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International

Climate to conflict, Davos’ post-COVID return has full plate

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By Jamey Keaten And Masha Macpherson in Davos

DAVOS, Switzerland (AP) — Davos — the hub of an elite annual gathering in the Swiss Alps — is back, more than two years after the coronavirus pandemic kept its business gurus, political leaders and high-minded activists away. There’s no shortage of urgent issues for the World Economic Forum’s annual meeting to tackle.

With their lofty ambition to help improve the state of the world, forum organizers have their work cut out for them: there are soaring food and fuel prices, Russia’s war in Ukraine, climate change, drought and food shortages in Africa, yawning inequality between rich and poor, and autocratic regimes gaining ground in some places — on top of signs that the pandemic is far from over.

It’s hard to predict if the high-minded discussions will yield substantial announcements that make headway on the world’s most pressing challenges.

The war in Ukraine will be a key theme. President Volodymyr Zelenskyy will speak on opening day Monday by video from Kyiv, while the country’s foreign minister and a sizable delegation of other top Ukrainian officials will be on hand. They’ll be joined this week by leaders like German Chancellor Olaf Scholz, U.S. climate envoy John Kerry, NATO Secretary-General Jens Stoltenberg and European Commission President Ursula von der Leyen.

“There’s no business as usual,” forum President Borge Brende told The Associated Press, saying Ukraine is not the only worry. “It is also climate change. It is also that the global growth is slowing, and we have to avoid that this very weak recovery ends with a new recession because we have very limited ammunition to fight a new recession.”

“A new recession will lead to increased unemployment, increased poverty,” he added. “So much is at stake.”

President Vladimir Putin’s war means Russian business and political leaders haven’t been invited to Davos this year. There will be no traditional “Russia House” social festivities with caviar and vodka spreads for the elite attendees of its evening fun.

Instead, critics — notably including Ukrainian tycoon Victor Pinchuk and the country’s Foreign Ministry — have seized on some symbolism and vowed to voice their disgust, which is shared by many around the world.

“This year, Russia is not present at Davos, but its crimes will not go unnoticed. The ‘Russia War Crimes House’ takes place inside the former Russia House,” organizers of the rechristened venue said in a press release.

Opening Monday, the venue will feature photos of crimes and cruelties that Russian forces are accused of perpetuating. Some victims will speak out — including Anatoliy Fedoruk, the mayor of Bucha, a town near Kyiv where images of killings of civilians drew outrage worldwide.

“It’s important to understand what is really happening in Ukraine,” said Bjorn Geldhof, artistic director of PinchukArtCentre, which is helping organize the exhibit. “Part of this exhibition is also to bring back a human face to those people who have become victim of these Russian war crimes.”

Brende, the forum president, says scores of CEOs and other business leaders will be looking into ways the private sector can support Ukraine, “in the situation where Russia is breaking international law, international humanitarian law, and not sticking to the U.N. Charter.”

Not everyone believe Davos is the place where solutions can be found.

A few dozen anti-capitalist demonstrators marching behind a “Smash WEF” banner clashed Friday with police in Zurich, Switzerland’s largest city, a sign of simmering antagonism against economic elites whom they accuse of putting profits over people. Police used rubber bullets and pepper spray to disperse the crowd in what was deemed an unauthorized gathering.

While Ukraine will capture attention on the meeting’s first day, climate and environmental issues will be a recurring, constant theme as the forum looks to future challenges as much as the current ones.

One-third of the roughly 270 panel discussions through Thursday’s finale will focus on climate change or its effects, with extreme weather, efforts to reach “net zero” emissions and finding new, cleaner sources of energy on the agenda.

Forum managers — who have faced criticism about hosting wealthy executives who sometimes fly in on emissions-spewing corporate jets — have increasingly tried to play their part and inoculate themselves against accusations of hypocrisy: Over the last five years, they say they have offset 100% of the carbon emissions from the organization’s activities by supporting environmental projects.

Experts say offsets can be problematic because there’s no guarantee they’ll deliver on reducing emissions.

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Economy

North American stock markets wrap up brutal quarter and first half of 2022

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By Ross Marowits in Toronto

Allan Small said the first half of 2022 has proven to be the worst run of his 25-year investment career.

Canada’s main stock index concluded its weakest quarter since before the pandemic while U.S. markets endured their worst six-months runs in decades on fears that rising interest rates will throw the economy into recession.

