In every administration, investors want some form of consistency and stability in order to invest in a theme and let the companies do the work necessary to set in the business plans are followed and the results make money for shareholders. It is a simple request, but politicians have minds of their own and often times use the road least travelled than the easiest method to do anything or it seems that way. For the Trump administration, the President has caused reaction to his ideas and while he talks about a weave, it is a little hard to follow what the results he wants are.

In the past quarter, we saw the stock market fall and then come back to where it was and climb on the basis it was not as bad as it seemed to be. Many families have different meals a week and one of them is TACO Tuesday or whatever day. The families are actually eating food.

On Wall Street, where everyone has an opinion, President Trump’s emphasis on immigration has played out to TACO trade or the expectation that Trump always chickens out or TACO. It maybe true, has been true, but will it be true in the future?

In an article by John Rapley of Reuters, the sentiment that President Trump is all talk, no action. The reason is while people may agree with the end result, how you get there is up for discussion. If billions were spent on the existing global trade system, what will be the result in 90 days? how much of a change will happen or even could happen? if you think about construction of a new home in a suburb – it will need sewer and roads or infrastructure, it will be a framework then the electrical and plumbing to be put in, and eventually the house will ready for someone to buy it and move in to become a home. There is a process, can it be speeded up? a little bit but it still takes time.

The problem with the TACO trade is it reinforces the notion the administration has got itself into a dangerous place.

In a normal administration, the last 2 years are essentially a lame duck president, because the President cannot run again and other people begin the process of running for the top job and they have to have a slightly different approach than the current holder.

President Trump has imposed July 9 as the day for all the tariffs to be signed and sealed. Will the President either offer an extension or stick to his guns and reimpose tariffs? The last time, the bond market did not like the results of liberation day.

The second deadline is the US will hit the debt ceiling by the end of July. With the debt ceiling be increased? will the Trump signature bill which increases debt be passed? what will the bond market do? President Trump want lower interest rates and has been fighting with the Federal Reserve chief over it, but will the bond market force higher interest rates?

Linking to dividend paying stocks, in all industries, there are some acronyms that work for a time and have truth in them, but they are meant to be guidelines. One can easily say Buy and Hold. If the company is profitable and can reinvest and also pay dividends, the acronym makes wonderful sense, but if it is not profitable, you might be holding for a long time before you breakeven. Use the acronyms as guidelines, not absolutes.

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

When most of hear about energy investments are bias is to first think about oil and gas industry and to be certain there continue to be investments in that sector. However, if you think about the world in general, other kinds of energy investments will be made.

In an article by Emma Graney of the Globe and Mail, the 2025 World Energy Investment report was released by the International Energy Agency (IEA).

Faith Birol, the executive director of the IEA said clean energy (wind and solar) will amount to 2/3’s of the investment because the cost of clean energy continues to fall.

The report says oil and gas production will be $570 billion and that is about what the sector spent last year. LNG or liquefied natural gas is experiencing its largest capacity growth between 2026 and 2028, with projects coming on stream in the US, Qatar, Canada and elsewhere.

On the electricity front, never has there been such a massive growth in global demand. Between now and 2030, demand will increase as much as the current consumption in the US and China combined.

The cost of utility scaled batteries has fallen by 2/3’s over the past decade and global battery investment is approaching the level of gas-fired power generation investment.

The investments in electricity grids is $400 billion a year, but that needs to increase to meet the demands.

Linking to dividend paying stocks, the report is good news for companies such as pipelines, investor owned utilities and companies that supply the infrastructure to ensure when the light switched is turned on, the power works. If you start at the macro level of what is going on and expected to go on in the industry, then you can determine which companies best work for you. For an industry that is expected to grow, there are fewer bad choices, just what is best for you.

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

When you are investing there are rules and the number one is try not to lose money. The second rule is remember rule one. However, that rule is often broken for a variety of reasons because we all want more. Sometimes we want more, but did not do our homework, but we still want more.

In a book called The Signs Were There by Tim Steer, published by Profile Books, London, UK, 2019, the author is a Chartered Accountant who became an investment analyst and is presently a fund manager for Artemis. Mr. Steer is based in the UK, but accounting rules apply to all western countries including the US.

Most people invest in the biggest companies and for the most part they are going to do okay by rule number one. As a fund manager, Mr. Steer is exposed to a great many companies because he has money to invest and needs to constantly do research and analysis to try not to lose money.

