When a politician says something particularly if it is slogan, while it maybe nice to hear, you may agree with it, you should not automatically invest in it. An example is President Trump said, one of the ways he was going to unleash the oil industry was to allow it to drill baby drill. This has meant changes in regulations to make it easier to drill and allowing drilling on more federal lands. For those in the oil industry, that can be good thing, but the oil and gas industry is a commodity based which means it is dependent on the price of oil. Too much of a good thing is bad for prices.

In an article from Reuters, CEO Ryan Lance of ConocoPhillips said the company will cut 20 to 25% of its workforce in a restructuring. The price of oil and gas has fallen which translates to cutting expenses including staff, slowing capital spending and reduce drilling.

Costs have risen by about $2 a barrel, making it harder for the company to compete. CEO Lance said the controllable costs has risen to $13 a barrel in 2024 from $11 a barrel in 2021.

ConocoPhillips has identified more than $1 billion of ways to cut costs and improve margins on top of the more than $1 billion it cost savings from its acquisition of Marathon Oil last year. The reorganization should be completed by 2026.

Linking to dividend paying stocks, the 3 largest oil companies in the US – Exxon, Chevron and ConocoPhillips are profitable companies but they still need to retain margins to generate profits to reward shareholders. The process maybe easier to drill for oil and gas, but market prices determine when and how much they will bring on stream to ensure they continue to make profits. Listen to the politicians but invest on the commodity prices determined by the market.

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

Shortly after WW II, in the western countries the men came back from the war and started to have large families which lead to the baby boom generation. The influx of population meant that services had to increase which led to increase schools, portables, then bigger high schools, expansion of post-secondary education and eventually a bigger workplace. By many measures it was a good thing. In addition to the baby boom population the economy moved from rural to urban from manufacturing to service industries. Many new industries came and still continue which has benefited millions of people. If we jump today, the baby boom is retiring, family size is down and while robots will help, society needs people.

In an article by Riham Alkousaa of Reuters, she writes about a German town called Altena. The town has about 20,000 people and if you ever lived in a small town, it has the classic signs. Altena has been an industrial town since the Middle Ages and is the birthplace of wire production.

Ironworks is still manufactured, but the number of jobs has fallen. The German government had a policy of letting in immigrants to the country and the town of Altena said they wanted some. There was empty apartments, there was high job vacancy for some service jobs, there was a need for more population and the services that go with it. How did it work out?

People tried to make the immigrants welcome, with support services and volunteers to help them show the ropes.

In 2024 roughly half of the 100 additional arrivals from 2015 were still living in Altena. Most of the rest moved to the bigger cities. There are advantages and disadvantages to living in smaller cities and advantages and disadvantages to living in larger cities, it is understandable people move.

Linking to dividend paying stocks, when you buy a stock and really learn about its operations, often times the company is operating in smaller cities and play a significant role in the economy of the area. From a macro perspective, sometimes there are cuts and relocations among operations of the company, it has an effect on the communities. We often like change to areas that do not directly affect us, but in reality we are all connected.

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

Understanding commodities also allows you to understand the world around you. For commodities are found around the world, it influences the governance of the country and equally important how and why the commodity price moves up and down.

In the book Gold, Oil and Avocados by Andy Robinson, published by Melville House, Brooklyn, New York, 2021 the author focuses on Central and South America’s economies through commodities.

Advertising works and advertising in the Super Bowl can work very well. In February of 2017, 278 million avocados were sold to be eaten during the Super Bowl game. In 2007, both California and Mexico produced the Hass variety of avocado, by 2020, 80% of the avocados consumed by US consumers came from the Michoacan area of Mexico. The demand for the avocadoes has transformed the area from 3,000 acres under cultivation in the 1960’s to over 180,000 by the early 20th century. The big issue is water, the trees that grow the avocados need a great deal of water and the water table is falling in Mexico. The alternatives are orchards in Columbia and Peru are expanding.

In Brazil, one of the biggest agricultural exports is Soybeans, it also happens the US is a big grower of soybeans. The number one customer is China and China has moved the US off the top of the list to Brazil. Soybeans are used for feed for pigs and chickens, and soybeans are shipped to Spain in Europe which has the largest pig and chicken factory farms. The interesting aspect is the grain terminals are operated by the big grain companies including Cargill of the US, ADM of the US, Bunge of St. Louis and Geneva, Switzerland and Louis Dreyfus of France.

