Economics

The Centers for Medicare & Medicaid Services has proposed that Medicare Advantage plan revenues will remain flat going into 2027 at a moment when underlying medical costs, labor expenses, and pharmaceuticals continue to rise materially. What does this mean in practice? For beneficiaries: Over time, beneficiaries should expect less generous benefits, tighter utilization management, and narrower provider networks. Access may become more constrained—not necessarily through explicit benefit cuts, but through fewer participating provider groups and more selective contracting. The tradeoff between affordability and choice will become more acute. For brokers and distribution partners: Distribution costs in Medicare Advantage are largely fixed, particularly commissions and marketing infrastructure. As margins compress, plans will continue to reassess how (and how much) they pay for growth. This may include lower upfront commissions, greater reliance on retention-based compensation, or shifts toward more direct-to-consumer enrollment strategies. For provider groups: Provider organizations seeking rate increases will face a much tougher negotiating environment. With plan revenues constrained, upward pressure on provider rates becomes difficult to absorb. As a result, some provider groups may choose to exit Medicare Advantage entirely, while others will narrow participation to fewer plans. The result may be increased network fragmentation and heightened tension between plans and providers over risk, quality expectations, and total cost of care. For managed care company employees: Cost discipline will extend inward. Plans will be slower to hire, more selective about new investments, and may pursue workforce reductions. Expectations will shift toward higher productivity, flatter organizational structures, and doing more with fewer resources. For Investor-backed Medicare Advantage plans: The economics of growth will change. Longer payback periods, lower internal rates of return, and greater regulatory uncertainty will make Medicare Advantage investments less immediately attractive. Capital will still flow to the sector, but it will be more discriminating, favoring scale, operational excellence, and differentiated capabilities rather than growth at any cost. For small and regional health plans: Scale matters more than ever. Smaller plans will struggle to compete. Many may exit the market or seek partnerships, mergers, or acquisitions. Consolidation pressures are likely to intensify as fixed administrative and compliance costs consume a greater share of revenue. Time will tell whether the rate decisions outlined in the Advance Notice hold through the Final Rule. Regardless of the ultimate number, one thing is clear: Medicare Advantage is entering a period of transition. The era of easy growth is ending, and the next phase will be defined by tradeoffs—between generosity and sustainability, growth and discipline, innovation and affordability.

This visual helps explain 3 concepts that A LOT of people forget about solar☀️   Solar energy’s fuel (sunshine) is free and delivered daily.   Therefore, electricity from solar does not include the cost of each marginal unit of fuel. That makes sense to people.   But the full implications of an energy system built upon a zero-cost, abundant fuel source are often still dramatically underestimated.   There are three other kinds of savings that solar provides:    Infrastructure Savings – As shown in the graphic, the world spends billions of dollars every year extracting oil, gas, and coal and transporting to the places it will be burned. The infrastructure to mine, refine, and move these fuels from point A to point B, whether by boat, rail, or pipeline, requires regular maintenance and TONS of investment. With solar, the sun does it all for us, delivering usable photons every morning.   Predictability Savings – When you’re relying on a globally traded commodity to produce electricity, the final cost of each gigawatt can fluctuate with the current price of oil and coal. Market uncertainty can send the price of these commodities (and the final price for electricity) soaring on a whim. But it doesn’t need to be this way. Once a solar farm is installed, the cost of each unit of electricity is basically fixed. This helps utilities better predict their costs and that’s a huge benefit to consumers.   Energy Independence Savings – Because oil, gas, and coal rely on complex international supply chains and lots of global infrastructure, there is a lot more that can go wrong. Geopolitical shocks, natural disasters, port congestion, and accidents (remember the Suez Canal blockage?) can all impact the predictability and reliability of coal and gas generation. No one can embargo the sun or interrupt its delivery to us, so solar energy is fundamentally more local and more independent.   I think it’s important to explain these hidden savings when talking to naysayers because, while they may understand that free sunshine = free fuel, they may not understand just how much they’re paying for the infrastructure, uncertainty, and volatility of fossil fuels.