Mr. Steer offers the following signs from the annual report of companies. If you see these signs while doing your homework, look for alternatives.

a deteriorating current asset quality, where there is an increase in the subjectivity in valuing them. Amounts recoverable on contracts which may take ages to collect are lower quality current assets, when compared to cash and invoiced receivables that should be easily to collect.

large and increasing accruals of revenue where chosen accounting policies allow for the recognition of revenue ahead of the cash actually being collected. (when is a sale revenue?) when the contract is signed, when money comes in, some companies stretched the limit)

large and seemingly unsubstantiated goodwill amounts in the balance sheet

relying on acquisitions to keep profits moving ahead. (one company had 37 acquisitions in 6 years, do you really believe they found cost savings and synergies?)

disclosed related party transactions. Run away from any company that does business with related parties. (related parties tend to do real estate deals and the price always goes up).

reported worrying trends in its performance. A deteriorating set of numbers over time showing rising stock levels, poor cash flow, falling margins or big increases in working capital can be a trend that is your friend, telling you to avoid the shares. (an example was a pet food company, the big margins were made changing habits from wet (10%) to dry (50%) pet food, which the private equity folks did. when the company became public where were the fat margins?)

growing levels of stock or makes odd adjustments to its stock valuation. (companies can issue stock at what valuation?)

capitalized large costs that under normal circumstances would be expected to pass through the income statement.

being too optimistic as to the recoverability of its debts and failed to provide adequately for bad ones. (it is easy to lend money, it is harder to collect it)

Linking to dividend paying stocks, if you invest in companies that make profits, and you understand how they make profits that can pay dividends the odds are you will not lose money. However, since you are human you will likely have some investments that you were intending to have short term holdings, but they became long-term holdings because the price went down. For the money not in dividend paying stocks, they take longer to do your homework because making profits consistently is a hard task to do. For those companies you have to watch out for the warning signs.

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

The biggest story for the next few years how artificial intelligence will affect the lives of everyone on the planet. We are aware that AI is coming as the chips to run the data crunching are getting better every year and there is heavy demand for the chips. This means that there are numerous ways to invest in the AI trade.

In an article by Avi Salzman, Mackenzie Tatananni and Joe Woelfel of Barron’s, Meta signed a deal with Constellation Energy to buy all the electricity produced by its Clinton, Illinois plant to power a data center. Clinton is located in the southwest part of the state and the deal is for 20 years of power.

As AI continues to make inroads into the world, there are a number of ways to invest and every month new AI ETFs will arise. Think of construction of a house, there are many different companies that are involved and it is the same with AI. There are hardware companies, software companies, energy companies, companies that produce the parts for the AI data centers, to make it safe – cybersecurity companies and the list goes on. Companies such as Vertiv Holdings, Emerson Electric, Eaton Corporation and the list goes on. Some of these companies have announced they have backlogs to do the work till 2027 and beyond. As an investor that is good news.

Linking to dividend paying stocks, in all areas of the stock market there are the higher profile companies than make the news more often. Then there are the steady performers who benefit from the high-profile companies because they work behind the scenes. As you do your homework, sometimes the ones behind the scenes are less volatile when markets go up and down.

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

In politics, the people love to have slogans because almost everyone can read into the slogan whatever they wish to. In this fashion, people buy into the slogan and the world can move on with some emphasis to the slogan. In the case of President Trump, one of his slogans is more manufacturing in the US. It is hard to find someone who disagrees with the slogan. How you go about it, there is much disagreement.

In an article by John Turley-Ewart an opinion writer with the Globe and Mail, he explains what conditions are present in the China and why in 90 days or whatever short time period President Trump has, very little manufacturing is likely to come back to the US.

Mr. Turley-Ewart uses information from a book called Apple in China by Patrick McGee. For the past 25 years, Apple and China have a relationship. Apple provided billions of dollars of know-how, China ensured stability of government which invested in education to provide an expanding managerial and engineering class atop of a scalable, just-in-time, low wage, low-skilled, low-rights 300 million plus floating work force that moves as needed from factory to factory. (If you think of migrant workers harvesting crops, moving to the next field to harvest, then you have an idea of the workforce in China’s manufacturing sector).

In 1999, Apple did not produce its products in China. A decade later it was making almost everything there. Since 2008, Apple has trained 28 million people in China’s factories.

Apple has invested about $55 billion annually by 2015. This supplied the capital and expertise needed to train managers and engineers to establish and run factories and complex tooling companies which encouraging raw material extraction and refining essential to feeding the just-in-time high-tech supply chain Apple products rely on to generate $90 billion in annual profits.