Beef cattle is been a growing industry in Brazil with 85 million head of cattle which is more than the US and Australia. One of the biggest meat companies is called JBS and one of the many ranches has over 150,000 cattle. Most of the ranches are what used to be the Amazon Rain Forest or as one hotel clerk said, the rain forest starts to the west of us. As the trees are replaced, the land is used for cattle raising and soybean farming.

President Trump calls the Gulf of Mexico the Gulf of America and among other things it is blessed with is oil. In Venezuela, they have enormous store of heavy oil which similar to Tar Sands in Canada has to extracted from the earth and then becomes oil to use. The problem for oil refineries is they have to be specialized in heavy oil and there are refineries in Houston and in China. For heavy oil, the price of oil has to be about $55 a barrel, when it goes below, activity slows down to a trickle. Offshore of Brazil, Mexico and Guayana are huge oil fields but once again the price of a price per barrel has to be high because the floating oil platforms are very expensive to build, maintain and move oil and gas once it is found in commercial amounts. All the major oil companies from around the world are active in the Gulf of America. This leads to what is America’s interest and what will America do to protect its interests and be aware sometimes governments change.

Linking to dividend paying stocks, many investors own shares in commodity companies, for example ever since Standard Oil became ExxonMobil and it has been a dividend paying company and it reliably pays a dividend every quarter. As investors you focus on the results of the company, how it does its business is for others to be concerned about as long as it is legal, but in reality, there is a footprint that is made. How big it is and how it is overcome, that may be left to greater minds.

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

Understanding commodities also allows you to understand the world around you. For commodities are found around the world, it influences the governance of the country and equally important how and why the commodity price moves up and down.

In the book Gold, Oil and Avocados by Andy Robinson, published by Melville House, Brooklyn, New York, 2021 the author focuses on Central and South America’s economies through commodities.

When Columbus made trips to the Caribbean Islands and Mexico, he eventually brought gold back with him and stories of more gold and silver to be found. The Spanish government sent a new group of explorers, the Conquistador whose purpose was to send gold and silver back to Spain, as well as Catholic priests to change the religion of the lands. Enough gold and silver were sent back to Spain to make it the wealthiest country in Europe and have a significant influence of religion and governance in Europe. The mountains of the Andes contain vast mineral deposits including gold and there are many mines still operating and to be found. Ever since gold was found, the best way to separate it from the rock is to use mercury and cyanide. In means that pools or ponds of water with the chemical are formed, and with multiple mines operating it is not hard to find one that breaks. The water of minerals gets mingled with good water causing the river to die for a period of years. In addition, finding gold means people flock to the area and there will be and are conflicts on whose land it is.

The term Banana Republic does not refer to the clothing store of the same name but the food many of us eat on a regular basis the banana. The banana was imported into the US and people developed a habit of eating them. As the demand grew the consolidation of companies grew and a company called United Fruit emerged as a dominant player. For years, the headquarters were in Boston, and it was a great dividend paying stock. The banana republic term is the way the company managed its operations. The company backed by the US government’s intervention, if necessary, essentially took over a 1/3 of the country for its operations. it ran the plantations, the railroad, the ports, the utilities – mail, light, telegraph and telephone to ensure bananas were available for consumers. If the government objected or wanted great changes, the government through the CIA and other agencies changed to politicians who interests aligned with the company and the US. Eventually the government broke up United Fruit to the companies we have today.

The book discusses minerals of niobium, coltan, and diamonds, potatoes, copper, lithium. quinoa and silver.

Linking to dividend paying stocks, if you consider Thomas Edison, he famously said he made thousands of experiments to ensure he learned the best one to ensure people could use the light bulb. Not only did he have to find a light bulb that people could use but the materials the light bulb could be reproduced at an affordable price. The final result is essentially what we have today and then industries were formed to produce the raw materials and the finished product. Every product goes through the same stages, invention to finding raw materials to finding alternative materials at the right price for the right market. Many of those rights have alternatives, which is good for consumers. For investors the question is why is that the right …

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

When you are investing invariably you will be interested in examining companies that have a commodities focus, when prices go up, these companies share price jump. It is hard not to be interested, unfortunately unless you are very disciplined, you may own some of the shares for a long time if the price of the commodity falls after you have bought it. Until the next super cycle comes along. The key to investing in commodity related companies is understanding at what price of the commodity does the company make money? Companies report the number in their Annual Reports and analysts write about the number in their description of the company.

