In this week’s Commercial Awareness, we discuss the markets reaction to the air strike that killed Qasem Soleimani, China’s plan to boost the economy, new evidence of Cambridge Analytica’s reach, ethical veganism and the decline of the Saturday job.
The reaction to the air strike that killed Qasem Soleimani
The news that an airstrike organised by the US killed a top Iranian military leader, Qasem Soleimani, caused fluxuations in the markets last week. Before the strike, US markets were strong, with the Dow Jones and S&P 500 reaching record peaks. However, since then markets across the world have taken a turn as confidence has been rocked by uncertainty surrounding the event.
With the potential of conflict within the middle east and the tensions arising around this, the demand for oil has increased, which has seen the price of oil jump 4%, with Brent crude reaching $70 per barrel. The increased risk of conflict has also caused share prices of firms in the aerospace and defence industries, like Lockheed Martin, buck the market trend and rise.
Another sign that investors are worried about the impact of the air strike is the price of gold hit a seven year high, climbing to $1,585 per ounce. In times of uncertainty investors tend to seek safe investments, like gold or government bonds, because they perceive greater risk with other investments. While Trump and Iran continue to escalate threats to one another, markets are likely to be on edge.
Questions to ask yourself... Why is gold considered a safe investment? Is
China’s central bank stimulates their economy
China’s central bank has taken further measures to boost their slowing economy and allow more money to flow into the economy. They have announced that banks have to hold less capital in reserve, freeing up 800 billion yuan (£87 billion), which can fund loans and stimulate economic growth. This is known as the reserve requirement ratio (RRR), which is the amount of capital a bank has to hold in reserve (and therefore not invest) compared to its liabilities. China has cut the requirement to 12.5% which is a drop of 50 basis points.
There is another potential boost for the Chinese economy as both President Trump and Chinese leader Xi Jinping suggest a ‘phase one’ trade deal is agreed and will be signed as early as 15th January. The deal isn’t widespread, but it will provide some tariff relief and a commitment to more agricultural buying. On 13th December, Trump canceled a new 15% tariff on goods, which would hit Chinese imports, as the deal was the process of being negotiated.
Question to ask yourself... What are the advantages and disadvantages of protectionism for the USA?
Cambridge Analytica is back in the news with a new wave of documents exposing more details into how the company operated and used public data to influence elections. Over 100,000 leaked documents show the company accessed 87 million Facebook profiles and worked in 68 countries, including the UK, the US and the Ukraine during key elections.
The scandal which initially broke in 2018 raised concerns over the amount of personal information social media platforms have over account holders, along with the rules that govern their rights to share this information with third parties. During the scandal Facebook saw its share price drop 40%, along with CEO Mark Zuckerberg being questioned before the US senate. Their global brand and user trust also took a huge hit. In the aftermath many companies have increased the transparency of their data usage policies making it clear how customer data is used, and twitter even went as far as blocking political advertising on their platform altogether.
Questions to ask yourself... Do you think these changes go far enough to protect personal information? Should political advertising be banned from all social media channels?
Ethical Veganism now protected by law
A recent employment tribunal has declared ethical veganism as a protected philosophical belief. The ruling has potentially wide reaching effects, giving vegans the same protections in the workplace and education as other religious and philosophical beliefs outlined in the equality act. It raises interesting questions around what workers can be asked to do as part of their role, particularly in the food and FMCG industries, as well as changes that employers may have to make within the workplace for employees who subscribe to those beliefs.
With veganism increasing, particularly amongst Millennials and Generation Z, we’ve seen a shift in the consumer industry towards meat free meals and increased alternatives to meat based diets. With the added protection of this ruling, as well as increased support for initiatives such as ‘Veganuary’ or meat free days of the week, it’s likely we’ll see a greater shift to veganism over the next year.
Questions to ask yourself... What are the key implications of this ruling? Will meat eventually be banned?
The Saturday job
A recent study found that the number of teenagers working in part time roles has halved in the last 20 years. The Resolution Foundation found that the proportion of 16 and 17 year olds working around their studies has dropped to 25%, down from 48% in the late 1990s. It shows a trend of students deciding to focus on their studies, rather than building their work experience and earning some money on the side.
Commentators suggest that this shows the Saturday job is dying, but it may not be workshyness to blame. Young people know they will be working later into life than any generation previous, so could be delaying entering the world of work due to this. However, on the flip side the experience someone gains in a part time job at that age can give them essential experiences to set themselves up for early career success.
Questions to ask yourself... Should students be focused solely on their studies? Are there wider problems for employers if they can't hire part time workers?