In every large company, there will be a number of divisions with thousands of employees and each of them contributes to the company’s results. Sometimes there will be a disruption in one division or another, but it is always important to determine how much does that division contribute to the profits of the company or perspective is needed?

In an article by Cathy Bussewitz of the Associated Press, 3,200 workers at 3 Midwest manufacturing plants where Boeing makes military aircraft and weapons went on strike. The 3 facilities are in St. Louis, St. Charles, Mississippi and Mascoutah, Illinois. The members are part of the International Association of Machinists and Aerospace Workers or IAM.

Boeing had anticipated the strike, and the plants will remain open as the non-striking workforce can continue to support Boeing’s customers.

Boeing’s Defense, Space and Security business accounts for about 1/3 of Boeing’s revenues. Boeing’s CEO Kelly Ortberg, noted the impact will be less than the walkout of 33,000 workers who built the Max planes.

Revenue for the second quarter had improved and the company only $611 million compared to $1.44 the quarter before.

Linking to dividend paying stocks, with large companies when something happens negative happens you need to know does it affect their main profit center or other divisions? How does the company handle the disruption? who has it handled it in the past? If you have good answers for these and other questions, then you may continue to hold the stock and wait till the disruption is over and the stock bounces back.

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

Having skin in the game, you will hear the phrase and from an investors point of view, senior management of a company should own shares in the company they manage. Ideally, enough to give them incentive for the long-term continuation of the company, but not enough to worry about the stock price every day. It is often why at the AGM, senior management compensation is voted on and it usually tries to give more shares over a 5-year vestment and the price of the shares is somewhat less than the market. In this fashion, senior management owns more shares, the shares are in the money and if the company continues to do well, there will be more shares next year.

In an article by Michelle Chapman of the Associated Press, the question of how much is enough, was put to Tesla shareholders and they voted to give more shares to Mr. Musk. Tesla is awarding 96 million shares to restricted stock valued at $29 billion. The exercise price will be $23.34 a share, which is equal to the exercise price per share of the 2018 pay package that was awarded to the CEO. It was held up by a court filing, because the process of awarding the shares was not transparent. The independent directors were not really independent.

Since 2018, the shares of Tesla has grown, which the present Board argued that Mr. Musk deserves compensation because he has delivered transformative and unprecedented growth that translated into immense value generated for Tesla and all shareholders.

Dan Inves, an analyst from Wedbush (you may have seen him on MSBC wearing colorful jackets) said we believe the grant will now keep Musk as CEO at least until 2030 and remove an overhang on the stock. Musk remains Tesla’s biggest asset, and the comp issue was a constant concern since the lawsuit began.

While Tesla was once the world leader in Electric vehicles, the reason people believe in the stock is the autonomous driving and use of robots that is the potential future of driving.

In the most recent quarter, Tesla profits fell from $1.409 billion to $409 million.

Linking to dividend paying stocks, all companies including voting for senior compensation at the AGMs and as shareholders you need to balance is this the right team to lead the stocks higher, keep profits and pay dividends. If the answer is yes, then it is rare for the compensation not to pass; if no the compensation will likely pass but you need to find alternatives.

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

In the world of management, there are different managers and the issue is how will the organization run through both good and not so good times. Every industry goes through cycles and it is much easier when times are good, but markets have a way of keeping people on their toes, because similar to the story in Aesop Fables of the ant and grasshopper, if you do not have supplies in reserve, when the harvest is long gone, what will you do?

In an article by Ben Casselman of the New York Times News Service, one of President Trump’s management style is he does not like bad news.

When President Trump didn’t like the weak jobs numbers, he fired the person responsible for producing them. Never mind the numbers reported on is what the financial industry relies on, never mind the person who gave the numbers is at the top of a large number of people who have input into the numbers, never mind it would almost be impossible to manipulate the data and never mind if the numbers are what President Trump called fake numbers, it leads to many questions and none of them are good.

In countries such as Greece, Argentina and China, numbers were reported that faked deficit for years. One hopes with a great many economists going through the data, if the data does not mean expectations of private sector data, it would be very hard for the US government to report fake data.