Understanding commodities also allows you to understand the world around you. For commodities are found around the world, it influences the governance of the country and equally important how and why the commodity price moves up and down.

In the book Gold, Oil and Avocados by Andy Robinson, published by Melville House, Brooklyn, New York, 2021 the author focuses on Central and South America’s economies through commodities.

All developed countries or G7 countries and more likely the G20 countries have something similar to the US’s Munroe Doctrine which you may have heard President Trump’s Cabinet members talk about. The Monroe Doctrine is from President Munroe telling the other European countries that essentially these countries are in our backyard or it is our sphere of influence and you stay out. That could have meant many things, but one aspect is we want and have a say in how that country operates.

The Monroe Doctrine is not particular to the US, history teaches every country that sent explorers to another country often times the second or third trip declared it as their sphere of influence. It is easy to look at British Commonwealth Countries; Britian using the British Navy to sell opium to China; countries finding raw materials for their industry in another country and then the prime export market became their country; one can see China’s Belt and Road program along the same lines.

The reality is industry is formed and an example is the steel industry in the US. The industry was formed in Pittsburg, Penn because of the location for the steel mill needed water, coal from nearby West Virginia, iron ore from Minnesota, the money came from Wall Street. This is what is learned in the school textbooks. It was all from the same country and made great practical sense. What happens when either the costs to mine the raw materials goes up? are there less expensive alternatives?

In the book, Cleveland based Hanna Mining and US Steel sent their geologists around the world or particular the US’s spheres of influence and discovered a great find in the Minas Gerais state of Brazil. The iron ore was mined, a railroad built to transport the ore to a port and then shipped to Cleveland and onwards to Pittsburg. Since the book is written showing the negative effects of corporate development, what tradeoffs did the government of Brazil give to the US to ensure the ore moved in an orderly fashion? Part of the answer is ensuring a government in power to do the work that benefited the US interests.

At the moment, the term rare earth minerals is in the news and some of those deposits are in South America. If a country says we need to have sources of rare earth, what does that mean?

Linking to dividend paying stocks, in investing we all want to make more money, and one method is to buy commodity companies when the price is low and watch the price go higher which is reflected in higher stock prices. The trick is eventually to sell at a higher price and move onto the next “hot” area and repeat. If you are not good at selling at higher prices, a way to protect yourself is to buy companies which can pay dividends to ensure you get a reasonable return, when the stock price goes up it is a wonderful bonus.

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

Every President has the ability to appoint people to their administration but how far and how much should they be able to do? This time around President Trump has an agenda, although one might be concerned with the next President or the next one, what will their agenda be and how much power will rest in the office. Most of us have grown up with the idea that Presidential authority needs to be checked in balance and out of a 8-year two term President, the last 2 are essentially are on hold or lame duck till the next President. President Trump is different this time. This time, President Trump wants to challenge the more accepted norms and what agency have more independence.

In an article by Christopher Rugaber of the Associated Press, one of the more independent agency in Washington is the Federal Reserve Bank. The agency which among other things determines interest rates, regulates banks, ensures enough cash in cash machines and the list goes on. The financial world needs an independence from politics because politicians in general want lower interest rates. Is that good for the economy? does it battle inflation?

President Trump has decided after one of the Directors of the Federal Reserve resigned from their post, to go after Lisa Cook. In the law courts, the Department of Justice lawyer said President’s Trump tweets is a notice and President Trump has the authority to fire an Governor of the Federal Reserve. Neither mind the Federal Reserve was set up to be independent, the Directors are staggered to ensure no President can appoint a majority, never mind past law cases over 112 years support the independence. President Trump the prime rate to be 1.3% rather than the 4.3% it is now. The Supreme Court has signaled the President cannot fire Fed officials over policy differences, but can do so “for cause”, typically meaning misconduct or neglect of duty. Ms. Cook has not been charged with any crime.

Ms. Cook is the first Black woman to serve as governor. She is a Marshall Scholar and received degrees from Oxford University and Spelman College. She was a professor at Michigan State University and Havard University’s Kennedy School of Government.

As the case continues, the Supreme Court said Ms. Cook job is safe until a later court date.

The Federal Reserve has to deal with President Trump’s policies on tariffs which are inflationary or similar to a tax cut on the average consumer because the importer pays the tariff and eventually, they are passed on the consumer of the product. It would take some time in the supply system not to import the same item into the US and if that price was lower than the imported price. If the imported price is 25% lower, add the tariff and the imported price is add 15%, meaning the imported price is still lower why turn to domestic manufacturing? Would will likely happen and is starting across the country is prices are increasing to reflect past margins.