#Batteries have become so cheap that around-the-clock solar is becoming economically viable for the first time. And this isn't just theoretical, it’s based on real world data. In 2024 alone, average battery prices fell by 40% and signs are a similar fall is occurring in 2025. These cost reductions are being driven by: ➡️ The rapid scale up of assembly plants ➡️ Intense manufacturer competition ➡️ The continued decline of LFP battery cell prices But there’s more to it than just falling prices. Batteries are also getting better: ✅ Higher round-trip efficiency ✅ Longer usable lifetimes ✅ Projects becoming cheaper to finance as the technology de-risks 20 years is now the standard design life of the battery – a big shift from just a few years ago. Taken together, this changes the economics entirely. Pairing solar with enough batteries to keep the electricity flowing though the night is no longer a distant dream – it's an economic reality. At around just $76/MWh all in, dispatchable solar is already competitive with other forms of firm generation in many markets. This analysis focuses on markets outside of China and the United States, where competitive procurement of Chinese-manufactured equipment is reshaping global storage economics. This isn’t a silver bullet. Future power systems will still rely on a diversified mix, including wind, hydro where available, gas backup, potentially nuclear, interconnection and longer-duration storage. But cheap batteries fundamentally change the role solar can play. They turn it from a purely daytime resource into a genuine round-the-clock contributor and this has profound implications for power systems, investment decisions and energy security. Data and original chart is from Ember's latest report, link below. #energy #renewables #energytransition

As expected, the Fed cut rates by 25 basis points and announced an end to quantitative tightening—both steps toward further easing. However, the meeting revealed some notable divisions within the Federal Open Market Committee. One member voted against the rate cut, while another favored a larger, 50 basis point cut. This dissent was a bit unexpected. Chair Powell also highlighted strong differences of opinion about a potential December rate cut and discussed the “neutral rate”—the level at which the Fed is neither stimulating nor restraining the economy. Powell suggested a range between 3 and 4%, higher than the 3% median estimate from FOMC members. These factors led markets to pause and reassess the likelihood and pace of future rate cuts. While markets still anticipate a December cut, the path ahead may be shallower than previously expected. Both stock and bond markets reacted with caution. For investors, this complexity is a sign that the Fed is weighing risks carefully—balancing the dangers of being too easy or too tough in today’s environment.  

In the last five years, MicroStrategy has effectively converted itself from a software company to Bitcoin SPAC, and its success at driving its market cap upwards has led some to argue that other companies would be well served following that model and redirecting their cash holdings into bitcoin. I disagree, and not because I have a point of view on bitcoin (I do.. but it is not relevant). It is not a good substitute for cash (which is held as a shock absorber), it steps on and obscures your business narrative, managers are terrible traders (of bitcoin or any other investment) and it opens the door to self-dealing and worse. Put simply, if you are a shareholder in a company with a large cash balance, and you think bitcoin is the place to be for the future, you are better served asking for the cash to be returned to you (in dividends and buybacks) and doing It yourself. There are four exceptions to this general rule - a company with a bitcoin savant in change (MicroStrategy), companies with bitcoin businesses (PayPal and Coinbase), companies in countries with failed currencies and companies with failed businesses that have become meme stocks (AMC, Gamestop). Even in these companies, you need governance, disclosure and accounting guardrails in place, to prevent abuse.

In Ghana, Nigeria, and Burkina Faso, women in rural cooperatives produce some of the world’s finest shea butter- by hand, in conditions many global consumers will never see. Locally, it’s sold raw for $1 to $2 per kilogram. That same shea butter, once exported, repackaged, and labeled “organic” or “artisanal,” can sell in the U.S. or Europe for $30 to $50 or more. The difference? Branding. Packaging. Storytelling. Access to global markets. It’s not just shea butter. It’s coffee, cocoa, hibiscus, moringa, baobab oil- Africa exports raw, and imports wealth back in the form of marked-up goods. Meanwhile, the women who do the hardest work in the value chain often remain in poverty. This isn’t just an economic issue. It’s about power and narrative. The current system rewards ownership of the story, not just the substance. So what needs to change? 🔹 Investing in African-owned brands that can go beyond raw exports 🔹 Building infrastructure for local manufacturing and distribution 🔹 Creating access to retail markets, both on the continent and abroad 🔹 Shifting from “supplier” to brand owner, from “producer” to value creator Africa doesn’t need saving. It needs more control over its own value chains, and support for the people, especially women, who are the backbone of its raw material economy. Let’s stop asking why global brands profit from African goods and start asking what it takes to build our own. Image cred: @tanziehq #Africa #RawEconomy #ValueChain #Entrepreneurship #OwnTheNarrative

