When you think of the industrial revolution, what industry do you think of? My answer would have been the invention of the steam engine and the railroad industry. Recently read a book which changes the viewpoint, the book is Empire of Cotton – A Global History written by Sven Beckert, published Alfred A. Knopf, NY, 2015. The book examines cotton through global transformation – the movement of capital, people, goods, and raw materials.

The discovery of the Americas will change cotton and enable the creation of a complex, Eurocentric maritime trade web; the forging of a military-fiscal state allowed for the protection of power into the far-flung corners of the world the invention of financial instruments – from marine insurance to bills of landing – allowed for the transfer of capital and goods of security to global investments; the construction of alliances with distant capitalists and rulers provided access to local weavers and cotton growers; the expropriation of land and the deportation of Africans created flourishing plantations.

After Columbus discovered the Americas for Europe, next came Hernan Cortes claiming the Aztec Empire for Spain and sending back gold and silver to make Spain the richest country in the world. Portugal acquired Brazil; France took parts of the Midwestern and Southern States or the states around the Mississippi River and a piece of Canada. England started a colony in Virginia and claimed most of the eastern seaboard.

For Europe the other big discovery was many people believed the earth was flat or they were Mediterranean centric. Vasco da Gama sailed around South Africa and made it to India. Before this route, all trade from India and China went through various middlemen who marked up prices. The trip around the South Africa met lower prices or higher markups or higher profits for Europeans.

India was the number one producer of cotton textiles, but European control was limited. One of the reasons why Indian textiles were so popular was their superior design and brilliant colors. The work was done in the home and had been done for centuries which allow people to have great skills.

In Americas, the Europeans started with taking gold and silver, but gradually moved to the growing of rice, tobacco and indigo. To grow these products they needed bodies or slaves. Often the currency of choice for the sellers was cotton textiles. For a time 50% of the purchase price of slaves was cotton from India, the people produced agricultural commodities for European consumers.

At first the plantations in the West Indies produced sugar cane, which requires a lot of bodies to grow and harvest. Then cotton was introduced because the manufacturers in England were dependent on India for their raw cotton and in business it is always better to have more than one source of raw material.

The revolution began in the most unlikely of places: a quiet valley in the low hills that surround Manchester, England. If you think of England, you will likely know where London is. Travel northwest 3 hours by car and you will reach the city. Not far from the airport is the Quarry Bank Mill. This was the first mill to use a new spinning machine called water frames which used falling water to mechanize the work for hundreds of years done by humans. The year was 1784.

The cotton came from Jamica and Brazil which arrived in the city of Liverpool, about a hours drive away, The spark that was ignited in Manchester changed the city into the leading manufacturer of cotton and made England the dominate country in the world.

The question of why Manchester and not somewhere else? For a long time, cotton cloth was less inexpensive in India, for example in 18th century India spinners needed 50,000 hours to spin a hundred pounds of cotton. In 1790, using a 100-spindle mule, could spin the same amount in 1,000 hours. In 1795, they needed 300 hours with the water frame. In 1825, it was 135 hours. In 3 decades, productivity had increased 370 times, which meant labor costs in England were less than India. An increase in productivity would demand more cotton inputs.

Prices for British yarn fell every year and soon were lower than yarn manufactured in India. In 1830, a British manufacturer could sell Number 40 yarn for 1 shilling, 2.5 pence, in India the price was 3 shillings, 7 pence. The output of British manufacturers grew annually at 10.8% or another way to look at it, in 1788 there were 50,000 mule spindles, by 1830, over 7 million.

Linking to dividend paying stocks, to gain entry into a market you can either do it on a value proposition or be less expensive than the other company. To be less expensive you need to use technology to increase productivity which lowers unit costs which makes it competitive and then have a competitive advantage. It seems to be a never ending loop, but there are markets that seem easier because they tend to have monopoly characteristics.

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

When you think of the industrial revolution, what industry do you think of? My answer would have been the invention of the steam engine and the railroad industry. Recently read a book called Empire of Cotton – A Global History written by Sven Beckert, published Alfred A. Knopf, NY, 2015. The book examines cotton through global transformation – the movement of capital, people, goods, and raw materials.

