The economy is opening up after COVID shut it down and that is a good thing. Governments around the world have battled a health care crisis and we are recovering, that is a good thing. It is not surprising that as the economy recovers changes are happening at a rapid pace and more and more involves technology. This is good because customers are served, not so good because once technology is in place, there is no turning back some jobs will be lost. If you think about the auto plants of Henry Ford time, there were thousands of jobs and to keep people on the job, Henry Ford offered higher wages. Those auto plants do not exist, the new ones go to You Tube type in making of F150 Fork Truck and see how many people are on the auto plant? The F150 is Ford’s biggest and America’s biggest selling truck.

In the service industry, automation has come partly because of a need and partly because after the pandemic starting wages have risen to attract people. Pre pandemic, if someone worked in the service industry the wage was near the minimum wage and to make a living, people needed to work well over 40 hours or had more than one employer. That has changed as people have choices to go to higher paying jobs or closer to $15 a hour.

In an article by Ben Casselman of the New York Times News Service, employers have been making choices because they need bodies or automation.

When Kroger supermarket customers in Cincinnati shop online, their products may be picked by a robot in a warehouse, not by a person in their local supermarket. If successful it will be rolled out to more stores. The warehouse is 375,000 square feet and uses more than a 1,000 robots.

Gamers at Dave & Buster’s in Dallas who want pretzel dogs can order and pay from their phones – no need to flag down a waiter.

At the drive-through lane at Checkers in Atlanta, the request is done by a voice recognition algorithm.

For years we have seen technology focused on the manufacturing world and when there are repetitive movements on a regular basis, robots are very useful to use. The robot does not have sick days, it works when the line is moving and it is capital depreciation asset. Now technology is going into the service businesses and when it goes in, it is very difficult not to use it.

Shana Gonzales, a Checkers franchisee in Atlanta was having a hard time finding workers and thought there could be another solution. She contacted Valyant AI, a Colorado based startup that makes voice recognition systems for restaurants. It took a while for set up and testing but it has worked very well and she has added the service in her other Checkers restaurants.

Ms. Gonzales has 4 restaurants and needs 30 people if she could find them. The pay in Georgia was $9 a hour and she has increased it to $10 a hour. Technology is easing pressure on the workforce. If she paid $15 a hour she might be able to fully staff, but would have to raise prices which might cut sales.

In a survey of 300 global companies at the World Economic Forum this past year, 43% of the businesses expected to reduce their work force through new uses of technology.

Some economists see the increased investment as encouraging, some do not. Some people in the industry see good in technology, but if the idea is to make it very simple why would somebody spend a career in the industry?

Linking to dividend paying stocks, all profitable companies need to need to use technology to their best advantage and see the glass half full. When one company is using technology to meet customer demand, others will hear and see what they are doing in the trade journals and follow suit. One company will have an edge and the large profitable companies buy the company to offer their customers the edge, is an age old story. Profitable companies do not have to be on the edge, they have patience to see the positive affects and the resources to duplicate to maintain their market share and margins.

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

In an article by Ken Sweet of the Associated Press, American Express is upping the benefits and the fee on its flagship Platinum Card as it tries to hold onto its customer base as the economy opens up again.

American Express is changing how it views its customers – according to Rafel Mason, senior VP of international premium products at American Express, the card is aimed at those who travel extensively, but those who have an affluent lifestyle and are willing to pay for it.

Every credit card does the same thing, gives you credit to buy now and pay later, however some cards have higher limits than others. The card with the greatest limit is the black card of American Express but the platinum card ranks high on the list. The Platinum card has been in circulation since the 1980’s and it fit a very specific niche in the marketplace – it was aimed at those travelled, stayed at hotels, dined out and shopped. Consider the affects of COVID 19 on all the above for the past year and half, the revenue stream dropped as people could not do those things, what should American Express do?

The fee is being increased from $550 to $695 a year.

The benefits included a $179 credit with CLEAR, the security verification service found at many airports; a $200 credit for prepaid bookings on AmEx’s Fine Hotel & Resorts or Hotel Collections properties; a $240 annual entertainment credit service towards NBC’s Peacock or the New York Times and $300 annual credit to Equinox gym membership or a digital fitness class subscription.

Linking to dividend paying stocks, for generations American Express has been associated with those who travelled (fly business class); stayed at hotels (3 star plus); dined out (restaurants) and there are many people who have the card. Then the pandemic hit and although American Express does things, it was linked to travelling, hotels and eating out which meant they had to do a rethink of their business. As the world comes out of COVID 19 expect profits to roll in and that is why profit generating companies can continue. They can pivot when needed, change to the circumstances and keep going with their strong customer base.

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

When you consider hacking measures designed by governments to examine what other governments are doing, that is one aspect of geo-political measures which all the world believes is semi okay. We hack you, you hack us; however the same tools used to hack governments can easily be translated in Ransom attacks on companies.