Apple is now moving some of its manufacturing to India which has similar conditions as China in regards to people in the country moving to the cities for regular higher paying jobs than the subsistence in the countryside.

Linking to dividend paying stocks, often times these are the ones that benefited from the global supply systems that have been set up. Each part has evolved for a particular reason and it would be very hard to duplicate in the home country, not with standing the slogans of the politicians.

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

In President’s Trump big beautiful bill is a cut to medicare and health services. There are practical reasons why there are cuts particularly as the baby boom generation ages, the cost of health services will dramatically increase. The next generation is smaller, which tends to mean health care costs should decline, but the way the health care system there are really no decreases.

A book about health care is called Dying for a Paycheck by Jeffery Pfeffer, published by Harper Business, NY, 2018. The issues with health care are not new, but Mr. Pfeffer, a Professor at the Graduate School of Business at Stanford University provides a healthy statistical information about the health care system and its relationship to people.

An important statistic is 75% of the more than $2 trillion annual health care spending was accounted for by people with chronic diseases. These diseases include diabetes and circulatory problems.

Mr. Pfeffer focused on people working and that means at the workplace it is very easy to find productivity loss arising from sickness, the cost to replace employees who are to sick to work, higher insurance premiums, cost of having health care and how to reduce it. From a employer’s perspective, focus on prevention should be a key, is it?

If someone does not have health insurance, what happens? The expected life expectancy falls because of a number of factors: higher stress levels because of fear of getting sick, medical bills which are difficult to pay, and non-prevention actions because some of it means going to see medical professionals on a regular basis for screening. It is easy to treat something at the beginning of the cycle then once you are infected and the list goes on.

There are many different methods for companies to deal with the health care of all types. Some companies reduce workforces (typically when a company announces a layoff, its stock will fall because investors see something is wrong, then it takes a week to figure what was wrong and how the company is addressing the problem). some companies offer prevention and everything in-between. The real issue for investors is how does the company rationalize what it is doing? does it keep workers longer? are they happier and more productive? are they grinding it out because they have a job till the next layoff? how do employees think about their company?

Linking to dividend paying stocks, for the foreseeable future health care and its issues will play a significant role in the scope of government. How a company translates those concerns to their employees is an issue which needs to be examined. Most people hope the drug companies will have the magic pill or treatment, but only if is covered by insurance companies.

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

If you pay attention to the war between Ukraine and Russia, you will have seen changes in the way war is being done. Traditionally, while people had weapons war was done on a person to person basis. If one side had more people, they could send waves of people and eventually the other side would lose. This tactic was present during the Middle Ages and was one of the reasons why WW I was stopped. Both sides were losing too many people, and it was difficult to find more. Part of the problem with person to person is the need for the troops to rush in and be cannon fodder. The war in Ukraine and Russia is changing this with technology.

Drones or small unmanned aircraft outfitted with cameras and also can carry weapons, means there is less dependence on people. The drones can be sent from a safe place for the operator and if there are enough of them sent, some will reach their targets.

In an article by Omar Saleth and Paul Ziadea of North Vector Dynamics, an opinion article in the Globe and Mail, in early 2024, a $2.3 billion US Navy destroyer used a $2.1 million SM-2 missile to shoot down a $500 one way attack drone launched by Houthi rebels over the Red Sea. In the course of a few weeks, the US Navy spent more than $1 billion in high-end munitions defending commercial shipping lanes against threats that cost the enemy a few hundred dollars each to launch.

For the past decade, Western defense procurement has drifted toward the exquisite. Precision, complexity and integration have become synonymous with capability. But in the last couple of years because of drones, the shape of modern warfare has shifted. The ability to wage war has been disrupted. The old battle plans have been shifted, war has changed.

Drones have flipped the battlefield. Every new drone engagement pushes the same question – how long can the allies spend money before there is concern with deficits?

In the Ukraine, $39,000 Shaheds and $35,000 Lancets have knocked out multimillion dollar NATO tanks and air defense systems. In Gaza, rockets costing a few hundred dollars have triggered $40,000 to $50,000 Iron Dome interceptors and once in while get through. In the Red Sea, low-end drones have forced the Navy to expend $3 million missiles, and some drones have hit commercial ships.

A British defense and security think tank called Royal United Services Institute says drones are now responsible for 60 to 70% of all damaged and destroyed Russian equipment in Ukraine. A growing proportion are equipped with AI guidance. In the past, jamming radio frequencies would drop the human controlled drones to a 10 – 20% hit rates, the AI are achieving 70-80% hit rates.

