Economics Newsletter – October 7, 2022

New UWES articles, a stock contest update, CPI data, and more!

Written By: Benjamin Pipicelli and Noel Tom Paul

Canada’s Economy at a Glance

Economics Society News, Events, and Articles 

– Econ study lounges have begun! Every Monday from 6-8pm in HH2034 Project Cube! Feel free to stop by!

– The Stock Competition Sign-Up has closed! Check out how you’re doing in our stock contest in the updated rankings below. Keep an eye on our Instagram for updates @uweconsoc

– Check out our latest original article – Oligopolies and their Domino Effect by Lameena Chowdhury!

News and Noteworthy

OPEC will cut production by 2 million barrels a day, likely sending gas and oil prices back up

After their discussion on Wednesday, October 5th, OPEC will cut oil output by 2 million barrels a day, according to delegates. This is the first time OPEC has done this in over 2 years. The significant reduction signals that the global economy is slowing fast in the face of tightening monetary policy. Brent crude oil soared above US$125 a barrel following Russia’s invasion of Ukraine. Since then, other major producers have undergone significant hits like Saudi Arabia, United Arab Emirates, and Russia amongst others. Read more.

Supply chain shifts signal reglobalization

The COVID-19 pandemic has exposed the fragility of global supply chains, which remains one of the top economic challenges and threats facing the world. Companies are now recognizing the need to build redundancies into their supply lines, which will impact industries, companies, and countries. As such, supply chains are shifting, but not deglobalizing. Further opportunities are emerging from global shifts in production. Read more.

Why is Credit Suisse Under Pressure?

Will Credit Suisse become the next Lehman Brothers? Vulnerability from credit default swaps? Only time will tell. After European markets have digested the UK’s fiscal plans, Credit Suisse (CSGN) has become a new source of anxiety for investors. On the first trading day of October, CSGN lost nearly 59% of its value as concerns emerge about its financial viability. Credit Suisse CDS soared to record highs earlier this week which supports the perceived riskiness of the bank. Read more.

Inflation hits international students hard, with some turning to food banks

International students are experiencing unique constraints when trying to navigate the current inflation situation in Canada. International students have fixed budgets, rules that limit how much paid work they can do, and exchange rate woes. A Vancouver food bank said that three-quarters of the students on its books were from overseas. Tuition fees are up about 8% in 2022-23, rising to approximately an average of $36,123 annually. With exchange rates worsening with time due to current economic conditions, some international students are having to shift focus away from their studies to respond to raising concerns. Read more.

The Canadian Stock Market Remains Half Domestic and Half International

The Canadian equity market sources 50% of its revenues domestically and 50% internationally, according to Morningstar data. In June 2021, 45% of the Canadian equity market was 45% domestic. Canada’s increased focus on domestic equities runs counter to global trends. Equity markets in the United States, Germany, Japan, Brazil, China, Australia, and United Kingdom all source more revenue outside international borders than they did in the prior year. The fact that equity markets are globalising runs counter to the notion that supply chains are onshoring and countries are pursuing self-sufficiency. Read more.

Russia smuggling Ukrainian grain to help pay for Putin’s war

When the bulk cargo ship Laodicia dock in Lebanon last summer, Ukrainian diplomats said that the vessel was carrying grain stolen by Russia and urged officials to impound the ship. Moscow called the accusation “false and baseless”. But after an investigation, it was found that the Laodicia, owned by Syria, is part of a sophisticated Russian-run smuggling operation that has used falsified manifests to steal Ukrainian grain worth at least $530 million. This ongoing theft is said to be carried out by wealthy business\men and state-owned companies in Russia and Syria, some of which are already facing sanctions. Read More.

Leave a Reply

Your email address will not be published. Required fields are marked *