In an article by Nomaan Merchant, Eric Tucker, and Frank Bajak of the Associated Press, US and British agencies disclosed in early July how Russian intelligence tried to break into cloud agencies of hundreds of government agencies, energy companies and other organizations.

The US National Security Agency (NSA) described attacks by operatives linked to the GRU, the Russian military intelligence agency.

Brute attack means the automated spraying of sites with potential passwords until hackers gain access. The agency urges companies to adopt methods urged by experts as common sense cyber hygiene, including the use of multifactor authentication and mandating strong passwords.

The NSA says GRU-linked operatives have tried to break into networks using Kubernetes, an open source tool developed by Google to manage cloud services. The hackers also used Microsoft’s Office 365 cloud services.

Joe Slowik, a threat analyst with the network monitoring firm Gigamon, said brute force method and lateral movement inside networks described by the NSA are common among state-backed hackers and criminal ransomware gangs, allowing the GRU to blend in with other actors.

In the news conference, the NSA was joined by the FBI, the Cybersecurity and Infrastructure Security Agency and the British National Cyber Security Center.

John Hultquist, VP of analysis at the cybersecurity firm Mandiant characterized the activity described in the advisory as routine collection against policy makers, diplomats, the military and the defence industry.

Linking to dividend paying stocks, when governments play the spy game against each other, business tends not to mind because they have been doing that since the Cold War and before. However, the same skills can be used against business and they will be charged Ransomware, because the line is not very clear anymore. In the old days, bank robbers were asked why they robbed banks, they would answer that is where the money is. For a profitable company, the money is within the area of the internet and protection has to be a top priority. Ask what companies and if common sense cyber hygiene is a given or monitored in your investments.

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

If you are a fan of Sherlock Holmes, you may have seen a movie or description in the books after the fog in London, UK. In reality, although London is accessible by river to the ocean and the fog does come in, much of the fog was coal pollution. Ever since the discovery of coal in northern England, London has been burning coal, at first for heating in homes and then to generate electricity. The ports and railways of England developed to bring coal to the marketplaces.

If you know something about British history, former Prime Minister Margaret Thatcher closed down coal mines and caused a great deal of strife in labor relationship.

In an article by Elizabeth Piper and Susanna Twidale of Reuters, the UK Minister of Energy Anne-Marie Trevelyan moved the target to end the use of coal to generate electricity to October 2024. Part of the reason is climate change and the year was to be 2025, the other part of the reason is the UK is hosting the UN Climate Change Conference in November.

Coal known as coking coal will still be mined for the steel industry.

Linking to dividend paying stocks, industries changed over time, but people get attached to the history and do not see the alternatives. It takes effort to see the alternatives becoming better and the new need to change. For companies that continually make profits and pay dividends, examining strategic values is important or you may want to find alternatives.

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

If you think about the brokerage company Robinhood, it was done a wonderful job shaking up Wall Street and introducing new retail investors to stock trading. If you use Robinhood, one of the biggest reasons for using the app is low commission or zero commissions to buy and sell. In that sense, Robinhood makes it easy to set up an account and begin trading. The downfall is they do a poor job on allowing people to use margin and for many the margin or borrowing is too easy and too much. Margin is the wonderful double edge sword – if you use it you can juice up your returns, if you are wrong you end up with too much debt. Debt has to be repaid.

In an article by Stan Choe of the Associated Press, Robinhood Financial will pay close to $70 million to settle a wide range of allegations including it gave its customers misleading information and allowed some users to make riskier trades after they lied about their trading experience.

The financial penalty is the largest ever ordered by the Financial Industry Regulatory Authority (FINRA), a non-governmental organization that oversees the brokerage industry. Jessica Hopper, head of FINRA’s department of enforcement said it reflects the scope and seriousness of Robinhood’s violations.

Robinhood neither admitted nor denied the allegations but for its 31 million customers, has improved support for customers, including talking to a service representative on some issues.

FINRA noted Robinhood seemed to be using approval lots with very limited oversight to decided whether to allow customers to trade options.

Robinhood has been fined before.in 2019 it paid $1.25 million and 2020 paid $65 to the US Securities and Exchange Commission that it failed to tell customers who the settlement of trades worked. Robinhood goes through a division of Citadel Securities and prices may not be the ones on the screen, likely a little higher.

Linking to dividend paying companies, Robinhood is a new company challenging the rules of the game and it is not surprising the more established companies exert influence over the regulator. The regulator likely did the best thing for everyone but one has to wonder why it was the biggest fine in FINRA’s history. Companies have a love hate relationship with the regulators. They love it when the regulator punishes their opponents and believe they have a working relationship with the regulators and hate it when they come after them.

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

On Independence Day weekend more than 2 million people flew everyday which is a record and an wonderful indication the economy is returning to more normal. When a person flies their expectation is to fly the newest planes and large companies such as United must continually buy or lease new planes. The new planes also tend to be similar to new autos – they should cost less to maintain, achieve greater mileage per mile flown and be flexible to meet the demands of the public. All this is good for the airlines, but to make money they need the business class to resume their flying schedules and gaining points. In most organizations there is a time delay to using the points and the airlines make money from the delay.

