The sun is up, the birds are chirping, and maybe—if you look at a few key prices—the world’s battered supply chain is beginning to heal from the shock of the pandemic and war in Ukraine. 

Driving the news: Recent data suggest that some critical parts of global supply chains are functioning better than they have in years.

• Shipping: 50% of congestion in ocean freight has been resolved, according to a report published by Sea-Intelligence last week, and should be fully cleared by March. That’s showing up in prices, with the cost to ship a container across the Pacific down almost 90% from last year’s high.

• Food: The United Nations’ index of world food prices fell in September, the sixth consecutive month it has declined since peaking in March after Russia’s invasion of Ukraine. Bank of Canada Governor Tiff Macklem also said he believes food inflation would come down soon.

• Cars: It’s becoming easier to get your hands on a vehicle (new or used), as demand falls and supply chain issues resolve. In the US, total automotive inventory is at its highest level since May 2021, and new vehicle sales in Canada dropped over 10%, according to the most recent data.

• Lumber: The price of this important commodity has fallen back to pre-pandemic levels, thanks in part to sawmills resuming normal operations and consumer demand for home renos receding.

Yes, but: A return to normalcy in the supply chain won’t show up in most prices you pay for a while to come—in many cases, those are driven by contracts signed between suppliers and retailers months ago. 

• Costco CFO Richard Galanti told The Wall Street Journal the retail giant would not yet be lowering prices for shoppers due to this factor and higher labour costs.

There’s also the not-so-small matter of energy prices, which rose last week after OPEC+ cut oil production and are particularly vulnerable to possible shocks (like a sudden escalation of the war in Ukraine).

• A big jump in the cost of energy could cause some supply chains to break down again, and high prices in Europe have already forced some producers to suspend operations.

Bottom line: There’s good supply chain news for the first time in a long time, but plenty of risks and dangers ahead that could undermine all the progress that’s been made.

Recession is the word of the week: the heads of the World Bank and International Monetary Fund are warning that higher interest rates are making the risk of a global recession next year “a real danger,” while JPMorgan Chase CEO Jamie Dimon said the US would likely be in a recession within 6 to 9 months. (BNN, CNBC)

Russia fired missiles at major cities across Ukraine, an attack Vladimir Putin said was in retaliation for the bombing of a bridge that connects Crimea to Russia. Putin called the bridge attack an “act of terrorism” and alleged Ukrainian involvement. Ukrainian officials denied the allegations. (Al Jazeera)

Hockey Canada’s interim board of directors chair resigned only two months after taking the position, saying “it no longer makes sense for me to continue to volunteer my time as Interim Chair or as a Director of the organization.” (Global News)

Japan is opening its borders for tourists again this week, lifting a cap on daily arrivals and a requirement that travellers visit with a tour guide (vaccination restrictions are still in effect). (BBC)

Electric vehicle startup Rivian voluntarily recalled nearly all of the trucks and SUVs it has sold due to what it called an “extremely rare” issue with a part that can affect steering control. (CTV)

Twitter temporarily froze Kanye West’s account for violations of its content policies, culminating in an anti-semitic post on Saturday night. (TechCrunch)

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China’s most important political event begins this week, a twice-a-decade Communist Party gathering that will likely see President Xi Jinping secure a precedent-breaking third consecutive five-year term in office. 

Why it matters: Who leads China for the next five years (and their policies) will have enormous consequences for the global economy, which has come to depend on the Chinese economy as a critical manufacturing hub and consumer market.

• The main focus of the Party Congress will be on Xi’s bid for another term in office—it’s a decision that would break recent precedent of limiting the country’s ruler to two terms, but Xi has consolidated his grip on power and is likely to stay in the top job.
   
• Observers will also be watching to see if leaders-in-waiting emerge who could fill Xi’s position in 2027—if not, it will be a strong signal that Xi intends to hang on to power indefinitely.

Beyond questions of leadership, China is grappling with a number of other pressing issues that the Party Congress will address.

• China is undergoing several economic crises right now, including a collapsing property market and a growing number of debt-laden banks struggling to stay afloat.
   
• The future of China’s Zero-COVID policy will also be discussed—some expect the Congress could herald the start of a re-opening process.
   
• The last Party Congress took a more aggressive stance on Taiwan, and China’s position has become more hawkish since then—it’s possible Xi will strike an even tougher note this week.

Bottom line: What happens this week will set the tone for China’s relationship with the West for the next five years and shape how businesses operate in the world’s second-largest economy.

Danielle Smith, the newly-elected leader of Alberta’s United Conservative Party (UCP), will be sworn in as the province’s premier today.

Why it matters: Smith campaigned for the job on an “Alberta First” slogan and promises to adopt a more antagonistic posture towards the federal government. 

• Part of her agenda includes a law to allow the province to refuse to enforce certain federal laws if it decides they interfere with provincial jurisdiction. 
   
• While courts would likely strike down any such law (and the incoming premier may already be softening the plan), it could set up a major political showdown between Alberta and Ottawa.

Smith takes over during a critical time for the province. Alberta has the world’s third-largest crude oil reserves, which have delivered enormous economic benefits—but as renewables become cheaper and the push to decarbonize accelerates, that could become a shakier foundation for growth.

• Outgoing premier Jason Kenney told The Peak the province needs to diversify its economy to succeed in the future: “...the curse [of the energy sector], if you will, is that you can’t rely on it, you need to diversify.”

What’s next: Alberta’s next election is scheduled for the spring of 2023 (though it could come sooner)—Smith will have until then to make her mark on the province before she must face voters.

🦃 2.7 million. How many turkeys (approximately) are sold in Canada each Thanksgiving, around 45% of all turkeys sold during the year.

☠️ $700 million. How much “water startup” Liquid Death was valued at after raising $70 million, just three years after launching.

💎 $49.9 million. The price (in USD) a rare pink diamond fetched at auction in Hong Kong, a new world record for the highest price per carat for a diamond sold in an auction.

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