Linking to dividend paying stocks, as an investor you depend on various Boards and agencies for independence in the expectation of a level playing field. If the playing field is tilted toward political influence would stay in the game? What would your expectations be? Would you spend more time with political representatives to give you inside information? Would you trust the system? Most of us are smaller players in the game, but we believe the tilt on the game allows everyone to compete. If you go back to a time before deregulation of trading prices, it was hard to make money when the commission prices were so high. People bought stock and held for a long time because the brokers were making the easy money for little work. It was good that commission prices have fallen.

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

When Henry Ford invented the Model T and sold it at a lower price, as long as it was black, all the parts that went into the car were manufactured by Ford, most of it at is Rouge complex in Detroit. The system was left alone for decades and then slowly the big 3 companies Ford, GM, and Chrysler decided that they would rather spend their money on selling the finished cars rather than the parts that went into into it. The parts divisions were sold to investors but they had guaranteed customers as the big 3. A few independents companies managed to get a foothold and soon the Big 3 sold off their shares and the parts companies were independent. The big 3 could squeeze costs from the parts companies and the system evolved to what it was.

President Trump was elected for the second time and his signature economic piece is manufacturing in the US through the use of tariffs. The premise to is impose a tariff on every country as an incentive for the companies doing business is the US to manufacture in the US and sell tariff free. On one hand it has validity, if tariffs and other incentives are changed, then the process could produce more manufacturing in the US. On the other hand, over the decades of driving down costs, companies have operations in lower wage companies, tariffs does not fundamentally alter that lower costs. In addition, the tax system or incentive structure has not been changed. The other obstacle is countries that import into the US have developed feeder systems that will be affected. Is it wise to place obstacles to friends of your country?

In an article by River Akira Davis, Jin Yu Young, Melissa Eddy, and Hisako Ueno of the New York Times News Service, the economies of car making countries of Japan, South Korea and Germany are being affected by the tariffs imposed by President Trump. In all the countries, the cars that are imported to the US, have supplier companies. The Japan’s auto parts sector employs over 600,000 people South Korea has 330,000 employees and Germany supplier sector is a third of the more than 700,000 people in the automotive sector.

Besides tariffs the other aspect that the automotive industry is being changed with electric vehicles which need fewer parts. Supplier companies often have razor thin margins, so they do not have the levers to adjust to tariffs. The shift to EVs plus the rising competition from Chinese competitors is causing companies to consolidate. Tariffs are an accelerator to the process.

President Trump at the moment to impose tariffs, although it could be struck down because it was done under emergency powers, then Congress would have to vote for it. Similar to many what seems to be good policies, the Trump administration agreed to provide a partial, 2-year reprieve for auto part tariffs for companies that finish assembling in the US. This reprieve helps both foreign and domestic manufacturers.

The irony is for manufacturers to offset the effect of tariffs is the new operations in the US are filled with robotics and AI mechanisms or fewer manufacturing jobs.

Linking to dividend paying stocks, governments have the ability to change their policies when they have a majority and that can be a good thing. However, that often means companies have to adjust to new rules and ideally they are looking for consistency. The policies that are meant to help often have unintended consequences which typically means adjustments are needed. Companies employ lobbyists to try to ensure the effects of the unintended consequences are low to them.

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

If you think back to the property crisis in 2008, property values across the US and the world decreased which sent economies in recession. The leverage in the economy was too much, but asset prices went down. Eventually they bounced back, but it took time and it is important to remember over the time, things had to change. In the US case one of the big buyers of real estate was hedge funds which now rent property for income streams, because when there is a recession no one is borrowing money or interest rates are low. If someone has access to credit when asset prices are low, and given the economy should recover, eventually those assets can be sold off at a profit.

In an article by Daisuke Wakabayashi and Joy Dong of the New York Times News Service, China has been going through what the US went through in 2008, but the property market has not improved yet. China’s Evergrande Group was once China’s biggest property developer. It had a sports stadium named after it and the owner was a billionaire. Owning shares meant only an increase and the company was building thousands of apartment buildings which investors were snapping up. Then the downturn came in China and in late August of this year, the shares have been delisted from the Hong Kong stock exchange and there is still $300 billion in debt, the company is working through.