Chanel gets into the recycling business with launch of new company.. ♻️ In a surprising move, the French luxury brand launched NEVOLD. The new company will focus on turning leftover fabrics, unsold clothes & old leather into new materials. 🚚 Fashion waste is a HUGE (!) issue. The industry generates around 92 mio tonnes of textile waste annually and luxury brands contribute significantly with billions of dollars in unsold inventory. Nevold, meaning "never old", will be Chanel's B2B play to future-proof their supply chain & promote circularity. It now unites 3 specialist firms that the mega brand has been acquiring since 2019: 1) L'Atelier des Matières: offers recycling & upcycling services for luxury & premium brands 2) FILATURES DU PARC: a spinning mill specialized in recycled yarns 3) Authentic Material: a leather recycling company who breaks down leather into pellets for reuse 🚀 The long-term goal is to produce & sell premium recycled input, not only to Chanel's own studios, but also to external (luxury) brands and sectors like hospitality & sportswear. And the timing is right! 🇪🇺 From 1st of Jan 2025 on, every EU member state must collect textiles separately, a first step towards "Extended Producer Responsibility" fees that will shift disposal costs onto the brands. Imho, companies with in-house recycling capabilities will gain an edge.. 📈 Other luxury groups are pursuing similar strategies: > LVMH launched "LVMH Circularity", which to focus on recycling & managing unsold inventory/production waste. > Kering targets a 40% reduction in environmental footprint by end of this year and aims for half of its materials to align with circular economy principles. ♟ Nevold also fits into Chanel’s practice of buying key suppliers (from embroiderer Lesage to milliner Maison Michel) to lock in scarce skills & materials. ➡️ As regulations tighten & resources become scarcer, the brands that can turn yesterday’s inventory into tomorrow’s fabric will set the pace for the next growth cycle in luxury.

Saturday rant... this article summarises the main reason why I obsess over clean data to be reported instead of relying on often made-up dodgy offset schemes. TL;DR – Climeworks are a really well-known name in carbon removal and are being exposed for reportedly emitting more CO₂ than they've captured. A customer who paid them monthly for three years has found out that in reality no carbon had been removed. What's even worse though is that the Climeworks figures show just over 1,000 tonnes captured… against more than 1,700 tonnes emitted in a single year of operation. This isn’t a tinpot startup, it’s a heavily backed alleged "leader" in direct air capture. But, this shows that these charlatans can't be allowed to hide from accountability. And it's not just Climeworks. Microsoft are one of the biggest corporate buyers of carbon offsets and they also came under fire for funding a $200 million rainforest protection project in Brazil that failed to deliver. The scheme was riddled with issues like deforestation being displaced elsewhere ("leakage"), and questions about how permanent the carbon savings really were. Meanwhile, Microsoft’s own emissions have gone up over the last three years by more than 20%. So this isn’t a niche problem. It’s sadly endemic... It’s yet another stunningly obvious reason why we shouldn’t treat offsets (of any flavour) as a substitute for real reductions. Too often it's just game-playing by execs to support vaguely net-zero promises in their corporate brochures. The only credible way forward is to measure actual emissions, drive them down through better design, smarter engineering, and holding execs actually accountable (mess with their pay). Conclusion - where possible, you should keep away from dodgy creative carbon accounting and treat offsets with a healthy dose of scepticism and your last resort. https://lnkd.in/eJk3uEJB

