growth, driven by rising obesity rates and the increasing demand for effective treatments. The biotech industry continues to invest in innovation, with advances in drug development, novel mechanisms of action and improved delivery methods set to transform the AOM landscape in the years ahead.”
Bird flu: should we worry?
It’s out there (bird flu) and getting worse. What’s the chance that the current challenge could get really bad? Cue the super forecasters tracked by an outfit called the Swift Centre. They asked their credentialed super forecasters to predict whether the H5N1 bird flu virus, currently circulating in birds and some non-human mammal species, will lead to a major human health concern or economic damage to the livestock industry.
• The forecasters thought that it was unlikely, but not vanishingly so (4.5%), that significant human-to-human spread of the virus (minimum 10,000 confirmed cases) would happen this year
• They thought it more plausible (but still unlikely – 14.5%) that the World Health Organisation would declare H5N1 a “Public Health Emergency of Imminent Concern”, because sometimes the WHO declares PHEICs over diseases that have relatively few human cases
• They foresaw essentially two main futures when it comes to the number of deaths: either the disease will not start spreading significantly among humans, in which case there will be very few, or it will. Conditional on 10,000 human cases, they thought there could well be millions of deaths
• Most forecasters thought that whether or not there are 10,000 human cases, mass poultry vaccination programmes or dairy cattle culling in the US and UK were unlikely, both because of the economic costs of doing so and because they would likely be ineffective at preventing the spread of the virus
Bottom line ? The chance of many human to human cases remains low but slight increase due to spreading in mammals
