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The ‘huge impact’ that will cause disruption to every business until 2026

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As the war in Ukraine remains chaotic, many key industries are feeling the brunt with unintended consequences

The world is facing severe supply disruptions. However, some countries are being impacted more severely than others.

Delivery speed is a key metric in supply chains and this has never been more essential when it comes to the crisis between Russia and Ukraine.

Ukrainian forces are needing military aid as quickly as possible to combat Russian aggression – so with major disruptions, sanctions and a war, how is Ukraine getting supplies?

What differentiates military supply chains in comparison to commercial supply chains?

Peter Jones from Prological consulting joined a panel with ticker’s Brittany Coles and Holly Stearnes.

The supply chain expert says in military supply chain, it is absolutely critical that things happen the way that they are intended to happen.

Medical supply donations for Ukraine are prepared for shipment in a Vanderbilt University Medical Center warehouse off of Dayton Avenue Friday, March 11, 2022 in Nashville, Tennessee.

“It’s a very big part of alternative forces strategies to disrupt the supply chain of their particular enemy, because that means then people aren’t being fed food and water can’t get through, let alone armament and other military types of support infrastructure. So there’s actually quite a significant difference at that first base level that people’s lives are at stake,” Peter says.

He continues to say the second level is in commercial supply chains, and at war time, nations tend to “open up the chequebook and whatever is required. So from a financial perspective, that support is given as much as possible with domestic commercial supply chains, that commercial imperative always has to be considered.”

How are goods transported to Ukraine and Russia amid war?

There’s sanctions on Russia, global companies boycotting. So what does the supply chain landscape look for shipping and also air freight?

Air freight to Ukraine

Peter breaks this down to two elements.

At a local level

Peter begins with Crimea, which is basically Russia’s major gateway, into their nation, and then out of Ukraine. These local areas will be enormously disrupted.

At a global level

Peter says Russia only occupies around about one and a half percent of global movement or product in and out of Russia.

“So that global level, Russia doesn’t have a big impact in terms of the volume going through the networks, and the Ukraine is only half a percent. So at that local level, it’s enormous, because nothing can move in and out, due to ports disrupted,” he says.

“But at an international level, that factor by itself is not going to have a huge impact. The follow on to that though, where the big impact will come into global shipping is firstly, the energy crisis as this is creating.”

Energy and employment crisis brewing at ports

Ships are one of the biggest consumers of crude oil in on the globe. With Russia being the second largest exporter of oil in the world, Peter says commercial pressure on businesses will impact global trade.

On the other side, there’s employment.

According to the global shipping chamber, around 15% of global seafarers within merchant navies come from Russia, a bit over 10% and the Ukraine a little under 5%. So that’s 15% of a global employment group coming from the two countries that are in conflict.

“Global shipping lines are going to get conflicted about their ability to continue to employ the Russian employees. And the Ukrainian government more and more is bringing as many of their men back into the Ukraine to look after the nation. So those two elements with is going to have a huge impact if this conflict goes on for any length of time.”

What about China?

Peter says global shipping is still a long way from recovered from the events of 2020.

When demand around the world just fell off a cliff, the shipping lines took the opportunity to retire their old equipment, because it was coming with new taxes and fees being applied because of emissions regulations.

Lockdown fears hitting global supply chains

“So they said rather than us applying those taxes and fees, here’s an opportunity, we’ll get rid of the ships demand came back very, very quickly and unexpectedly, but the ships had been retired. So that was one of the issues that led to a lack of demand,” Peter says. “Then we put up the overlay on top of that port shutting down, empty containers being in all the wrong places. All of those issues are still very present today from COVID.”

Now with the Ukraine situation having emerged and the wash back through to China, and the things happening there, these issues are just going to amplify even further.

The question is how long is this disruption going to go for?

So with global shipping, the general thoughts were until a month ago, maybe towards the middle of 2024, q3 2024.

Peter says the industry has really been thrown a curveball due to war and further lockdowns in China.

“If the Ukraine Russia scenario lasts for many months, then that timetable is going to get pushed right out 2025/2026.”

PETER JONES

The implication to that comes back to countries being able to get what they need in order to run the nation from government perspective.

Peter is based in Australia and says he has heard of quite a lot of talk about onshoring more manufacturing and becoming more self sufficient as a nation.

“So what these issues will lead to is just that conversation being amped up again, at government level and in boardrooms as they try and work out what their risk profile looks like in terms of how long we believe this Russia and Ukraine scenario is gonna last,” Peter says.

He believed we could well see a pivoting back towards much more national security from a manufacturing and a maintaining sovereignty perspective.

