Insights into Markets
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US crude settles up 3.9% at $47.49 ahead of OPEC decision on output

US crude settles up 3.9% at $47.49 ahead of OPEC decision on output | Insights into Markets | Scoop.it
Oil prices rose to their highest in three weeks as OPEC appeared to be moving closer to reaching an agreement to cut output.
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OPEC and the stagnant price of oil - Counting the Cost

The 15th International Energy Forum, held in Algiers earlier this week, saw OPEC members decide to cut production by about 800,000 barrels per day. The cu
Westminster Business School's insight:
  1. What market conditions has prompted OPEC to agree a production cut?
  2. What impact do you think this will have on oil markets?
  3. Draw the expected impact of the OPEC production cut on a demand and supply decigram, showing the new equilibrium price and quantity.
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Who are the winners and losers from the pound’s fall?

Who are the winners and losers from the pound’s fall? | Insights into Markets | Scoop.it
Foreign tourists may enjoy the ride, but shoppers and pensioners could soon feel the heat
Westminster Business School's insight:
  1. Use a supply and demand diagram to show how increased selling of pound sterling will lead to a lower value of the pound in the currency market.
  2. Explain why a weaker pound is having a positive effect on the stock market (FTSE)

 

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De Beers Said to Cut Diamond Prices as Much as 9% - Bloomberg Business

De Beers Said to Cut Diamond Prices as Much as 9% - Bloomberg Business | Insights into Markets | Scoop.it
De Beers, the world’s biggest diamond producer, lowered prices after production cuts failed to support demand for the precious stones, according to three people familiar with the situation.
Westminster Business School's insight:

Questions for discusssion

Read the article on De Beers and Diamonds industry. The article talks about two main factors negatively affecting diamond prices:

  1. A fall in retail demand (led by weak demand from China)
  2. Tight credit lines.

Illustrate Using a demand and supply diagram the impact of 1. 

What does the information in the article tell you about diamonds and availability of credit? What types of goods are these?

What will the cross elasticity of demand be between these two products?

Illustrate how poor availability of credit will impact the diamond market using demand and supply diagrams for credit and for diamonds.

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Saudi Arabia to cut spending after oil price decline - BBC News

Saudi Arabia to cut spending after oil price decline - BBC News | Insights into Markets | Scoop.it
Saudi Arabia will cut spending and delay some state projects after the recent decline in the price of oil, Finance Minister Ibrahim al-Assaf said.
Westminster Business School's insight:

Questions for discussion

  1. What factors have resulted in the slump in oil prices?
  2. Choose one factor and illustrate the effect on a demand and supply diagram for the oil market.
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The rising cost of a healthy diet: changing relative prices of foods in high-income and emerging economies | Publication | Overseas Development Institute (ODI)

The rising cost of a healthy diet: changing relative prices of foods in high-income and emerging economies | Publication | Overseas Development Institute (ODI) | Insights into Markets | Scoop.it
This report investigates the prices of different foods in some of the rapidly-growing emerging economies, where incomes have risen notably in the last 20 years. We ask what effect this has had on growing rates of overweight and obese people and whether this trend could be reversed through taxes and subsidies.
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Labour's rent control plans explained

Labour's rent control plans explained | Insights into Markets | Scoop.it
Ed Miliband’s announcement that a Labour government would cap rents for private tenants have been attacked by Tories and landlords’ groups, but what would the effect really be?
Westminster Business School's insight:

Questions for discussion

  1. Draw a supply and demand diagram for rental properties illustrating the impact on the rental market if a labour government implemented rent controls in London, capping prices at below market clearing rate. (Place number of rental properties on the horizontal axis and rent (£s)on the vertical axis.
  2. Look at your diagram and indicate the area of excess demand for housing at the capped rent. 
  3. How does the new level of supply of privately rented houses compare to the original supply prior to the implementation of the rent cap? 
  4. What are the implications of the excess demand caused by the rent cap?
  5. How effective do you think this policy will be in addressing the problem of lack of availability of privately rented properies in London, and the high rents charged by landlords?
  6. It has been argued that the excess demand caused by rent caps will lead to a shadow market - where landlords charge extra for services such as window cleaning, laundry etc. How realistic do you think this scenario is?
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ONS: UK House prices fall 0.2% in January

ONS: UK House prices fall 0.2% in January | Insights into Markets | Scoop.it
House prices fell by 0.2% between December and January, according to the ONS, the first monthly fall since March last year.
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Diesel car 'demonisation' condemned