When you look at the cotton plant, it seems an unlikely candidate for one of the wonders of the world. Humble and unremarkable, it grows in many shapes and sizes. The dominated type of cotton is G. hirstum – also known as American upland. It rises to a height of 2 to 3 feet, and then divaricates into boughs, which bristle with hairs. The upper leaves are entire and heart-shaped; the petioles are velvety. The flowers near the extremities of the boughs are large, and somewhat dingy in color. The capsules are ovate, four-celled, nearly as large as an apple, and yield a very fine silken cotton wool, much esteemed in commerce.

The history of cotton is while it was found in various countries around the world, it was small scale and focused on households. While some sold the cotton outside the area, most used for the household or to pay taxes or tribute. There would be change in the 19th century. Cotton came to Europe via the spread of Islam. Cotton was grown in cities in Spain and exported to the rest of Europe. When Christians reconquered Spain, the expertise of the growers left and cotton was introduced to northern Italy.

Cotton manufacturing blossomed in northern Italy for 2 reasons first, these cities looked back on a long history of still vibrant wool production, which left them with skilled workers, capital-rich merchants and expertise in long-distance trade. Once entrepreneurs decided to engage in cotton manufacturing, they could draw on those resources. They advanced raw cotton to women in the area to have it spun. Then urban artisans, organized in guilds, weaved the yarn. They branded and standardized their goods and exported the goods across the Mediterranean.

Second, northern Italy had easy access to raw cotton – what is now known as Turkey and Syria at the time the Ottoman Empire. As improvements in shipping allowed for cheaper transportation of bulk commodities, Venice became Europe’s first cotton entrepot, the Liverpool of the 12th century.

To improve every industry needs new technology. For cotton, it was the introduction of the spinning wheel. Before that people used hand spindles. It was a slow process: a skilled spinner produced using the hand spindle took 11 hours to spin enough yarn for one blouse. The spinning wheel triple productivity, which is why in medieval Europe the spinning wheel was called the cotton wheel.

The downfall of the industry was the rise of a strong Ottoman Empire which controlled the raw material and did not send it to Italy and Germany. People wore linens and woolens.

For the next couple of hundred years, little changed in the world of cotton, but then Christopher Columbus discovered the Americas.

Linking to dividend paying stocks, we all think we are looking at something new and shiny but in reality, there have to be a number of elements which go together to change a industry and the profitability of it. Once that happens, more innovation and change happens and then profits can be made for a long time.

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

Tax season has come and gone and hopefully you received an income tax rebate. The important part of the tax season this year was President Trump’s One Big Beautiful Bill touted the cutting of income tax for regular people. The Democrats focus on tax cuts for billionaires. Both can be correct, but taxes and money are typically individual things that people like to keep in the family, so who was more correct?

In an article by Andrew Duehren of the New York Times News Service, the good news in the law of averages is the average tax refund is $3,521 according to the IRS which is roughly 11% higher than it was a year earlier. The bad news is the benefits are unevenly and to some tax experts, arbitrarily distributed. The reason is even if you can claim one of the new tax cuts, the savings reflect how much money they make. Someone who does not owe much in taxes gains little from a tax cut.

The New York Times spoke with 3 dozen Americans to understand how the tax cuts were reshaping their finances. In addition surveys were done by hundreds of people while others were interviewed as they waited at a tax clinic.

Many of the taxpayers said they had received their biggest refund in years, money that will go towards paying down credit card debt, catching up on bills, adding to savings accounts, covering the cost of a vacation. Among the biggest winners were high income earners and large companies, some did not gain much of anything.

According to the Tax Policy Center, roughly a third of Americans were not expecting to receive a new cut from the tax law. If you make less than $50,000, the tax refund is used to catch up on bills particularly heating and utility bills (about 30% of Americans are behind in their bills for the winter) and look to new purchases as the money will be spent.

