In many areas of the economy there are and will be conflicting possible outcomes in the macro context. We all know that the world’s temperature is changing, some places for the better, some places for the worst. What we do not know is when it changes and how does it affect all the normal activities in the places for the worst. For example, agriculture depends on rain and melting snowcaps to replenish the rivers which can be used for irrigation. If there is less rain or less snow, then there is less water for irrigation. The issue is billions of dollars in infrastructure are in place to produce the agricultural products and companies cannot just move unless there are decades of less rain. There is a time lag between what once was a very good model to one that is broken. Sometimes governments can help with the solution.

In an article from the Associated Press, the country of Brazil had an election, and a new President was taken office. The last President believed that business or industry could do no wrong and whatever it wanted, it was allowed to do. The new President has a different vision and new regulations are coming in quickly.

One example of the President’s action was to appoint Joenia Wapichana, Brazil’s first Indigenous woman in charge of the agency charged with protection of the Amazon rain forest and its people. During the reign of the previous President, huge swaths of the rain forest was cut down to become agricultural land. Was this good or bad, we will not know but we do know the rain forest contributed to the earth’s atmosphere quality. One could argue that the process of clearing the land was bad, but the growing of crops is good.

Linking to dividend paying stocks, in all countries when governments change some policies change and companies dealing with that country have to adapt. It is normally better that the company tries to do the correct thing in the first place, or the process of adaption is the changing of buzzwords and a few people the company deals with. When a government, similar to company changes, the management picks a signature item to show changes are being made. In Brazil, the change in the Amazon Forest is a signature piece, how it turns out is a different story. When management changes in the companies where you invest in, what policies change? how does the new management show the new direction? If you agree, you can do little or nothing, if you disagree then it is time to find alternatives.

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