The problem is not capability, it is culture. The Western defense procurement ecosystem is not built to reward cost-efficiency. It rewards integration, vendor relationships, program longevity and adherence to legacy doctrine.

Major defense firms still push gold-plated, monolithic systems built for complex and tightly controlled battlefields. For high-end threats, this makes sense. But against swarms of cheap drones, it is not good.

Linking to dividend paying stocks, a profitable company has the advantage of larger resources, but if the competition is changing the board with hundreds of dollars, it is a matter of time before either the competition is bought out or the competition becomes the leader. The reason is the disruption of what works and what does not. It is always important to understand what is the culture and the strategic plan of the company. Do you agree?

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

When people think about investing, they are often drawn to the stock market and it is reported in the financial press. But in reality, the biggest market is the bond market mostly accessed by institutions or institutionalized accounts. While the stock market is important and when a company makes money it is celebrated, when a company does not make money and declares bankruptcy the reality is bond holders are paid first, then preferred stocks and finally common stocks are left picking up the pennies that are left. The bond holders hold the cards, everyone else watches.

The bond market is the risk return of paying back the debt owned. The higher the risk, the higher the interest rate. For generations, the top country in the world by far has been bonds backed by the US government. It is one of the great reasons why it is the default currency of the world. If the local currency is being ravaged by inflation, by instability the powerful greenback buys goods and services.

In an article by Coley Smith and Joe Bennison of the New York Times, the House of Representatives controlled by the Republican Party passed what President Trump calls a big, beautiful bill. It does many things, but for bond holders, it increases the debt in the future. That coupled with existing debt, bondholders are beginning to seriously ask is the country’s debt becoming unmanageable?

Yields on US bonds, which underpin consumer and business interest rates around the world, from mortgages to corporate loans. Yields rise as prices for bonds fall. Higher yields reflect investors’ concerns that buying its debt has become more risky.

If President Trump is correct and the economy gets back on a good path – the economy starts growing, inflation stays down – you might see a demand for American asset. said Christopher J Waller, a governor at the Federal Reserve.

Ajay Rajadhyaksha, global chair of research at Barclays Bank said, it was increasing plausible that the central bank will not cut, not raise rates, but do nothing all year.

This year the government will spend more than $1 trillion on interest payments on its debt, which is more than the defense budget and twice the amount from 5 years ago.

Despite the uneasy mood across Wall Street, financial markets are still functioning smoothly.

Linking to dividend paying stocks, similar to individuals, when their debt payments get out of hand, there is remarkably little savings and equity to fall back on. The bond market looms in the background most of the time, but it is the force that drives the economy. One way to keep the bond market in the background is invest in profitable companies because they make profits which means they have choices and can reward shareholders through buybacks and dividend payments.

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

There is song by Kenny Rogers called the Gambler and in it is the lines You have to know when to hold and know when to fold. When a merger is announced, the companies have agreed to a price and sometimes external events happen. The events can be elections or politics either at the national or local level. Sometimes the local event is seen to affect the national event and the local event becomes symbolic and repeatedly makes the national news. This was the case with US Steel.

In an article by Alexandra Alpher and Jarrett Renshaw of Reuters, US Steel needs an investment and were given one by Cleveland Cliffs but at a low level. Nippon Steel made an offer which the Board of Directors agreed to and all was good for US Steel. The Presidential elections were on and the two people running for President are of the age when they remember US Steel as an important force in the economy. There are multiple reasons why that has changed including use of technology by competing companies. However, US Steel was seen as an icon in the swing state of Pennsylvania which meant both candidates can out across any merger.

The Japanese Prime Minister visited President Trump and among things he did was lobby for Nippon Steel. The President agreed for an investment by Nippon Steel.

Nippon Steel was subject to a national security review which ended on May 21 and submitted new plans to invest $14 billion in US Steel including a new $4 billion steel mill.

Nippon increases the investment pledges from $1.4 billion to $2.7 billion and promised to keep the US Steel headquarters in Pittsburg. They had agreed to $565 million breakup fee with US Steel if the deal does not go through.

It seems President Trump will allow the deal to go through and the investment will become majority ownership.

Linking to dividend paying stocks, the good thing about dividend paying companies is they have a long-term horizon, which means they can wait till the politics goes down and will consider the investment for years. While it is wonderful if the savings and investment happen in 2 years, it may happen over 5 to 10 years and produce results for the next 25 years. Similar to individuals time horizon is important when you are investing.

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