The Bureau of Statistics is officially part of the Labor Department whose Secretary is in the Cabinet. The agency operates independently. producing detailed, non-partisan data on employment, prices, wages and other topics.

Official statistics, government statistics are a mirror that society holes up to itself. If that mirror is distorted or broken, then the accountability that is central to the democratic system cannot work. If society cannot see itself clearly, then it cannot identify its problems. If it cannot identify its problem than it cannot find the right solutions.

Linking to dividend paying stocks, as investors company report their earning every 3 months, if you believe they are fake, and it has happened in the past, the result is the company’s stock goes to zero. Good data matched to analyst expectations allow you to keep your money in the stock market.

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

For every government raising money is a necessary aspect to keep functioning. In the US, income tax came into 1913, partly to pay for WW I as military expenditures are both necessary and expensive, which has not changed in this century. Everyone wants the other person to pay their full share, but less for them. Raising income tax levels for both individuals and corporations is going to lead to many questions and fewer votes. Governments then look for other methods to raise money, and President Trump has seized upon tariffs.

Tariffs are paid by the importer, which means an extra cost which means higher costs for the end user. Essentially tariffs are taxes, but if a company cannot add the entire tariff to the price then the company has to pay the tariff from its margins or makes less money.

In an article by Andrew Duehren of the New York Times News Service, custom duties including tariffs have generated $152 billion in July, roughly twice as much when compared to a year ago in July of $78 billion.

President Trump has commented on Truth Social Media that tariffs are bringing in billions of dollars to the US and it was a good thing.

Joao Gomes, an economist at the U of Penn’s Wharton School believes the money could be addictive. It will be very hard to turn away when the debt and deficit are what they are.

President Trump has long fantasized about replacing taxes on income with tariffs. The tax cuts in the latest Republican bill moves the US away from taxing earnings and toward taxing goods.

The issue is who benefits the most and it tends to the rich the most. The reason is lower-income Americans spend more of their earnings on those more expensive goods or the ones with tariffs. meaning the tariffs amount to a larger tax increase for them compared to richer Americans.

Tariffs have begun to bleed into consumer prices both because of the tariffs and for domestic companies matching the higher imported prices to raise their margins. Clearly prices are not going down.

Linking to dividend paying stocks, clearly any company which was importing goods has to pay more for the goods and the need then goes to passing on higher prices to the end user. While there are significant advantages in using imported goods, the issue is how high must the tariff be before it is less expensive to do the work in the US. A 15% tariff or less is likely manageable, but we will see in the coming months because most imported goods have a time delay for the logistics to work their way into the system.

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

Every quarter, corporate America whose companies are on the stock exchange report their quarterly earnings. The CFO has worked overtime to ensure the results are in place and to meet the expectations of analysts all over the world. The more valuable the company, the more analysts who spend time and effort to determine what the company should be earning. The analysts raise expectations both for the company, the industry and the market reacts. For some companies it is relatively easy to determine what they should be earning, so expectations are important.

In an article by Deborah Mary Sophia and Greg Bensinger of Reuters, Amazon reported a profit which is good, but not beating expectations of the rest of the industry. Amazon for the past few years, the biggest profit area of 60% was AWS or Amazon Web Services. AWS profit margins fell from 39.5% to 32.9% in the first quarter versus 35.5% a year ago. The AWS reported a 17.5% increase to $30.9 billion edging past expectations of $30.77 billion. However, the competition of Microsoft’s Azure rose 39% and Google Cloud gained 32%. The issue revolves around will Azure overtaken AWS as market leader.

Amazon expects total net sales to between $174 billion to $179.5 billion, compared with analyst’s average estimate of $173.08 billion.

A concern of analysts is while Amazon has poured billions of dollars into AI infrastructure, is the lack of a strong AI model from AWS is causing concerns the company could be trailing rivals in AI development.

The retailer posted online store sales of $61.5 billion, an 11% gain. Advertising sales were up 23% to $15.7 billion.

Linking to dividend paying stocks, profitable companies often continue to report profits every year but do they meet expectations of growth? Companies are valued on great number of statistics and projections of where they will be the future, no one knows for positive, so expectations play a role in deciding alternatives.