Diesel car 'demonisation' condemned | Insights into Markets | Scoop.it
The Society of Motor Manufacturers and Traders launches a campaign to counter the 'demonisation' of diesel vehicles following Paris's plan to ban the cars.
Westminster Business School's insight:

Questions for discussion

  1. What will be the likely impact on market for diesel cars of the news that Paris plans to ban diesel cars? 
  2. Can you illustrate the short term impact of this news on a demand and supply diagram, clearly showing the shift in any curve and the new equilibrium price and quantity.
  3. In the long term what will be the likely response from the industry? Illustrate this on the same diagram and indicate the long run equilibrium price and quantity.
  4. Vehicle pollution is seen as a negative externality which gives rise to a market failure. Define these terms and explain it with reference to pollution from cars.
  5. It is argued that the government could tax diesel car production rather than ban these cars all together, in order to correct for the market failure of vehicle pollution. Using a demand and supply diagram Illustrate how a production tax can be used in order to bring a more socially optimal production of diesel cars?
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House prices grow at fastest rate in 10 months

House prices grow at fastest rate in 10 months | Insights into Markets | Scoop.it
Has a bombshell has landed in the housing market this morning?
Westminster Business School's insight:

Questions for discussion

  1. What factors are contributing to higher house prices in the capital? Illustrate this in a supply and demand diagram.
  2. If rents go up in London what is the likely impact on house prices? explain your answer and use a demand and supply diagram to illustrate the relationship.
  3. Explain how low interest rates support house prices?
  4. Why do you think there is so much regional variation within London?
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Markets are crucial to human progress: We need more

Markets are crucial to human progress: We need more | Insights into Markets | Scoop.it
Many outrageous things happened around the world over the course of the last week.
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Concern over pension advice service

Concern over pension advice service | Insights into Markets | Scoop.it
A leading pensions expert says the government's new pension advice service will not be properly staffed by the launch date of 6 April.
Westminster Business School's insight:

Comment

Afia Kufuor Davenant Sixth Form 

This article is about the new pension advice service that is expected to be launched in time for George Osborne's pension reforms on 6th April 2015.  Under the governments new plans those 55 and over will now have the freedom to take their pension as a cash lump sum, with no obligation to buy an annuity from April 6th this year.  In order tom support these changes Citizen Advive Bureaus will be offering face-to-face guidance to pensioners. While the government plans are aimed to encourage more people to take out pensions, the planned guidance service   will not be properly staffed by the launch date, and this will create asymmetry of information. This will create a market failure as the demand for pension experts will be high relative to the supply and in the meantime people could make sub-optimal decisions based on a lack of information.  


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Oil advances on US slowdown hopes - FT.com

Oil advances on US slowdown hopes - FT.com | Insights into Markets | Scoop.it
Oil added to Friday’s powerful advance with Brent crude rising above $54 a barrel in the wake of drilling data that raised hopes of a production slowdown in the US. Brent, the international oil marker, jumped 8 per cent on Friday — its biggest one
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A “New Normal” for the Oil Market

A “New Normal” for the Oil Market | Insights into Markets | Scoop.it
By Rabah Arezki and Akito Matsumoto Versions in عربي (Arabic), 中文 (Chinese), Français (French), Русский (Russian), and Español (Spanish) While oil prices have stabilized somewhat in recent months, there are good reasons to believe they won’t return to the high levels that preceded their historic collapse two years ago. For one thing, shale oil production has permanently added to supply at…
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Oil eases off four-month high as speculators doubt deal to cut output

Oil eases off four-month high as speculators doubt deal to cut output | Insights into Markets | Scoop.it
Oil eased off four-month highs on Monday as doubts over oil producers reaching a meaningful output cut deal brought some speculators to unwind bullish bets.
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Further viewing

https://www.youtube.com/watch?v=wRsVQghAtwo

http://www.reuters.com/article/us-oil-opec-saudi-idUSKCN12A0MM

 

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Oil prices seen under pressure as Paris attacks spark demand worries

Oil prices seen under pressure as Paris attacks spark demand worries | Insights into Markets | Scoop.it
Prices of oil and other commodities will come under renewed pressure on Monday on fears that Friday night's deadly attacks on Paris will further slow the global economy. 
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What are we to make of the commodity price meltdown? - Telegraph

What are we to make of the commodity price meltdown? - Telegraph | Insights into Markets | Scoop.it
The ramifications of the turmoil in commodity markets are difficult to
determine, says Roger Bootle
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Glencore promises to cut debt and raise cash - BBC News