The problem for under $50,000 is to pay for the tax cuts, the Republicans cut funding for health care, Medicaid, food stamps, and raised feeds on other government services. Is someone better off?

If you are between $50,000 and $150,000, technically you are in the middle class. Technically there is flexibility in the budget, but everything costs more and the tax cuts are similar to the amount received last year. The tax bill put a cap on overtime and tips payments, so it was not as much as expected. Bills that typically get paid from refunds include property tax, home owners insurance, and car insurance.

If you make over $500,000, then the refund is a nice surprise than can be used to buy new autos.

For corporations, many are the biggest beneficiaries and an example in the article is Amazon, it saved $8 billion in taxes last year.

Linking to dividend paying stocks, in all business, accounts receivable and write offs are important and no one likes to see them go up. In broad customer-based companies, people often get behind but something similar to a tax refund helps them give over the hurdle to pay their bills. It is something companies expect from past years of payments. For these types of companies is it important to pay to the accounts receivables.

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

In the investment world, there is are always different types of investments for different types of investors. Some people are day traders, the most important aspect is volatile prices or some sort of pop. As long as the stock is moving either upwards or downwards, it is possible to profit from it. There are other companies where the main action is the quarterly report where it says it met expectations. These companies tend to be less newsworthy carrying about their business and overtime as long as expectations are met, will increase in value. Another case is special situations which are affected by the news cycle of the day, week or month.

In an article by Purvi Agarwal, Rashika Singh, and Johann M Cherian of Reuters, when President Trump decided to start the war in Iran, that lead to increase volatility which the day traders liked. It created special circumstances because for every action, not all companies benefit.

In a war, people generally look at defense stocks because many of the products are very useful in a war and depending on how long it lasts, new orders for more product should be forthcoming.

A lot of conflict premium was in the defense stocks valuations, said David Bianco, an Americas chief investment officer at German asset manager DWS. We saw gold and oil and defense rally, part of the reason was messages from the Trump administration. When Trump sent the armada to the Middle East, nobody knew anything, but they saw chances of conflict reasonably high.

Reuters reported in the weeks leading up to the war that the US was building up forces and preparing for a weeks-long operation if diplomacy failed.

In addition, President Trump asked for more money up to $1.5 trillion for the 2027 defense budget, up from $1 trillion in 2025.

The defense index has surged more than 150% between 2020 and 2025, leaving the sector at historically elevated valuations. The S&P 500 Aerospace and Defense sub-index trades at about 32 times 12-month forward earnings, well above the broader S&P 500’s multiple of 20 times, according to LSEG data.

Sameer Samana, head of global equities at Wells Fargo Investment Institute, said the conflict would need to last longer, or expand materially for estimates to move higher.

One of the good things for existing shareholders has been share buybacks, the Trump administration is pressuring the defense firms to prioritize production rather than share buybacks, raising questions about capital returns.

The sector’s medium-term outlook depends heavily on US budget decisions with key spending details expect by April 21, Bloomberg News reported.

Linking to dividend paying stocks, with every conflict there are some companies that benefit and others that do not, but the companies that benefited before the war started, not once the war started. Once the war started other companies that have operations in the Middle East have not benefited and likely lost money. If you invest on a news cycle, it is important to do your homework before the event happens, not while it is happening.

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

A merger captures the public interest or at least in media and it seems to be the hot project. Eventually one company wins and the other has a larger bank account, but the executives have spent time and energy on the possibility of what happens if they won. For most companies there is a let down because the plans have gone astray. What happens next?

In an article by Dawn Chmielewski and Lisa Richwine of Reuters, the question was asked about Netflix which recently lost when Paramount SkyDance offered more money for Warner Bros Discovery. Netflix was willing to pay $72 billion to shore up its library and augment its intellectual property with Harry Potter and Game of Thrones because creating franchises has proven challenging.

Franchises can be valuable for entertainment companies because they are lower-risk investments that can bring in ancillary revenue through merchandise sales and in-person experiences.