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

One of the summer readings was a book called Asian Waters by Humprhrey Hawksley published by The Overlook Press, NY, 2018. Although the book is a few years old, the issues it covers have not changed much for the book is about the struggle over the South China Sea and the strategy of Chinese expansion.

Many people have heard and know something about the US and Cuba crisis in 1962. At the same time, China and India were feuding over land. President Kennedy asked Indian Prime Minister Jawaharlal Nehru, what he needed and just over a week after the Chinese invasion, US military advisors, weapons and other supplies were in Indian military air bases. The US also sent military assets to the Philippines ready to help India. (incidentally, originally the Spanish controlled the Philippines but their empire went downwards, in 1898 after Teddy Roosevelt and the Rough Riders helped fight the Spanish in Cuba, the Spanish added the Philippines to the settlement. Cuba was important for the sugar trade and the US was beginning to look beyond its borders). China had fewer weapons and withdrew from India.

A year later, Pakistan ceded territory in Jammu and Kashmir to China. The problem was that India claimed 4,000 square miles of Aksai Chin. India and Pakistan fought over the borders, peace was brokered by the UN although the biggest tank battle since WW II had occurred.

Pakistan found itself an ally of both China and the US. When President Nixon went to visit China in 1971, India forged an alliance with the USSR. India also sponsored an independence movement in West Pakistan (now Bangladesh). The US lined up against India and for Pakistan.

The constant state of war and hostilities with Asia prompted a nuclear arms race. By 1974, India had nuclear weapons. The relationship between Pakistan, India and China is complex.

In the book, each country in Southeast Asia is examined and they all have their histories and as time goes on more and more influenced by China. Which is why if you listen to opposition US politicians as the US steps back from being a world leader, China is stepping into the position. Is that good or bad, time will tell, but hopefully you will have a greater understanding of the why.

Linking to dividend paying stocks, in all industries, there are leaders and the leaders drive the industry on the drive to continue to make profits to pay dividends. In all industries you can see companies that could move towards leadership if the leaders step backwards for a multiple reasons, including succession planning. If you own investments in companies that are leaders, it is good to also know who could replace them if conditions change.

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

If you are similar to most people living in North America or Europe, you will hear news about China but not really know the details, because wherever you live that is the area of the world where you will be focused on. First it is where you sleep, then where you work, then the local community, the regional community and wherever your friends and relatives live. In order to have a connection to another part of the world, you need some sort of personal connection. This is why books are valuable, you can develop an understanding and then go back to your regular world.

One of the summer readings was a book called Asian Waters by Humprhrey Hawksley published by The Overlook Press, NY, 2018. Although the book is a few years old, the issues it covers have not changed much for the book is about the struggle over the South China Sea and the strategy of Chinese expansion.

If you go back to the spice trade from Asia to Europe, for generations it was done by land routes or camel caravans and boats from the Mediterranean Sea. If you ever read Shakespeare the Merchant of Venice, the merchants lived in Venice, Italy and controlled the spice trade on the Mediterranean. It was not till people looked beyond the Mediterranean and a ship went exploring and brought back spices to Europe. The trip would take a year or two, but it turned out if the ship came back the profits were very healthy. First the Portuguese dominated the trade but soon the Netherlands or the Dutch, the Spanish and English were sending ships to the spice islands and taking a country for their own or colonization. When profits are healthy as long as the major partners are making money, there is relative peace. When someone wants a bigger share, then conflicts happen.

If you jump to 1842, England had the most powerful navy in the world which allowed the British Commonwealth to be the biggest group in the world. When the price of spices went down, alternatives needed to be found. It turned out that India grew opium and it was the drug of choice for Chinese. The East India Company whose shareholders included royalty, shifted from spices to drugs and profits flowed to London. If you think about the war on drugs between the US and Columbia (cocaine), you have an idea of the tensions between China and Britian.

England had a more powerful navy and weapons of mass destruction; wars were fought and a couple were called the Opium Wars which England won. One of the many concessions was the drug trade continued. At the same time, the government in China was on the downhill, relative to before 1492 when China was the leading country in the world, however the emperor turned inwards and let someone rule the world.

