You are reading the article How Businesses Can Trade Futures To Fight Inflation updated in December 2023 on the website Moimoishop.com. We hope that the information we have shared is helpful to you. If you find the content interesting and meaningful, please share it with your friends and continue to follow and support us for the latest updates. Suggested January 2024 How Businesses Can Trade Futures To Fight InflationWhen to invest in futures
Businesses that produce raw materials (such as mining companies or agricultural businesses) and those that rely on them to operate (like manufacturers) are most likely to benefit from investing in futures.
To know whether futures could serve your company, consider how much you rely on specific raw goods. Futures contracts represent a transaction for a particular commodity. For example, one RBOB gasoline futures contract is worth 42,000 gallons of gas, according to CME Group. If your business depends on a single commodity, like gas, you can use those futures to control prices.When to avoid futures
On the other hand, if your business is less reliant on raw materials, futures might not be beneficial. For example, while a coffee shop needs coffee beans, a more diversified restaurant may not have such strict ingredient requirements. A coffee shop must pay higher prices when coffee beans become more expensive, but a restaurant may be able to change its menu to avoid paying higher costs. If the price of apples rises, a restaurant may be able to substitute apples or otherwise tweak its menu, or it could feature dishes without apples in its marketing.
Did You Know?
Futures contracts aren’t always tied to commodities. You can trade futures for equity indexes (like the S&P 500), cryptocurrency or foreign currencies, but these products might not have a direct tie to your business operations.How to get started with futures
To start trading futures, you’ll need a brokerage account that gives you access to the futures market. This is similar to a stock brokerage account, and some brokerages may allow you to trade both stocks and futures in a single account.
Depending on how your business is structured, you may be able to open the brokerage account in your personal name, or you may want to open it in your business’s name. If the account is in your company’s name, you’ll need to designate the individuals who are authorized to place trades on your company’s behalf.Placing futures trades
Once you’ve funded your account and you’re ready to make a trade, you’ll fill out a ticket (typically online or through a mobile app) that specifies the type of trade. There are many types of trades you can place, but they all stem from three major types: market, limit or stop.
Market orders: These orders execute as soon as possible at the best price available at that moment.
Limit orders: These orders guarantee a predetermined price – but the order won’t execute until someone is willing to take the other side of your trade, and the order may not execute at all if you set the price too high or too low.
Stop orders: These orders are typically market orders, but the brokerage doesn’t place the order unless another trade has already been executed at a predetermined price. For example, you may buy a contract at $1,000 and set a stop order to sell at $800. If the price falls to $800, the stop order will execute and you’ll sell the contract almost instantaneously. There are many variations of this order type, including orders with a percentage-based trigger and “trailing” stops that adjust as the price moves in your favor.
Did You Know?
Stop orders, often called stop-loss orders, are commonly used to exit your trade when the price moves too far in the opposite direction you’d hoped. “Stopping out” automatically controls your losses so you don’t have to constantly track your trade.
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One foil for this sense of helplessness that has made appearances in policy circles throughout the years is personal carbon allowances, or PCAs. Back in the early 2000s, British policymakers considered a “credit card” of sorts that would allow UK residents to monitor their carbon usages—and trade for more or less carbon credits if need be. This already exists on a big scale for some economies, countries, and industries through policies called cap-and-trade. The idea was thought to be ahead of its time by the UK government and was eventually booted, but now, with years of technology improvements, researchers including Ekins, think now is the time to rev up the PCA idea again—and detailed their findings in Nature Sustainability earlier this month.
[Related: What companies really mean when they say they’re ‘net-zero’.]
