In the US election one of then candidate Trump’s stump speeches was how as the Master of Deal, he was going to tear NAFTA up and come up with a better deal for the US. In reality the tearing of the deal is much harder than President Trump made it seem. NAFTA is about supply systems and companies taking advantage of lower wages and benefits in Mexico. The large auto companies kept some of the facilities in Canada and the US to have bargaining positions with the government. We want to spend a $ 1 billion on a upgrade, while you (government kick in a third and reduce the taxes we pay? – yes we will says the government and the auto companies financing just went down in costs.

In Mexico, all the car and truck companies set up operations as well as the supplier or parts companies and when the market is for 20 million vehicles per year, a healthy amount of that number is coming from Mexico to be priced as it came from the US which results in healthy margins. It was not surprising the United States was not going to have a new NAFTA in mid May. The process of talking about the possibilities will go on for some period of time. The mid May deadline was about the election cycle and the possibility of seats changing in the Senate which means less Republican votes.

Perhaps just perhaps the Trump administration is becoming similar to other administrations and reality is coming to the White House – then the President will tweet something or other and you begin to wonder again.

Linking to dividend paying stocks, supply systems developed based on the rules of the day.  To change the supply systems except at the margin causes a great deal of uncertainty. For dividend paying investors, certainty is a good thing.

There are more questions than answers, till the next time – to raising questions.