China’s leaders want to get back to the period of dominance and at the moment it is the world’s second largest economy. There are multiple ways they are doing this including what is now as the Belt and Road linkages. Similar to all countries, they like to have options, if the primary route is under threat, there are many secondary routes to link into the country. China has the money to do that and they have gone to many countries offered them infrastructure, as well as a military presence for their navy.

Back to the book, the east coast of China is on the South China Sea and to protect itself and ensure its dominance, China has been taking over islands, adding to their land and installing military installations on the land. Some of the islands are outside the 200-mile limit, but China is the elephant in the room, who can stand up to them?

Linking to dividend paying stocks, the companies are often the biggest players in terms of market share and profitability which allows the companies to raise prices as costs go up and to maintain margins. From an economic standpoint, as investors you like that, which is why often times evaluating the world from an economic viewpoint means it is slightly easier to understand.

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

When gold was discovered in California in 1848, it set off a rush to get to the state, but the only options were travelling by ship or wagon trains. It was not until 1869, the East and West coasts were linked by railway. Over the years through various consolidations and agreements, no single entity has controlled that coast to coast passage.

In an article by Josh Funk of the Associated Press, Union Pacific and Norfolk Southern Corp in a $85 billion deal want to change that. UP owns vast rail network in the west and NS is concentrated on the East Coast. UP is offering $20 billion in cash and one share of UP or $88.82 and a share which values NS at $320 a share.

Any deal would be closely scrutinized by antitrust regulators who had set a high bar after previous consolidations led to massive backups and snarled traffic. If the deal is approved, there would be pressure on BNSF and CSX to merge. BNSF has the ability to buy CSX.

The regulators of railways is called the US Surface Transportation Board and in the hearings, the big shippers have a say, but they all want something a little different. The chemical plants in the Gulf fear a monopoly or higher prices. Other big shippers such as Amazon and UPS might be in favor if the packages arrive more quickly and reliably.

The deal if approved will take 2 years of planning for a smooth integration or they are looking for 2027 approval.

In the early 1980’s there was 30 major freight companies, now there are 6 companies.

Linking to dividend paying stocks, one of the reasons for owning a railway is they are not making any railroads anymore. The size and shape of the country means the cost of using railroads over trucks will always exist, which means big shippers need the railways. As long as the economy is moving, the railroads will make a profit and pay dividends. The issue is how much of a profit.

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

If you are reasonably normal person, most of the time you focus on what is around you, where you live and work, then where close friends and family live and finally everywhere else until you visit there. There are very good reasons to do this, but we live in a global environment so information about other countries is a good thing to know.

In an article by Lydia Depillis and Bhadra Sharma of the New York Times News Service, beside China is a country of 3 million known as Nepal. If you know anything about Nepal, you will likely know the highest mountain in the world is located in Nepal. If you have mountains, that should there should be hydro electric power and likely is relatively inexpensive because the water comes down the mountains.

Similar to most countries, Nepal had many vehicles with internal combustion engines, that has been changing. 5 years ago, there was almost no electric vehicles or EVs. This past year, 76% of all passenger vehicles sold were EVs, and the light commercial vehicles were EVs.

The swift turnover is Nepal’s wealth of hydropower and China’s EV companies had a push to sell vehicles into Nepal. The process was also helped by government subsidies to buy EVs.

The Asian Development Bank has been a key financier of Nepal’s dams, transmission lines and charging networks.

The cost of a Hyundai SUV is $38,000 and the gas-powered model is $40,000.

The Nepal Electricity Association built 62 charging systems in the capital Kathmandu. It also allowed anyone to build chargers, businesses have added 1,200. The government set electricity costs for chargers at less than market rates. At those prices, fueling a gas power tank costs 15 times as charging an electric one.

There is no perfect method as the gas-powered auto dealers worry Nepal does not have a plan for collection or recycling of batteries. The smaller Chinese car companies might be faulty; there should be more regulation to independently certify safety and quality.

Linking to dividend paying stocks, if the government wants to change habits, people vote with their pocketbook. It is the same in investing, if there is a better way, new technology which is adopted then people begin to adjust to the different method. It is a tried and true method which no matter the industry, people vote with their pocketbook to find alternatives.

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