“Life changed in ways we didn’t think possible just a year before the pandemic,” says lead author Francesco Fuso-Nerini, director of the Climate Action Centre at the KTH Royal Institute of Technology in Stockholm. We all had to learn quickly how to track and manage our health, be it through apps, contact tracing, and rapid communication, he says. Taking that knowledge, and the responsibility of our health, could be useful in amping up our response to climate change. “Maybe those changes resulted in people realizing that in global crises, in these times, there are some shared responsibilities.”Understanding PCAs
A simple way to think about PCAs is to think about how you and siblings might have traded chores around the house when you were kids. Say you and your sibling both got $5 for baseline chores. If you wanted an extra buck to go to the movies, the easiest way to get that done without prodding your parents for more cash was to pick up a few of your sibling’s chores to try for that sweet, sweet bonus dollar.
Carbon allowances work pretty much the same way. Everyone starts with a baseline amount. Right now, that could cover how much electricity you use at home, travel budgets, and the impact of your food—with more investigation into other products in the future, Fuso-Nerini says. But if you want to take a long flight or have a big fancy car or something else that pushes out a lot of carbon, you may need more credits than you initially get.
Trading comes in when your allotment doesn’t exactly fit your lifestyle. If a household isn’t using their full allotment, they can sell or trade to those who need more credits. Typically, people with lower incomes have lower carbon footprints than their high-income counterparts, says Fuso-Nerini, so these systems could provide a boost for families who might need it.
Even simply knowing what your carbon footprint is, and how you stack up next to your neighbors, can motivate folks to rethink their own footprints. “PCAs are designed to use three interlinked mechanisms to affect behavioral change: economic, cognitive, and social,” Ekins says.The impact on big business
Fuso-Nerini notes that PCAs aren’t an attempt to put all of the responsibility back on consumers. Existing cap-and-trade measures work to make low-carbon companies and industries more affordable, putting the pressure on big emitters to pay up or figure out a greener plan. “Personal carbon allowances are definitely not about shifting the responsibility to individuals,” he says. “There’s a lot of responsibility on those big companies themselves.”
[Related: What is ‘degrowth’ and how can it fight climate change?]
To return to our childhood allowance analogy: If the movie theater was hacking up prices to $10 a ticket, and we were all still just getting $5 a week, there’s a decent chance we’d be looking for a more affordable way to spend our Friday night. Better yet, the movie theater would have to rethink its prices to keep people coming. In the same way, if businesses want people to keep buying their products and services, but we all are beholden to carbon allowances, it’s on them to find ways to keep selling stuff for a lighter carbon footprint.
While there aren’t any national policies in place, PCAs have been utilized in communities across the globe, notably Lahti, Finland, which was recently voted the European Green Capital for 2023. The city’s 120,000 residents had the option to opt-in to a PCA program to monitor and trade allowances for carbon emissions linked to travel and mobility. According to the city, 3,000 people downloaded the app, and one in three users declared reduced motility emissions.
Now, Fuso-Nerini says it’s time to reconsider upping these policies to a bigger level, and consider how to help people who are dependent on fossil fuel-intensive industries adjust. At the end of the day, industries and countries still hold the vast majority of responsibility for the climate situation we’re in today, but doing what we can to nudge big emitters in the right direction is a good place for individuals to start.
What is Data Enrichment?
Data enrichment is about filling and refining all the gaps in existing company data or company information. Data enrichment is a process that involves combining raw data points and merging them with similar data points, basically filling in the gaps with important details to create a richer profile.
Ultimately you improve the quality of your datasets by adding new data and cleansing inaccurate or outdated entries.Types of Data Enrichment
While the types of data enrichment are very wide and can vary, here are the three most common types.
Behavioral. By enriching behavioral data, you will be adding customers’ behavior patterns to their user profile, this includes areas of interest and their “reactions” to campaigns.
Geographic. Companies that enrich geographic data will have better insights into where their customers coming from. This allows them to focus on certain markets and make better marketing investment decisions.How to Implement Data Enrichment
Despite the benefits, many companies have a problem with enriched databases, usually, they are out of date and incomplete. Even a report has shown that 49% of marketers don’t have confidence in their company’s data quality.