At its peak, the property sector accounted for roughly 30% of China’s economy. Proceeds from land sales to property firms filled local government coffers and many Chinese households turned to real estate, believing it was safe investment for their savings.

One of the great things about China is its infrastructure, on the property boom, new roads and railways and everything else in the urban landscape was built. The local governments made money on the property boom. Then things came to a halt and construction slowed drastically, which is good for absorption of inventory. However, this is China with a central government which encourages some construction for the good of the economy.

The National Bureau of Statistics reported the amount of new housing is down almost 20% from the same period of a year ago, but the number of vacant homes available for sale is more twice the historical average, according to Yicai, a financial media and research group backed by the Shanghai municipal government.

China South City Holdings, a mid sized developer was ordered to liquidate because it had not made significant progress to restructure its debt.

An example of the property market is a apartment in Hefei, an industrial city in central China, the property was bought for $330,000 with upgrades costing $80,000. The property was listed for sale, dozens of real estate agents came to see, but the offer was 15% below the asking price or a loss of $100,000 if the property was sold. With the price ever get back to peak price? The owner does not think so, so a loss on the property at some point is expected.

Goldman Sachs in a research report noted that July sales showed few signs of recovering prices in the real estate market had been linked to top-tier cities.

Even the top tier cities are removing some restrictions, for example to cut down on speculative buying, the government had restricted the number of units someone could buy. The restriction has been eased in Shanghai where people can buy unlimited number of homes in the suburbs.

Linking to dividend paying stocks, asset prices go up and down, when they are down they are great buying opportunities, however you need access to credit. One method to gain credit is buy profitable companies that can pay dividends, the dividends give you cash and you can use to buy companies with low asset prices, have patience as they slowly rise again. Patience is a virtue.

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

If you ever watched a YouTube video of how a Ford F150 or any other vehicle be made you will see many robots involved in the process. There is a reason why manufacturing plants used to hire many people and now they need less, people are still needed but there are less every year. This is good for the manufacturer because robots can work essentially 24/7, with some time down for regular maintenance. For every job function that involves a great deal of repetition, there is likely a robot for the job. If you watch a YouTube video about the Robot Games, the great deal will likely fall faster than you imagined.

In an article by Farah Stockman of the New York Times News Service, across the manufacturing companies are both large and small companies. Robots are fully utilized in the large companies because they have the resources and expecting long times of usage. However the robots are coming to the smaller companies.

To buy a robot could cost as much as $500,000 which is a lot of money for a small or medium sized company, but renting is feasible. In the article, a company called Formic, a Woodridge, Illinois company takes care of installation, training, programming and repairs. The cost is about $23 a hour roughly the same as a human.

In every smaller manufacturing plant, boxes have to be stacked on pallets to be shipped to distributors to be sent to the end customer. The stacking takes bending of the knees and use of the back, if you do it enough times, possible back injury will result. A robot solves the problem and the people can do something else and there is no particular reason to hire more people.

In the US, there are 244,000 manufacturers and 93% have fewer than 100 workers and 75% have fewer than 20, according to the Manufacturing Extension Partnership. Many of these small business lack the capital and in-house knowledge to integrate new equipment into their assembly lines.

Saman Farid, CEO of Formic says this is where the opportunity is. Formic rents robots to 150 different locations. Formic’s customers are often small, family owned businesses that have to turn down orders because of lack of staffing. Automating the most arduous and repetitive jobs allows them to redirect employees to more productive tasks, keeping them satisfied (and longer employed) and boosting sales.

AAA20 Group, a Las Vegas company leases robots called palletizers that stack boxes onto pallets and wrap them in plastic for $4,950 a month.

RobCo, a German robot-leasing firm, acquired the assets of Rapid Robotics, and will open an office in San Franciso and is equipping a manufacturing facility in Austin, Texas.

Robot rentals make up a tiny but growing slice of the overall market, according to the International Federation of Robotics, an non-profit group that publishes an annual survey of robot manufacturers around the world. About 113,000 transportation and logistics robots were sold globally in 2023, up 35% from the previous year. About 5,000 were rentals.

Linking to dividend paying stocks, similar to most industries the larger companies because of the volume and money involved if they do not do it, lead the way in ensuring, in this case robots are used. A few years go by, the robots begin to come down in price, other companies start using them and when it becomes affordable smaller companies use the same processes. Rentals mean a revenue stream and after that it is doing your homework to pick a public company that is making a profit and can send dividends to you.

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