“As we hit the mid-point of the year, when you look back I think the first part of the year will be known for just a bloodbath in the markets,” the senior investment adviser at IA Private Wealth said in an interview.

The S&P/TSX composite index closed down 217.28 points to 18,861.36 to end the quarter off nearly 14 per cent for the biggest decrease since December 2019. The TSX is closed Friday for Canada Day while U.S. markets will be closed Monday for Independence Day.

In New York, the Dow Jones industrial average was down 253.88 points at 30,775.43. The S&P 500 index was down 33.45 points at 3,785.38, while the Nasdaq composite was down 149.15 points at 11,028.74.

The TSX is down 11 per cent so far this year, while the Dow is down 15 per cent, the S&P 500 is off 20.6 per cent for the worst six months in 50 years and Nasdaq fell a record 29.5 per cent.

“I don’t remember a year that started off the six months this poorly,” said Small.

Soaring inflation has been stoked by Russia’s invasion of Ukraine while supply chain bottlenecks have been accentuated by China’s COVID-19 lockdowns.

While markets endured steep declines in the past due to COVID-19 and the financial crisis, they were always followed by people buying the dip. This time, many investors remain on the sidelines after getting hammered and unsure about when markets will bottom out.

Economic data out of the U.S. on Thursday said core inflation numbers, the Fed’s preferred inflation measure, rose 4.7 per cent in May. That’s 0.2 of a per cent lower than April but still around 40-year highs.

In Canada, economic growth slowed in April to 0.3 per cent, while a preliminary estimate for May suggests it likely contracted 0.2 per cent. The U.S. previously said its economy slipped 1.6 per cent in the first quarter.

A negative number in the second quarter will mean the U.S. economy is technically in recession. But Small said many people think the economy is already there and that Canada is either in recession or about to go into one.

Small said he wouldn’t be surprised to see markets rise during a recession in anticipation of things getting better, with inflation moving down after peaking.

Real estate and utilities were the lone sectors in positive territory Thursday in a broad-based slump with six of nine sectors falling by more than one per cent.

Health care led the declines, losing 4.1 per cent with Canopy Growth Corp. plunging 18.5 per cent after the pot producer announced a convertible notes exchange.

Materials lost 3.6 per cent on a drop in metals prices, particularly copper.

The August gold contract was down US$10.20 at US$1,807.30 an ounce and the September copper contract was down 7.1 cents at US$3.71 a pound.

“Whenever you have fear of a recession, those types of metals which are used to build homes and build things, the fear is that you’re not going to need to use as much of these building materials,” Small said.

Energy lost 1.7 per cent on lower prices with crude oil dropping as Advantage Oil & Gas Ltd. shares were down six per cent.

The August crude contract was down US$4.02 at US$105.76 per barrel and the August natural gas contract was down US$1.07 at US$5.42 per mmBTU.

The Canadian dollar traded for 77.60 cents US compared with 77.65 cents US on Wednesday.

Shopify Inc. decreased 5.6 per cent to push technology lower while Laurentian Bank fell 2.5 per cent to lead a drop in the heavyweight financial sector.

Small is hoping for a better second half of the year after central banks conclude their aggressive interest rate hikes to tame soaring inflation.

“I don’t know if we’re going to make back enough to get us in the green for the year, but I’m hopeful that we’ll see a positive second half and we’ll make back some of the losses.”

This report by The Canadian Press was first published June 30, 2022.

Companies in this story: (TSX:AAV, TSX:WEED, TSX:LB, TSX:SHOP, TSX:GSPTSE, TSX:CADUSD=X)

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Environment

Supreme Court limits EPA in curbing power plant emissions

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WASHINGTON (AP) — In a blow to the fight against climate change, the Supreme Court on Thursday limited how the nation’s main anti-air pollution law can be used to reduce carbon dioxide emissions from power plants.

By a 6-3 vote, with conservatives in the majority, the court said that the Clean Air Act does not give the Environmental Protection Agency broad authority to regulate greenhouse gas emissions from power plants that contribute to global warming.

The court’s ruling could complicate the administration’s plans to combat climate change. Its proposal to regulate power plant emissions is expected by the end of the year.

President Joe Biden aims to cut the nation’s greenhouse gas emissions in half by the end of the decade and to have an emissions-free power sector by 2035. Power plants account for roughly 30% of carbon dioxide output.

The Associated Press

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