Credit scoring is built on data enrichment. Banks or loading providers that have access to enriched databases are less likely to work with a potential defaulting customer, they have all the information about who they are dealing with.Fraud Prevention
Similar to loans, businesses can reduce fraud rates and scams. With access to an email address and device IP address, enriched data will create a fuller picture of the user.Marketing Retail
Key Benefits of Data Enrichment
With data enrichment, businesses collect data that’s valuable to them, they can trust it and use the information to benefit their companies. Here are the top 3 benefits of data enrichment:1. Improved Data Accuracy
One data set is not powerful enough to build a deep view of a customer, his history, interest, and reliability. That’s why data enrichment plays a crucial role in making these one-standing data sets more useful by adding missing information to existing data.2. Better Customer Targeting
Sales reps only spend one-third of their time actually selling, while with data enrichment, that time could be much longer. When data is organized, up to date, rich with details, and accurate, these companies have much greater chances and time to spend time selling or creating marketing campaigns. Basically, enriched data will lead to an increase in sales conversions, thus increasing the potential return for customers.3. Elevated Customer Experience
Over the last few years, there has been an unprecedented explosion of data. As a result of this, data analytics has become a growing field and many businesses are choosing to heavily invest in professionals of this industry to take their organizations to the next level.
However, despite this growing interest in data, there is still a large disconnect between the sheer volume of data being created and the number of organizations making use of this data.
Certain aspects of marketing data can provide valuable information to companies, such as campaign tracking or general web traffic, yet few small businesses make use of this information.
Here, we’ll talk about how you can use marketing data to improve your marketing strategies and grow your business.Identify the Right Marketing Data
One big reason that marketing data is not used effectively by many small businesses is due to a lack of understanding regarding the importance of that data. Data analytics isn’t a new field, yet many small business owners fail to see how they can access and use their marketing data.
Related: Use data to create a content map that converts more customers.
Some organizations today focus on older forms of data to pull consumer analytics from, but this data isn’t as representative as more modern data sources. Despite the fact that many businesses make use of the wrong data, the importance of targeting the right data is not commonly known.
So, how can you find the right data to target? It’s essential to place an emphasis on the collection of data that deals with consumer traffic, conversion rates, and marketing growth.
And, the type of data that you need to collect may vary by marketing type. For instance, the marketing data you collect from PPC campaigns could vary from your SEO metrics.
Related: Find out the 29 marketing metrics you need to know to track every strategy.
You can also look at the sources of data you can collect, including first-party data, which can help you boost your chances for marketing success.Focus on Marketing Data that Taps Into the Consumer Mindset
Regardless of if you choose to invest in your own data analytics or outsource the job, understanding the consumer mindset is everything. Another reason small businesses overlook key data is that they retain the mindset of a seller. Put yourself in the shoes of a potential consumer and you’ll be able to identify more data points to target.
Almost every customer has the option to leave a review after purchase, and reviews can provide valuable marketing data for your small business. But, you can also take it a step further and reach out to consumers for case studies, which can not only give you coveted marketing data to drive growth but can create validation for your business.
Data shows that case studies are an extremely important part of the consideration stage in the buyer’s journey that can make or break a purchase decision.
Adding this simple validation to your website can help convince potential customers that you are a reliable organization, while also helping you to build a connection with previous customers and have them potentially make another purchase, which is a big way that marketing data can help propel your business toward growth.
Related: Own or run a finance business? Get data-backed finance marketing strategies built around consumer behavior.Determine the Best Way to Collect Marketing Data
After determining and outlining the most important types of data for your organization, collecting said data is the next course of action. For small or even mid-sized businesses, this can seem like a tall order. Creating a new division within your organization dedicated to data collection and analytics can be expensive and time-consuming, which is why relying on third-party data analytics teams is typically a smarter move — especially for small businesses.
After all, your entire organization doesn’t need to become an expert in data analytics if you choose to partner with experts in the field. Many marketing partners offer prominent features such as digital presence building and outreach marketing services from which they can collect and synthesize important marketing data in the form of reporting dashboards — or they can even tie the information into your CRM.Utilize Data to Create Personalized Campaigns
Based on the data collected either by yourself or by your marketing agency, you can then personalize your outreach to customers. By personalizing your campaigns based on marketing data you can optimize each message sent to a customer and increase the odds of getting engagement.
