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I was on the CBC News‘ Weekend Business Panel this Saturday, speaking about three topics:

1. The Canada Post Strike: The company is in dismal financial status, with seven years of losses, each year beating the next. The company wants to turn more into an Amazon-like delivery service, with contractors delivering parcels over the weekend, while the union wishes for their members to get paid overtime for these deliveries. Both of these requirements are unrealistic. Canada Post functions in a highly competitive environment, one where labour laws are many times overlooked. A solution must come via rethinking what is as modern post service that reaches rural and urban Canadians, possibly some reforms to the labour code to protect delivery workers across companies and provide a level playing field, and a more lean, efficient post office that delivers services as Canadian need them. Otherwise, the crown corporation is, in my opinion, doomed.

2. The GST holiday and the $200 incentive: This is a terrible policy. At best, it displaces consumption and reduces the fiscal arks with limited economic impact. At worst, it compounds an inflationary environment given the promised increased expenses by the incoming US president. If the latter occurs, then the BoC will react and either stay further rate cuts or, in a more extreme situation, increase the interest rate, eliminating any impact. This is a populist measure that has, sadly, proven quite popular by Doug Ford’s similar measures.

3. The latest inflation numbers: They were squarely in the BoC’s estimates, so nothing serious here. I do believe that the BoC hast to be cautious about the future. Donald Trump’s protectionist and expansionary policies may lead to an even weaker CAD, thus the risk of importing inflation in the future is high. The BoC must be thinking carefully whether they can keep cutting the interest rate or should they wait to see the impact of Trudeau’s, Ford’s and Trump’s policies.

Give it a watch below! This is my last panel of the year. I come back live on January 18th.

I am recruiting up to two new Ph.D. students for entry September 2025. I am running a shorter recruiting cycle this year given the new constraints on international students (Deadline: December 2nd, 2024!). The ad below:

Ph.D. Position in Banking Analytics – Department of Statistical and Actuarial Sciences, Western University

The Banking Analytics Lab at Western University invites applications for a fully funded Ph.D. position focusing on financial contagion in corporate and consumer credit risk. This cutting-edge research project aims to understand and model the interconnected nature of credit risk across different sectors of the economy, with direct applications in banking and financial regulation.

Position Details:
– Full funding guaranteed for four years.
– Annual stipend of CAD$30,000.
– Direct collaboration opportunities with major banks and regulatory bodies.
– Access to unique datasets and computing resources, plus annual funds for travelling and expenses.

The successful candidate will:
– Develop novel methodologies for analyzing financial contagion using deep learning techniques in consumer retail, small business lending, and/or corporate lending.
– Work at the intersection of machine learning, statistics, and banking over real, challenging datasets solving problems at the forefront of modern banking.
– Contribute to both academic research and practical applications.
– Engage with industry partners and regulatory bodies.

Required Qualifications:
– Master’s degree in Statistics, Operations Research, Computer Science, Economics, or related fields.
– Strong quantitative and programming skills. Python programming and knowledge of modern methods (pytorch, polars, spark, arrow, duckdb) is a strong plus.
– Excellent written and verbal communication abilities.
– Demonstrated interest in banking and financial applications.

Application Process:
1. Submit your CV and academic transcripts by December 2nd, 2024 to cbravoro@uwo.ca. Please mention your GRE scores and TOEFL/IELTS or similar tests, if available.
2. Selected candidates will be invited for interviews that same week.
3. Successful interviewees will be invited to submit a formal application to Western University.
4. Final acceptance will be determined by the Graduate Affairs Committee.

To apply or for more information, please contact me at cbravoro@uwo.ca.

The Banking Analytics Lab values diversity and encourages applications from all qualified individuals, including women, members of visible minorities, Indigenous peoples, and persons with disabilities. This position is available to anyone, worldwide.