In an article by Tracy Rucinski and Eric M Johnson of Reuters, United Airlines made an order for 270 planes worth more than $30 billion made by Boeing and Airbus. The planes go into domestic operations between 2022 and 2026.

United which is America’s 3rd largest airline will be able to boost the number of seats across its domestic network by 30% and get better use out of hubs with the fleet shakeup.

Boeing makes the planes in Washington State and South Carolina while some of the Airbus planes will be made in Mobile, Alabama. For Boeing the order includes the new Max 737.

Linking to dividend paying stocks, profitable companies can look to the future to modernize to take advantage of opportunities in the marketplace. They have the leisure to continually trying to find better efficiencies to help their customers in the short and long run, when they do their customers tend to stay loyal and be repeat customers.

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

In late June, the US Supreme Court ruled in favour of a consortium of energy companies seeking to seize land from the the state of New Jersey to build a $1 billion natural gas pipeline despite the state’s objections.

In an article by Lawrence Hurley of Reuters, the consortium of energy companies called PennEast Pipeline LLC wanted to build a pipeline from Pennsylvania to New Jersey to supply about 5 million homes in Pennsylvania and New Jersey. The pipeline had to go through lands owned by the State of New Jersey who said no.

However, the consortium of companies including South Jersey Industries, New Jersey Resources, Southern Co, UGI and Enbridge. had received a FERC or Federal Energy Regulatory Commission in 2018. The Supreme Court ruled 1938 law called the Natural Gas Act allowed private companies to seize necessary properties if they have received approval from the FERC. The ruling was 5-4.

Linking to dividend paying stocks, many have the ability to have a long lead time before projects can be approved. The pipeline companies started working on the project 10 years ago and have the patience and resources to ensue approvals are given. The issues changed from jobs to energy security to other concerns but the pipeline companies had a good argument and won. Patience and resources for companies which will affectively have a monopoly are good things to have, and usually there is a strategy to achieve the results.

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

In late June, Panasonic Corp sold its holding in Tesla for $3.61 billion, it had bought the shares in 2010 at $21.15 or $30 million.

In recent times we have seen more and more companies taking shares in partners to help them get started and grow. Panasonic is in the battery making industry and it made sense to buy shares in the partner company.

In an article in Reuters, the Board felt given Tesla’s growth, there is no need to continue to own the shares however the partnership with Tesla remains.

Sometimes one of the assets of large companies is their investment portfolio. Tesla shares was bought at $21.15 and held on the books at that price, the shares were sold for in the $670 range and the money will be used for growth purposes.

Linking to dividend paying stocks, companies that generate profits on a year to year basis often times have an investment portfolio of companies they do business with or they admire and generally they are passive investments. Unless there are corporate takeover winds and the company is ensuring over 50% is in friendly hands. One does not buy a company for its investments, but examining them can give you more reason to hold the stock. You might ask what is the policy of the investments the company has or what does it not buy?

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

In every economy, the most important part is the the ability of the bank’s to make loans or keep credit in the system. When the banks have to restrict credit the economy goes in a tailspin, when the banks can give credit the economy has great potential. It is up to the bankers and the regulators to determine how much credit to give and that is a good thing. In 2008 when the housing market collapsed, the banks gave very little credit or the government had to bail them out. The result was at downturn or potential downturn the Fed Reserve sets higher standards for the banks to buy back stock and increase dividends.

In an article by Lanahn Nguyen, Jeannna Smialek, and Peter Eavis of the New York Times News Service, the Federal Reserve has lifted restrictions on the banks ability to buyback stock and increase dividends.

The Fed’s Vice Chair for Supervision Randal Quarles, said the banking system is strongly positioned to support the ongoing recovery.

The Fed was worried about the potential of banks to be in trouble with increased amounts needed for loan losses, however the government’s programs of enhanced unemployment benefits and stimulus payments resulted in the banks not increasing their loan losses. That was a good thing and the Fed believes the biggest banks are safe to leave your money in.

The Fed tests the banks using a hypothetical case of how the banks would fare if a severe global recession happened and global real estate values fell and equity prices on the stock market fell by 55%. The result would be a loss of $470 billion among the top 23 banks with $160 billion from commercial real estate and corporate loans. The bank’s capital ratios would fall to 10.6%, but that is double the lowest required ratio.

Since the announcement, JPMorgan Chase has announced a $30 billion dollar stock buyback over the course of the year.

Linking to dividend paying stocks, it would be wonderful if all industries had an easy stress test to see if the profitable company paying dividends would easily pass the test. You could look to the results and then do all the other important things in your life as you continue to hold the shares for the dividends. For now the best stress test is the approval of the Federal Reserve. When a company buys back its shares the float is less so the Earnings per Share goes higher which results in the share price increase as the stock multiple goes to normal. The total return on your holding remains high.

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