The Stock Market: A Slippery Slope
5 min read
The stock market is a slippery slope with great potential but great risk and with being a month into 2023 the stock market has been busy. With big corporations wanting more and the global economy being on the break of a recession if the world isn’t already in one there is a lot to keep up with surrounding this topic.
There are many factors that contribute to a poor economy, where the average individual gets the short end of the stick and has to deal with the consequences from the people who make the decisions they make.
The housing crisis is a main topic of conversation surrounding young adults. Rent everywhere is through the roof with wages not being able to keep up with rising inflation. As well there needs to be energy to power these homes and Europe is facing the worst of that with. With energy prices for example in October of 2022, the cost of household electricity has risen a staggering 114 percent. The war in Ukraine is a major factor in this with Europe sanctioning Russian energy and with Europe relying too heavily on that energy, the European nation leaders have put themselves in this inevitable position.
Back in 2018, Donald Trump the former president of the United States warned Germany they are relying too heavily on Russian energy and that they shouldn’t keep on going down that path. But Trump’s words were not taken seriously and now Germany is facing the blunt end of this crisis.
Morgan Stanley has conducted a study. They believe in the last two years food prices have risen 65 percent globally. There is another fact being that the global harvest has dropped by only 1 percent which doesn’t sound like a lot but due to that, it increased food commodity prices 8 ½ percent. Heads of lettuce and a carton of eggs have been seen for 8 dollars in Canada, the whole world is facing this food price crisis.
The MSCI All Country World Index has found that the global economy will drop 20 percent in 2022. This is reportedly the worst drop in over a decade, the last worst one being the 2008 financial crisis. With limited options to counter inflation the banks have been hiking interest rates to try and get that inflation rate below 2 percent where it currently stands at its 9.8 percent. They estimate it would take to at earliest 2025 to get inflation down to that 2 percent goal.
This possible recession is hitting hard and really scaring big corporations with dell for example cutting 5 percent of its workforce or to be more specific 6650 jobs.
The only thing that isn’t as volatile as the rest of the market are hard minerals. Materials like gold and silver have been rising slightly over the last couple years due to Covid creating an unstable market. People have always said materials such as gold and silver are safe choices to make money over a long period of time because having some physical hard material will never decrease in value to where you lose a significant amount.
Businesses always want to create cheap products because a company would much rather spend 50 cents to make something rather than let’s say 1 dollar. That’s why countries like China could help with global inflation and help to bring the market back. This isn’t an answer that most people want to hear due to China’s reputation but it is something that is inevitable. With China always being known to produce cheap goods and products and with China now being able to open factories and production and even their economy due to more relaxed Covid restrictions the global economy might have a shot at coming back. With China reopening reopens the global economy to cheaper goods and could help Western nations balance there economy
Now the ethical side of looking at China’s cheap production is not friendly in the slightest. With many allegations backed up with significant proof, China’s human rights codes are next to nothing. Abusing their population to boost their economy by paying the workers with low wages and poor work environments but the west benefits from this because everyone here likes cheap prices and this will likely never change and if it does it will take a while in order to do so.
As well, major components of the economy are vehicles because the economy is nothing if you can’t get to where you need to go. More specifically the lack of electronic chips to go in these new cars is concerning. Many vehicles are just being lined up in massive lots because they all have no chips and due to the lack of chips that means less new vehicles can be sold which will drive the prices up of the ones with electronic chips.
As well related to vehicles the price of gas is probably the biggest conversation piece related to this global inflation crisis. Natural gas prices in the U.S increased a staggering 165 percent. And gas prices in Canada were around a dollar a litre before 2022 and across Canada they reached above 2 dollars some places even reached 2.50 dollars a litre.
These rising gas prices are not only due to inflation and the war in Ukraine. The organisation is called OPEC which is a group of 13 countries which control most of the global oil supply. These countries can manipulate the oil market due to them being the main source of it and they have done just that. Back in 2022 the temporarily halted exports to more Western nations in order to drive prices up so they would get more money per barrel. Approximately they cut off 2 million barrels to countries which drive prices up significantly
There has been much going on throughout 2022 and even in early 2023 here with the global market and economy. With much debate on where and who to point fingers at and who is to blame there are many factors that contribute to such a poor and volatile present market. If this recession is to hit it would then be rock bottom and then the world will have to hope once we reach rock bottom we can only go up from there.