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US stocks face tests from Tesla, Netflix earnings

US markets brace for Tesla and Netflix earnings amid rising volatility and delayed inflation data

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US markets brace for Tesla and Netflix earnings amid rising volatility and delayed inflation data

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In Short:
– Earnings reports from Tesla and Netflix might affect U.S. stock performance next week amid high inflation concerns.
– Increased market volatility arises from U.S.-China trade tensions and fewer S&P 500 stocks in an uptrend.
This coming week, earnings reports from companies including Tesla and Netflix are anticipated to impact U.S. stock performance.
Investors are also awaiting delayed U.S. inflation data, which could test market stability as it remains near record highs.Recent trading activity has shown increased volatility, influenced by ongoing U.S.-China trade tensions and concerns regarding regional bank credit risks. The CBOE volatility index has seen a rise, indicating increased market uncertainty.

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The S&P 500 entered its fourth year of growth amidst these fluctuations, having previously experienced a period of calm. Experts suggest market risks are intensifying as valuations reach peak levels.

Market Volatility

Concerns regarding U.S.-China trade relations escalated last week when the U.S. threatened to raise tariffs by November 1 over China’s rare-earth export policies. President Donald Trump is scheduled to meet with President Xi Jinping in two weeks to discuss these issues.

Despite these challenges, major stock indexes gained ground over the week, with the S&P 500 up 13.3% year-to-date. However, a noticeable decline in the number of S&P 500 stocks in an uptrend raises caution among investors about underlying market weaknesses.

The upcoming third-quarter earnings will be closely monitored, especially as the government shutdown halts economic data releases. Companies like Procter & Gamble, Coca-Cola, RTX, and IBM are due to report. The delayed U.S. consumer price index is also expected to provide crucial insights ahead of the Federal Reserve’s monetary policy meeting on October 28-29.


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Australia’s unemployment rate rises to 4.5 per cent

Australia’s unemployment rate rises to 4.5 per cent in September, prompting calls for potential Reserve Bank interest rate cut

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Australia’s unemployment rate rises to 4.5 per cent in September, prompting calls for potential Reserve Bank interest rate cut

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In Short:
– Australia’s unemployment rate rose to 4.5% in September, the highest since November 2021.
– Economists note a cooling labour market, with fewer job ads and increased participation rate amid rising living costs.
Australia’s unemployment rate increased to 4.5 per cent in September, up from 4.3 per cent in August.It marks the highest seasonally adjusted unemployment rate since November 2021.

Economists suggest that the Reserve Bank should consider another interest rate cut next month. BetaShares chief economist David Bassanese noted a slowdown in employment demand as the labour market struggles to accommodate job seekers.

The number of officially unemployed rose by 33,900 in September, while the employment count increased by 14,900. The labour force expanded by 48,800 people, resulting in a participation rate rise of 0.1 percentage points to 67 per cent, returning to July levels.

In trend terms, the unemployment rate remained steady at 4.3 per cent.

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Labour Market

BDO chief economist Anders Magnusson stated that while the unemployment rate has increased, the labour market is cooling, not collapsing.

He pointed out that the 14,900 jobs added in September were slightly below the average for the past year.

A growing participation rate indicates that rising living costs are prompting more individuals to seek employment. Magnusson said the release confirms a gradual cooling of the labour market that keeps the Reserve Bank on track without necessitating immediate action.

He added that hiring activity is slowing, signalled by a 3.3 per cent drop in job advertisements in September, the largest monthly decrease since February 2024.

Despite this, he does not foresee a rate cut in November.


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Stocks rebound after Trump eases China trade tensions

Stocks rebound 600 points as Trump eases China trade tensions, signalling optimism in markets following Friday’s sell-off

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Stocks rebound 600 points as Trump eases China trade tensions, signalling optimism in markets following Friday’s sell-off

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In Short:
– Stocks rose on Monday after Trump expressed optimism about trade relations with China.
– The Dow Jones gained 621 points, with significant increases in tech stocks and broad market recovery.
Stocks gained ground on Monday, recovering from Friday’s decline after President Donald Trump expressed optimism regarding trade relations with China, stating they “will all be fine.”The Dow Jones Industrial Average rose by 621 points, approximately 70% of its previous loss. The S&P 500 experienced a 1.6% increase, nearing a 60% recovery of its earlier drop. The Nasdaq Composite increased by 2.3%, bolstered by rebounds in technology stocks.

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Oracle’s stock surged over 5%, with AMD and Nvidia seeing 1% and 3% increases, respectively. Broadcom’s stock jumped 10% following the announcement of a partnership with OpenAI.

Trump’s comments hinted that he might not impose a significant increase in tariffs on China, which had previously caused market turmoil. Vice President JD Vance similarly indicated a willingness to negotiate with China, while also asserting that the U.S. holds advantages in potential trade discussions.

Broader Recovery

Monday’s trading saw a positive shift with four out of five S&P 500 stocks rising, indicating widespread recovery. Small-cap stocks also made gains, with the Russell 2000 rising over 2.5%.

Market concerns persist, however, with a government shutdown continuing and a major payroll deadline approaching on October 15. Earnings reports from major financial institutions, including Citigroup and JPMorgan Chase, are expected this week, potentially impacting market sentiment.


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