Remember that personalization is one of the most important aspects of modern marketing and helps to build trust. And, personalization is only possible with accurate and complete marketing data.Get Started Analyzing Your Marketing Data
As technology continues to develop, the data floating around the internet will inevitably increase. Taking the time to learn how to sift through that data and partnering with effective professionals can help accelerate your business growth faster than ever before.About the Author Guest Author
Our guest authors are industry experts, marketers, or business owners who cover a range of topics from sales, marketing, data, and entrepreneurship.
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Be an Ally: How to Help Fight Anti-Asian Racism and Xenophobia
RacismBe an Ally: How to Help Fight Anti-Asian Racism and Xenophobia
⚠️ Content Warning: This article contains material that may be traumatizing to some readers.
Amid a national reckoning on race, racially motivated violence against Asians and Pacific Islanders has been on the rise since the start of the pandemic. The use of anti-China rhetoric and growing Sinophobia across the country have stirred up discrimination against the Asian American and Pacific Islander community, also known as AAPI. As an international student from China, though I haven’t confronted any direct attack or discrimination on campus, the troubling reality prompted me to seek out allyship resources to help fight racism and xenophobia.Build awareness through education and conversation
The hate-fueled attacks and harassments targeting the AAPI community are appalling. Unfortunately, discrimination against Asian Americans isn’t new. To be an ally for racial justice, the first step is to educate ourselves on the history of anti-Asian racism and understand how stereotypes, racial bias, and xenophobia have been impacting the well-being of the AAPI community.
The Howard Thurman Center (HTC) for Common Ground provides a platform and opportunities for Terriers to start conversations on race and equity. Collaborating with BU student groups, HTC has developed a resource guide and hosted several programs designed to support Asian students at BU. If you want to suggest topics for future Coffee & Conversation events, don’t hesitate to bring them to HTC staff. Your voice helps shape the community discussion on antiracism. Knowing race is a delicate subject, you might also want to check the Conflict, Conversation and Community Workshops cosponsored by the Dean of Students office and the Wellbeing Project, to learn how to safely bring up hard conversation and problems.
Many student groups on campus have launched their own initiatives and social campaigns to raise public awareness about anti-Asian violence. Recently, BU’s Chinese Students Association (CSA) has put up a list of educational resources on Instagram in response to the “rising anti-Chinese Sentiment.” I’d highly recommend checking out the two-part interview with Professor Hyeouk Chris Hahm and Professor Christina Lee, both teaching at the School of Social Work, on how to combat and overcome anti-Asian sentiment in America.Find your people and keep them close
Like ASU, many student organizations strive to make BU a better place in supporting racial justice and equity. These are some of the student organizations you should look into for engaging in healthy race conversations:
You can find more student organizations on the Student Activities’ website and learn about their initiatives on racial justice. I bet you’ll find the wholehearted support and allyship you need on campus.Cope with stress in difficult times
Being exposed to racism and xenophobia can impact one’s well-being. It’s important to continue to practice self-care in difficult times, and seek help when you feel depressed, unsafe, or overwhelmed. BU’s Behavioral Medicine offers confidential individual counseling services to help students cope with anxiety and maintain their mental wellness. Students will be asked to fill out a survey before visiting. All the information they share during the counseling sessions will be kept confidential.
Behavioral Medicine also offers a list of tips on how to help someone in distress, and an updated guide on how to cope with sociopolitical stress. You might want to take a look at these resources to better support your AAPI friends during this challenging time.Take action and be vocal
Photo courtesy of Graeme Sloan/Sipa USA/AP
If you see or encounter any racial discrimination or hate crimes on campus, please report to the Boston University Police Department by calling 617-353-2121. If you become a victim of a hate crime off campus in Boston, you should immediately contact your local police department. Victims of hate crimes can file a civil rights complaint with the state’s Attorney General’s Office or call the office’s special hotline at 1-800-994-3228.