Glencore promises to cut debt and raise cash - BBC News | Insights into Markets | Scoop.it
Commodities giant Glencore plans to cut debt, raise cash and suspend some African copper production
Westminster Business School's insight:

Questions for analysis

  1. Glencore plan to suspend some African copper production deemed to be high cost. Using a supply and demand diagram illustrate the likely impact on the equilibrium price and equilibrium quantity demanded/supplied, as a result of a cut in output from Glencore.
  2. Imagine that prospects for copper prices improve and the market becomes confident that copper prices will rise in the future. On a demand and supply diagram- showing demand and supply of Glencore shares, llustrate the likely effect of an improvement in market prospects for copper on Glencore share price. 
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Will scrapping stamp duty for first-time buyers push up house prices?

Will scrapping stamp duty for first-time buyers push up house prices? | Insights into Markets | Scoop.it
Labour is planning to exempt first-time buyers from paying stamp duty, but critics of the proposal say it could lead to an increase in house prices. What will the effect really be?
Westminster Business School's insight:

Questions fr discussion

  1. What is stamp duty?
  2. Why would the government want to scrap stamp duty for first time buyers?
  3. Why is it argued that scrapping stamp duty will lead to higher house prices?
  4. Illustrate the likely impact of scrapping stamp duty for first time buyers on the housing market in a demand and supply diagram.
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Cameron promises 200,000 starter homes if Tories win election - BBC News

Cameron promises 200,000 starter homes if Tories win election - BBC News | Insights into Markets | Scoop.it
Some 200,000 "starter homes" will be built for first-time buyers in England by 2020 if the Tories win May's general election, David Cameron says.
Westminster Business School's insight:

Questions for discussion

  1. Look at the data on the reduction in home ownership for the 25-34 age group between 2003/04 and 2013/14. Explain how the following factors have contributed to this pattern and illustrate this relationship in a supply and demand diagram 
  • a) Increase in house prices 
  • b) A reduction in availability of mortgages (hint consider the cross elasticity of demand between mortgages and houses )
  • c) Slow growth in wages
  • d) Tougher bank lending 
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Richard Buxton: 'Why I've bought Tesco shares'

Richard Buxton: 'Why I've bought Tesco shares' | Insights into Markets | Scoop.it
Richard Buxton, regarded as one of Britain's best investors, has bought back into Tesco for the first time since 2010. Here he explains why
Westminster Business School's insight:

Questions for discussion

  1. Why does Richard Buxton argue that it is the right time to but back Tesco shares?
  2. What change in the market has affected Tescos's market share?
  3. How did Tesco originally fight off the discount retailers in the 1990s?
  4. What does Richard mean by the fact that Tesco still has a lot of foot fall?
  5. What strategy can Tesco use to boost customer spending at each visit?
  6. If Tesco lowers its prices what is likely to happen to sales at discount retailers?
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Opec prepares to call emergency meeting over oil price slump

Opec prepares to call emergency meeting over oil price slump | Insights into Markets | Scoop.it
Cartel president Diezani Alison-Madueke says further price volatility would make it highly likely she would call an emergency meeting in the next six weeks
Westminster Business School's insight:

Questions for discussion

  1. Using supply and demand analysis indicate the impact on the oil market of a decision for OPEC to cut oil production. Indicate the new equilibrium price and equilibrium quantity.
  2. On another diagram illustrate the impact on the market for renewable energies of lower oil prices.

Further reading

http://www.theguardian.com/business/2015/feb/19/oil-price-falls-amid-worries-about-global-oversupply

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Oil rises on Libya violence, Kuwait sees prices supported

Oil rises on Libya violence, Kuwait sees prices supported | Insights into Markets | Scoop.it
LONDON (Reuters) - Oil rose to near $62 a barrel on Monday, supported by concerns over escalating conflict with Islamic State militants in Libya and predictions of lower supply in the second half of the
Westminster Business School's insight:

Questions for discusssion

  1. How might 'escalating conflict with Islamic State militants in  Libya' be expected to impact on the oil market? Using a demand and supply diagram to illustrate the likely impact.
  2. Why have prices responded positively to  "signs of lower oil industry spending?' 
  3. What are the long term implications of lower oil industry spending on the oil market?
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Poundland agrees to buy rival 99p Stores

Poundland agrees to buy rival 99p Stores | Insights into Markets | Scoop.it
Expansion plan involves buying 251 stores for £55m from family-run rival
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When a currency ceiling’s broken

When a currency ceiling’s broken | Insights into Markets | Scoop.it
The Swiss policy U-turn spooked markets – Chris Papadopoullos explains the change
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