Economics Newsletter – December 5, 2022

New UWES articles, stock contest finalists, CPI data, and more!

Written By: Benjamin Pipicelli and Noel Tom Paul

Canada’s Economy at a Glance



Economics Society News, Events, and Articles 

– Check out our latest original articles – Should Workers in the App-Based Gig Economy be Regulated as Employees? by Matthew Azevedo and …Terribly Profitable: The Economics of War Profiteering in the Russia-Ukraine Conflict by Isaac Brown!

– Studying for exams? Come to our Econ Study Lounges every Monday from 6-8pm in HH2034 Project Cube! Feel free to stop by!

– Check out how you’re doing in our stock contest in the updated rankings below.

– Want to join econ soc? Keep an eye on our Instagram for executive applications

– Our stock contest for Winter 2022 is complete. Congrats to our winners!

  • 1st: Srishti__.s – $50
  • 2nd: euan.lawrence – $40
  • 3rd: ccompsci – $20

See the full rankings and results below:

News and Noteworthy


Oil: Why Goldman Sachs is still bullish despite headwinds

Goldman Sachs remains bullish on its 2023 call on the global oil benchmark as prices test new year-to-date lows. Goldman Strategists see Brent crude averaging US$110 per barrel next year, in part due to supply overshadowing headwinds for demand. Oil prices recently danced around the positive territory as investors responded to news of street protests in China over government efforts to halt the spread of COVID-19 amid the recent resurgence of case counts. At the same time, investors await the final details of the G7 nations’ price ceiling on Russian Oil which will be announced on December 5. Read more.


Analysts cautious on big bank earnings amid recessionary headwinds

Analysts are cautious about the earnings forecasts for the Big Six banks as recession risks loom and a combination of factors working against the country’s major lenders. At least 2 analysts have revised the earnings expectations for the fourth quarter, pointing towards volatile markets the need to set money aside for loan defaults, and increasing fund costs among other headwinds. CIBC analyst Paul Holden and his team slashed earnings estimates across the sector by about 1.5% on average for the fourth quarter and by 1.6% for the full-year 2023. Read more.


Crypto lender BlockFi files for bankruptcy protection, caught in FTX fallout

Cryptocurrency lender BlockFi is filing for Chapter 11 bankruptcy protection as the fallout from the collapse of crypto exchange FTX spreads outwards. In the recent filing, BlockFi claimed more than 100,000 creditors, with BlockFi’s liabilities ranging from $1 billion to $10 billion. Cryptocurrencies wherein retreat Monday in what has already been a disastrous year. Many currencies, including Bitcoin, have plunged almost 70% in 2022 to below $16,000 per unit. BlockFi says bankruptcy protection will provide stability and company restructuring to recover all obligations owed by its counterparties. Read more.


US revises up last quarter’s economic growth to 2.9% rate

Despite high-interest rates and chronic inflation, the U.S. economy grew at a 2.9% annual rate from July through September, the government said Wednesday in a healthy upgrade from its initial estimate. Last quarter’s rise in the U.S. gross domestic product — the economy’s total output of goods and services — followed two straight quarters of contraction. That decline in output had raised fears that the economy might have slipped into a recession in the first half of the year despite a still-robust job market and steady consumer spending. Read more.


China could reopen in March, but zero-Covid has shaken confidence in supply chains, economist says

While Chinese authorities could gradually unwind restrictions in March, zero-Covid policies are starting to hurt global confidence in the country’s industrial supply chains, said Li Daokui, Mansfield Freeman professor of economics at China’s Tsinghua University. In the short term, supply chains will be largely unaffected since factories are still operating even if consumption is lower due to lockdowns, Li, a former advisor to the People’s Bank of China, said in an extended interview with CNBC’s “Squawk Box Asia” on Wednesday. “However, the long run impact might be already shaped, that is, the international economic community is thinking twice about the stability of supply chains in China,” he said. “People used to think that China is the most solid, the most secure, most stable supply source. Now they are thinking to rebuild their own supply backup chains in their own countries or regions. So that is the situation now.” Read more.


How Canada’s banks are preparing for an economic downturn

From boosting cash on hand to cutting staff, Canadian banks are taking a variety of strategies to prepare for a widely expected economic slowdown in the year ahead. Banks outlined some of their approaches in their fourth-quarter results this week, which saw executives strike notes of caution because of the variety of economic pressures, while still committing to a push for growth. “As we look ahead to 2023, global economic growth is expected to be slower as central banks continue with their monetary policy tightening to tame inflation,” said CIBC chief executive Victor Dodig on an earnings call. Read more.


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