Netflix purchased the rights to comic book publisher, Millarworld and one of the franchises that came from it is Stranger Things. Besides the series, a stage play and merchandise has been created.

However with every success, there are failures, a $700 deal to buy Roald Dahl’s catalogue which includes Charlie and the Chocolate Factory has yet to produce a major hit.

Producing consistent hits that spawn net series helps to attract and retain the subscribers and create engagement which grew by 2% in the second half of 2025, according to media consultant Owl & Co. Netflix’s top-line growth is expected to be in the range of 13%, compared to 16% in 2025.

On the TV side, according to Nielsen’s media distribution gauge, YouTube and Disney have consistently beaten Netflix in share of TV viewing since October 2024.

Netflix does have $2.8 billion from the failed merger as it had accumulated stock in Warner Bros and sold it off. In the movie industry there are always some projects that people are working on. Some will be good, some will not be.

Linking to dividend paying stocks, every successful company loves to have an extensive library to pull out of the vault and sell to a new audience. The trick is accumulating the library at relatively low cost and selling it and cross selling it in the future at higher prices. What assets does the company you invest in that was bought at low prices, can be held on for years in the future to sell at higher prices?

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

Every week most of us go to a grocery store to buy food. We buy whatever we need and ideally want and 90% of the time we are buying similar items that we bought before. What most of us do not do is look at the names of the items and say who owns the product? if I am buying it is a good investment? who has the biggest market share? is the company worth owning?

In an article by Julie Creswell of the New York Times News Service, one of the aisles in the grocery store says condiments and not far away is spices. On those aisles will be a new giant supplier.

McCormick and Unilver’s food business are merging together. Unilever will selling off the food division and concentrating on the health and beauty aspect of the company. Last year, the food business was 25% of the total revenues.

McCormick’s CEO Brendan Foley, said we believe we created a focused, global flavor powerhouse, scaled, resilient and uniquely concentrated on flavor.

McCormick owns spices on the spice aisle, and brands such as French’s mustard and Stubbs BBQ sauce. Unilever owns Hellmann’s mayonnaise and Knorr soups and bullion cubes. Together the companies will do about $20 billion in annual revenues.

McCormick has reported a 17% increase in sales, but nearly all the growth came from its acquisition of McCormick de Mexico. Without that acquisition sales increased 1% driven by a nearly 2% increase in pricing.

After the deal closes Unilever and its shareholders will own about 2/3’s of the company, McCormick’s shareholders owning the rest.

Last year, Unilever spun off its holdings in Ben and Jerry, Magnum, Breyers and other brands into a separately traded company called the Magnum Ice Cream company.

Unilever started as a margarine company, merged with Lever Brothers a soap company. In the 1940’s bought Birds Eye frozen foods, Breyers Ice Cream in 1993, Ben and Jerry’s Ice cream in 2000 As well as buying Bestfoods which owned Knorr and Hellmann’s.

Linking to dividend paying stocks, sometimes your homework can be what do regular people do and buy, many go to supermarkets. All those brands are owned by somebody, if you are buying maybe it is a good investment? You will need to do your homework, but often times steady reliable earnings are found in the supermarket.

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

President Trump came into the second term and one of his slogans was Drill Baby Drill. It was designed to appeal to those in the oil industry and to signal that federal lands will be used for oil and gas drilling. Thanks to fracking and the Permian Basin, the amount of oil drilled inside the borders of the US had made the US self-dependent in oil and gas. The President also decided that renewables or generating oil and gas from solar and wind will be downplayed as much as possible. Time will tell if that is a good decision, because the output of the Permian is expected to decrease in the coming years.

In an article from Reuters, the International Renewable Energy Agency (IRENA) released data showing that globally, renewable power made up almost 50% of the world’s electricity capacity last year. Renewables held a 49.3% market share versus last year of 46.3%. In terms of capacity, it was 5.149 gigawatts up 692 GW from 2024. The growth was led by a leap in solar capacity, which grew by 511 GW in 2025 to 2,392 GW.