At least one of these positions will be cosupervised by Dr. María Óskarsdóttir at Southampton University. The job post is below:

https://lnkd.in/gZ92cxaZ

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I was at the CBC News’ Weekend Business Panel this week, speaking about some interesting news that happened. Sadly, the CBC changed their policies, and now we don’t get a video of our participation, so I will be publishing these short summaries after every time I appear. This week we spoke of:

The MLS judgment in the US that may change the incentive structure of realtors: Looking at this from a pure incentive structure, the realtor business is poorly constructed. The buyer pays commission to their realtor based on a percentage of the purchase price, which means there are no economic incentives for their realtor to get them their best price (although they do have a fiduciary duty).
- The lawsuit in the US will change the structure of the process. It will now require a contract between the realtor and the buyer directly, with agreed fees, before showing houses. Buyer representation agreements are already common in Canada, this lawsuit splits the buyer and the seller’s commission, thus providing incentives to realtors to lower their fees when representing the buyer.
  - There is a new rule prohibiting offers of broker compensation on the MLS, and from creating rules that would permit a seller’s agent to determine compensation for a buyer’s agent.
  - However, this also means homebuyers will have to consider an extra closing price, instead of the now baked into the mortgage fee. Fees should come down but will also need to be paid up front.
  - In the US, the realty companies are saying they will not change their practices, as nothing in the judgment forces them to. There is a difference in interpretation on what the judgment actually means. This will most likely lead to new lawsuits if the actual implementations differ for what the other side interpreted.
Home Depot’s acquisition of building material supplier SRS Distribution. Home Depot’s thinking is that growth will come from contractors as opposed to retail, that boomed during the pandemic and is now coming down. Their bet is that construction of new homes and government plans to stimulate construction in general will mean higher sales than what they are seeing in their stores.
- Home Depot said that when taking the deal into account, it now believes its total addressable market is approximately $1 trillion, an increase of approximately $50 billion. Home Depot controls 17% of the market.
- One pain point in Home Depot has always been logistics, one of SRS’ strengths with their warehouses and truck fleet. This can bring synergies into their main business, even though SRS will continue operating as an independent entity. Through the deal, expected to close by the end of fiscal 2024, Home Depot will add SRS’ network of more than 2,500 professional sales force in 760 plus locations to its footprint of over 2,000 U.S. stores and distribution centres. It would also allow Home Depot to take advantage of SRS’ more than 4,000 truck fleet and job site delivery capabilities.
- There is still regulatory approval necessary. I am sure Lowe’s will have something to say about this deal. Maybe I’ll get to talk about this later again.

Cocoa prices have reached their highest value ever, hitting USD $10,000 per tonne. This is caused by a multifaceted problem. Short term: El Niño and West Africa pests, the swollen-shoot virus and black-pod disease, have been causing havoc with plantations. Just the Swollen-shoot virus affected 20% of all cocoa trees in the Ivory Coast. The war in Ukraine has also caused the sugar prices to go up, thus impacting further the price of chocolate.
- Long term, though, there is a geopolitical issue. Farmers get about 5% of the price of a bar, or 30% – 50% of the price of a tonne of cocoa. Each producer can make around 1 tonne per year, thus the income of a farmer is around USD $5,000 yearly at best. This has lead to unsustainable practices. 14% of the Ivory Coast and 11.5% of Ghana are cocoa plantations and many are planted in protected areas, 37% of the Ivory Coast and 13% of Ghana’s deforestation comes from cocoa planting.
- Any solution is super complex. As hard as solving hunger in Africa. Only a mixture of better governments, better access to sustainable farming training and supplies, less corruption, more development and a strong coordination between governments and international agencies can tackle this. Sadly, to me, this hints we won’t see chocolate prices come down anytime soon, and if the underlying issues are not resolved, we will end up with chocolate scarcity in the long term.

Happy to hear your thoughts about this. I’ll be again next time in May. Always a fun experience!

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CBC News’ Weekend Business Panel – The Canada Post strike, the GST Holiday and the latest inflation numbers

Ph.D. Recruiting 2024: Deadline December 2nd!

Weekend Business Panel – March 30th, 2024

The Banking Analytics Lab