President Trump's announcement that steel and aluminum tariffs will rise to 50% this week is terrible news for U.S. manufacturing. The reason is simple: steel mills and primary aluminum plants employ a fraction of the people that are employed in downstream industries that use steel and aluminum. One chart below created from the 2022 Economic Census (https://lnkd.in/gmSA3E8F) - you can't access higher frequency data for aluminum employment from the Current Employment Statistics survey. Thoughts: •The left two columns are payrolls at steel mills (NAICS 33111) and primary aluminum (NAICS 331313). Together, these industries employ somewhere between 80-90k people. •The three rightmost columns show payrolls in downstream industries: fabricated metals (NAICS 332), machinery (NAICS 333), and transportation equipment (NACS 336). Those three industries alone account for over 4 million workers employed. •Why do I say this is negative news? Simple: domestic producers will raise their prices of steel and aluminum, which will increase the cost structures of downstream users. We have ample evidence from numerous economics papers that upstream protectionary tariffs reduce total manufacturing jobs by impacting downstream employment. Two examples: Cox (2025): https://lnkd.in/d6CeCaqA Barattieri & Cacciatore (2023): https://lnkd.in/gWgxQjtY Implication: raising steel and aluminum tariffs to 50% is, simply put, horrible economic policy. Domestic producers will raise their prices for these metals, which will inflate cost structures for tens of thousands of plants than employ over 4 million workers (compared with just 80-90k in the protected industries that make steel and primary aluminum). This makes exports of goods containing steel and aluminum less competitive and may be the final straw that encourages EU retaliation. Remember: Canada is our largest source for imported steel and especially aluminum, so arguing this is for national security just doesn't make sense. #supplychain #shipsandshipping #economics #markets #manufacturing #freight

📢 New analysis on the leaked EU Omnibus Proposal – What will be the planetary price of simplification? Can Europe combine sustainability and competitiveness? Big changes are certainly coming to the EU’s sustainability reporting landscape. A leaked draft of the European Commission’s Omnibus Proposal suggests major rollbacks in the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation. 💡 To help navigate these changes, our put together a comparison table—let us know if it’s useful! Here are some highlights of what’s being proposed: 🔹 𝗖𝗦𝗥𝗗 𝘁𝗵𝗿𝗲𝘀𝗵𝗼𝗹𝗱 𝗿𝗮𝗶𝘀𝗲𝗱 – Only companies with 1,000+ employees and €450M turnover may need to comply (previously 250 employees, €40M). This scopes out 85% of firms previously covered. 🔹 𝗦𝗲𝗰𝘁𝗼𝗿-𝘀𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝘀𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝘀 𝘀𝗰𝗿𝗮𝗽𝗽𝗲𝗱 – Industry-specific ESG reporting rules may be permanently shelved. 🔹 𝗗𝘂𝗲 𝗱𝗶𝗹𝗶𝗴𝗲𝗻𝗰𝗲 𝘄𝗲𝗮𝗸𝗲𝗻𝗲𝗱 – Companies only need to assess direct suppliers, not the full supply chain. 🔹 𝗖𝗶𝘃𝗶𝗹 𝗹𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗿𝗲𝗺𝗼𝘃𝗲𝗱 – Under CSDDD, firms won’t face legal consequences for failing to meet sustainability obligations. 🔹 𝗧𝗮𝘅𝗼𝗻𝗼𝗺𝘆 𝗿𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴 𝗺𝗮𝘆 𝗴𝗼 𝘃𝗼𝗹𝘂𝗻𝘁𝗮𝗿𝘆 (not directly mentioned in the leak) – Instead of mandatory reporting, firms could opt-in, aligning with corporate lobbying efforts. ⚖️ I am wondering about if this is simplification or just plain deregulation. In addition, what will the effects be of a watered-down EU Green Deal for the bloc's sustainability leadership and for firms that have already invested in reporting? How do you see the balance between competitiveness and sustainability? Can we reduce red tape and still protect the planet? Drop your thoughts below! 👇 #CSRD #CSDDD #EU #Sustainability #ESG #SustainabilityReporting #ESGRegulation #Climate #Finance #CorporateResponsibility