For electrical generating companies, the price is the key element. When coal was expensive, the companies switched to natural gas. When natural gas gets expensive the companies add renewables or make small scale renewables such as putting solar on your home easier.

Linking to dividend paying stocks, if you own dividend paying stocks invariably you will look at private owned electrical utilities because they have a near monopoly and can raise prices every year which allows them to pay dividends. The companies will use whatever is reliable and cost effective, no matter what the policies in Washington are.

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

Once a company is in operation and is successful it faces two choices – grow or try to stay successful without growing too much. If it decides to grow, it will tend to do it vertically first to try to be control of the input to its operations. If it continues to grow, then to diversify itself it will move horizontally or ideally some sort of outside company that has relatively easy synergies to itself. And the process continues.

In an article by Neil J Kanatt and Abigail Summerville of Reuters, Sysco is buying catering supplier Jetro Restaurant Depot for about $29 billion. The deal will be financed with $21 billion in new and hybrid debt and $1 billion in cash and equity. Jetro shareholders will own 91.5 million Sysco shares or 16% of the company.

Sysco is the US largest food distributor, and if you look around you will often see their trucks bringing food to convenience stores, restaurants, hotels and hospitals cafeterias around the country. According to Brad Haller, a senior partner in West Munroe Partners’ merger and acquisition practice, the deal reflects Sysco recognizing its traditional distribution model is under real structural pressure and choosing to act before that pressure becomes existential.

Jetro Restaurant Depot operates a wholesale cash-and-carry model where consumers pay upfront for food, beverages, and takeout containers. The margins are higher than what Sysco operates at which would appeal to Sysco. Jetro has 166 warehouses across 35 states.

Sysco CEO Kevin Hourican, noted cash-and-carry business is an extremely recession resilient business. Every time there is a recession, cash-and-carry including Jetro picks up market share.

Large deals need to go before regulators such as the Federal Trade Commission, but Mr. Hourican notes operate in distinct channels of food with limited customer overlap.

Jetro is selling because the founder Nathan Kirsh is in his 90’s and his children are not interested in running the business,

Sysco expects the acquisition to boost earnings per share by mid-to-high single digit percentage in the first year after closing, which it expects by the 3rd quarter of 2027.

Linking to dividend paying stocks, successful companies are always doing some mergers and acquisitions and ideally the M&A lead to higher earnings and continuing stable profits. For shareholders, what is ideal at the time of purchase, needs to be executed and how well it is makes investing depended on quarterly results. How are they doing? is the plan working? the deal was done for a reason, what was the reason?

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

In Washington you will often hear about the size of the US deficit, and it grows every year. What you rarely hear about is why the US dollar remains strong even with deficits not on a decreasing rate of any kind.

In an article by Mile Dolan of Reuters, the real reason why the US dollar is strong is a deal between the US government and Gulf states. US protection in exchange for access to Gulf energy, oil priced in dollars and recycling of billions of dollars in US arms sales, technology and American stocks and bonds.

The arrangement since the 1970’s underpins the dollar’s status as the world’s reserve currency and has been central to the US-Saudi relations ever since.

The Gulf states of Saudi Arabia, the UAE, Qatar, Oman and Bahrain all peg their currencies to the dollar, and which require them to have reserves estimated to about $800 billion.

In addition, the sovereign wealth funds are estimated to have invested over $6 trillion in the US stocks, bonds, private equity and other US heavy investments.

The US Treasury lists Saudi Arabia and the UAE funds among the top 20 national holders of Treasury securities with almost $250 billion between them.

The petrodollar system rests on 3 pillars: America’s need for oil, the pricing of oil in dollars and the Gulf’s region security relationship with Washington.

Does the war shift those pillars or how strong are those pillars after the war is over?

Linking to dividend paying stocks, the US economy is the world’s biggest and can stand some shocks to it, but if the petrodollar system ever changed, the deficit would mean the same thing to the way you apply the deficit to every other country in the world. Invariably interest rates would go up and deficit spending would actually have to be done. None of that will change in the next year or two, but it is always worth understanding.

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