In addition to joining the nationwide conversation and reporting on racism and hate crimes, Terriers can also leverage programs like UROP and Innovate@BU to tackle racism through research and innovation. Innovate@BU has created a list of resources for building equitable ideas.
It’s time for us to explore new approaches to help build racial equity.
Explore Related Topics:
What is Inflation?
Inflation is an economic concept that represents an increase in the prices of goods over time, reducing purchasing power and affecting individuals, businesses, and governments.
For instance, a cup of coffee costs $2.00 in 2023, but in 2023, it costs $2.50. This increase in the price of coffee is an example of inflation because the same amount of money ($2.00) can now buy less coffee than before.
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Factors such as increased demand, reduced supply, or government policies cause inflation. Inflations can have significant economic impacts, such as reducing the purchasing power of consumers, increasing the cost of borrowing, and affecting business investment decisions.Key Highlights
Inflation is an economic concept that affects everyone, from individual consumers to businesses and governments.
Economists use metrics like the Consumer Price Index (CPI) or the Producer Price Index (PPI), which track the prices of goods and services at different production levels to measure it.
Strategies for managing it include monetary policy tools like adjusting interest rates and government policies to increase the supply of goods and services.
Over time, it can erode the value of savings and investments, emphasizing the importance of managing inflation to ensure long-term economic stability.How Does Inflation Work?
Step #1 Increase in the supply of money:
When the central bank increases the supply of money in an economy by printing more money or lowering interest rates, it increases the amount of money circulating in the economy.
Example: Let’s say a country’s central bank decides to print more money, and the total money supply increases from $1 trillion to $1.5 trillion.
With more money in circulation, consumers have more money to spend, leading to increased demand for goods and services.
Example: With more money in circulation, people may start buying more cars, electronics, and other goods, leading to increased demand for these products.
Step #3 Reduced supply of goods and services:
Example: Car manufacturing companies may not be able to produce enough cars to meet the increased demand, leading to a shortage of cars.
Step #4 Price increase:
With the demand for goods and services increasing and the supply decreasing, the prices of these goods and services begin to rise.
Example: The shortage of cars may lead to an increase in car prices, making it more expensive for people to buy cars.
Step #5 Reduced purchasing power:
As the prices of goods and services increase, the value of money decreases, leading to reduced purchasing power.
Example: With the increase in car prices, people may have to spend more money to buy the same car they could have bought at a lower price before. This means that the same amount of money can now buy fewer goods and services than before.Types of Inflation Demand-pull Inflation
It occurs when consumers want to buy more than businesses can produce and supply, increasing the product prices. For instance, if the tomato harvest falls by 50% over a given period, the demand will be more than the supply, which increases the crop price.Cost-push Inflation
It results from an increase in daily wages and production costs. For instance, if the production cost of cooking oil increases, food prices in restaurants will automatically rise.Built-in Inflation
It is when employees and laborers expect an increase in wages as a result of the increasing cost of living.What Causes Inflation?
Decrease in Supply: With the rise in prices of raw materials, the production volume declines, decreasing the supply altogether. When supply becomes less than the demand, the prices automatically increase.
International Factors: A significant part of a country’s economy depends on its import and export relations. When the import rate increases, the price of all imported goods increases in the domestic market.Effects on the Economy
Reduced Purchasing Power: Inflation makes money worth less, so people can buy fewer things with the same amount of money.
Hardship for the Poor: It hurts poor people the most because they spend most of their income on things like food and energy. The cost of essential goods has risen more than wages over the last seven years.
Increased Interest Rates: When inflation gets too high, central banks often raise interest rates. It makes borrowing money expensive, and people tend to spend less.
Boost in Employment and Growth: In the short term, it can actually help the economy grow faster. It can lower labor costs and encourage job growth.
