DPECO 2025 Kohler Report Week 3 (6/2-12/2)

Gold reached a new record high of $2,865.78 USD why is this?

• Due to general inflationary pressures

• Due to rising economic uncertainty, as gold is considered a safe store of value

• Due to financial markets booming

• Due to supply shocks in other minerals causing firms to shift to gold

This week according to Daniel Ziffer financial markets have been "shredding economic norms", what data support this claim?

• US markets are near record high due to pro-business policies of Trump, and despite economic turbulence caused by change in government

• Japanese market is up, despite the depreciation of the yen

• UK market is down, despite strong economic data to begin 2025

• HK's Hang Seng Index (a indicator of China's economy) is up, despite fears of looming US-China trade war

In Australian financial markets, banking stocks are up, which suggest?

• Interest rates are likely to drop, allowing banks to earn more money

• Mortgage defaults are rising meaning bank will take ownership of those properties

• Australian consumers are still doing well, and confident in repaying their mortgages in the future, meaning the banking sector will continue to profit

• Interest rates are likely to rise, allowing banks to earn more money

Durian is currently booming not only in mainland China but also across the world. What determinant of demand or supply explains the boom?

• Growing number of consumers in China, causing a rightward shift in demand

• Change of taste and consumer preferences leading to growing popularity and causing a rightward shift of demand

• A rise in the price of pineapple, leading to consumer substitute for Durian and causing a rightward shift of demand

• Forget demand and supply, it is the KING OF FRUITS, long may it reign

Two former RBA economists, Dr Gavin and Dr Hartigan, have used a factor model to calculate inflation rates in Australia. What does this model measure?

• It excludes the prices of food and energy as these are volatile and therefore more accurately shows the impact on consumer income

• It is the the average rate of inflation after ‘trimming’ away the items with the largest price changes

• It uses the inflation rate of the item at the middle of the price changes in the CPI basket (the 50th percentile by weight).

• It links prices that have moved together in the past, putting less weight on those which move erratically by themselves, meaning that the factor model more accurately reflects broader prices

What is the inflation rate (CPI) that the Australian Reserve Bank (RBA) targets?

• 2-3%

• 3-4%

• 1-2%

• It does not target a specific rate as it allows market forces to function freely

The UK just cut interest rates for the _ time in seven months.

(a)  

How much was the latest cut to interest rates by the Bank of England? And what does this take their overall rate of interest to?

• 0.25% and 4.5%, meaning that is now lower than Australia

• 0.5% and 4.5%, meaning that it is still higher than Australia

• 1% and 3.5%, meaning that is much lower than Australia

• 0.25% and 4.25%, meaning that is still fractionally higher than Australia

Money markets are 95% sure of a _ basis point cut to interest rates when the RBA meets on 17-18 February.

(a)  

Domino's Pizza is closing 200 store mainly in Japan, why?

• Domino's is facing diseconomies of scale due to the management challenges of coordinating global stores

• During COVID takeaway food boomed, but now consumer tastes have returned to normal there is lower demand for pizza

• Lawson's and Family Mart have a duopoly on takeaway food, particularly fried chicken and have using predatory pricing to force Domino's out of the Japanese market

• Domino's tried to launch a sashimi pizza which replaced the pizza crust with raw salmon, it led to riots