Risk of Recession: If inflation keeps rising, people may expect higher wages, leading to even higher prices. It could create a cycle of inflation that eventually causes a recession.How to Measure Inflation?
There are several ways to measure inflation, including:Consumer Price Index (CPI):
It tracks the changes in the prices of goods and services that households usually buy.
It includes things like food, housing, clothing, transportation, and healthcare.
CPI is published regularly by government agencies and is often used to adjust wages, benefits, and taxes.Producer Price Index (PPI):
It measures the average price change that producers receive for their goods and services.
It tracks changes in wholesale prices and can indicate changes in consumer prices at an early stage.GDP Deflator:
It compares the nominal GDP (total value of all goods and services produced in an economy at current prices) to the real GDP (adjusted for inflations).
It takes into account changes in both consumer and producer prices and is frequently used to compare inflations across countries.Inflation Rate Formula
The formula is,
Inflation Rate = (CPI (x+1) – CPIx) / CPI x,
CPI x is the CPI rate value for the first year.
CPI x + 1 is the CPI value for the second/next year.
You can download this Inflation Rate Example Template here – Inflation Rate Example Template
The CPI Index for the US in 2023 was 278.802. It rose to 296.797 in 2023. Calculate the inflation rate.
The inflation rate for the US is 6.45%. It indicates that the prices of goods/services in the US economy increased by 6.45% in a year.
The consumer price index was 123.8 as of 2023. The recent value in December 2023 was 127.164. Calculate the inflation rate.
The UK’s inflation rate is at 2.72%. It signifies that the increase in prices of products over a year has been over 2.72%.Inflation vs. Deflation
Definition It is a continuous increase in products (goods and services) over time. It is a constant decrease in the prices of goods and services over a period.
Causes Increase in money supply, increased demand, decrease in supply, or government policies Decrease in money supply, decreased demand, or economic recession
Examples Hyperinflation in Germany during the 1920s, inflation in the US during the 1970s The Great Depression in the US during the 1930s, the deflationary spiral in Japan during the 1990s
Impact on prices It increases the prices of goods and services It decreases the prices of goods and services
Impact on investments It tends to increase the value of assets such as stocks, real estate, and commodities It tends to decrease the value of assets such as stocks, real estate, and commodities
Impact on borrowing It increases the cost of borrowing money due to higher interest rates It decreases the cost of borrowing money due to lower interest rates
Impact on employment It can lead to job creation in the short run but may also cause a wage-price spiral and lead to unemployment in the long run It can lead to job losses due to decreased demand and economic slowdownFrequently Asked Questions (FAQs)
How does the government control inflation?
Governments can control inflation by using monetary policy tools such as increasing interest rates, reducing the money supply, and selling government securities. It can also use fiscal policy tools such as reducing government spending and increasing taxes.
Is inflation good or bad for the economy?
Inflation affects the economy in both good and bad ways. A certain level of inflation is beneficial as it encourages spending and investment. But high or unpredictable inflation can reduce consumer purchasing power, lower economic growth, and cause financial instability. So, the government and central banks must manage inflation carefully to promote stable and sustainable economic growth.
Q3. What is an example of inflation?
Suppose the inflation rate in a country was 6% per year. Here’s how much a loaf of bread would cost:
First year: $1.00
Second year: $1.06 (an increase of 6%)
Third year: $1.12 (another increase of 6%)
Real example: In 2023, the COVID-19 pandemic caused a surge in demand for homes in suburban areas, which led to an increase in the prices of houses and rental properties. This is an example of demand-pull inflation.
How to reduce inflation?
The most important measures to reduce inflation are:
Monetary measures: credit control, demonetization, and issuance of new currency
Fiscal measures: reducing expenses, increasing taxes, promoting savings, and managing public debt.
Other measures: increasing production, implementing wage policy reforms and establishing price control mechanisms.Recommended Articles
This is an EDUCBA guide to Inflation. You can learn more from EDUCBA’s recommended articles.
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