If you ever read books about Sherlock Holmes, the weather played a part of the descriptions. One of the reasons London was foggy was people used coal to heat their homes. The upside is homes were warmer, the downside is the air was foggy for longer periods of time. If you look at pictures from LA or Bejing, both of those cities are built in bowls – the mountains surround the cities and the air pollution stays until the winds blow it away. Then all is good. President Trump has used the coal industry as a political pawn and wants to mine more coal. Although the reality is for an underground mine, there are machines which do the digging and for strip mining, there are environmental concerns when the coal has been taken away from the deposit.

In an article by John Raby and Leach Willingham of the Associated Press, the Trump administration wishes to help the struggling coal industry.

Particularly in the western states, the US government owns most of the lands, and an executive order allowed more mining on federal lands. At one time, more than half of the power generation facilities burned coal to generate heat to turn turbines to make electricity. Many coal plants have switched to natural gas because prices are low and the US has great resources of natural gas. However, there are coal plants still operating. The administration allowed the nearly 70 older coal plants to keep operating by the way of a 2 year exemption to reduce emissions of toxic chemicals.

The US Energy Information Administration produces data every year and for example in 2014, US production was 907,000 metric tonnes, by 2023 it had fallen to 524 metric tonnes or by half.

President Trump seems to think of coal employment at its peak in the 1920’s when there were 900,000 miners. In the 1950’s it had fallen to 350,000. In 2023 the number was 45,476. The states with the most mines are West Virginia, Kentucky and Wyoming.

Elon Musk’s DOGE decided to save money on the mining safety agency MSHA by ensuring fewer inspectors inspect the mines and with less frequency.

Under President Carter, a fund was set up to restore land damaged by strip mining and reclaim closed coal mines. The agency responsible is called Office of Surface Mining Reclamation and Enforcement and was active in Lexington, Kentucky and Tulsa, Oklahoma.

Linking to dividend paying stocks, in every industry alternatives exist. For generations, immigrants came to America to work in the coal mines. The work paid but it was hard on bodies and never paid well, however it did allow coal to be mined. The process changed with the abilities of machines to do the work and more of it, which is better for everyone in the industry. It is the reason why there are fewer mine disasters, which is a good thing. If you invested in the coal industry, you will likely have long term holdings as the companies have consolidated to stay in business. Technology may bring new uses for coal, but that is still a pipe dream.

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

In Washington, and in reality everywhere else, the number one conversation is tariffs particularly with China. Who is talking to who and how long will it take to reach a deal? While administration press people say the President is talking to 200 countries, in reality a trade deal takes time. In the President’ first term – an agreement between US, Mexico and Canada (who are generally considered good partners) took 18 months. NAFTA was replaced by USMCA and signed by President Trump.

The global trade has evolved to what it was before President Trump signed the tariffs over 80 years and millions of people around the world moved from subsistence farming towards what is middle income in their countries. Under those conditions, it has been a success. Over the same period, the US economy moved from manufacturing to services and consumerism, with a small part of the economy related to manufacturing. Most people work in services including financial, tech, or retail and about 2/3’s of the US economy is related to buying goods or consumer shopping.

The global economy allowed China to start with relatively cheap goods and over the past decades the institutions of China now turnout extremely qualified individuals that can solve problems. Apple CEO Tim Cook said for his manufacturing needs, in the US he could fill a classroom, in China he can fill football fields. The post-secondary institutions in China are turning out great graduates.

All companies in the world, do not want to be dependent too much on others. President Trump has tapped into this dependence and all over the world people agree with the sentiment. However, it is debatable without trillion of dollars, the US would become independent.

Then you have China. David Rosenberg wrote in 2017 22% of goods imported in the US came from China. Today that number is 13%. This is due to a number of factors including sending their goods to a third country before they reach the US. It also due to the Belt and Road initiative which Chinese investment in infrastructure to countries around the world also means they receive Chinese goods.

China has options, the value of direct Chinese exports to the US in 2024 was about the same as it was in 2013. Meanwhile, the value of China’ exports to the EU has soared or China has diversified.

President Trump talk about shipping LNG, there was a huge market in China of 9.3 million tons and now it is near zero. This does not make Texans happy. Beijing is buying its LNG or gas purchases from the Middle East and Asia-Pacific countries.

Last week, China cancelled soybeans purchases from the US and bought from Brazil. Now only is China’s the US largest customer for soybeans, the backstop USAid used to buy surplus crops to send them overseas, the President through DOGE stopped it. Soybeans futures are down.

China not only mines most of the rare earth minerals that go into silicon chips, it processes the metal in China too.

In an article by Ana Swanson and Jonathan Swan of the New York Times News Service, the issue of who is talking to China was explored. The Treasury Secretary said he was talking to China about financial concerns but not tariffs. President Trump claims of talks have been rejected by Chinese officials from China’s Commerce Ministry. Any claims about progress in China-US economic and trade negotiations are baseless rumors without factual evidence.

What we do know is shipping container traffic at the business ports in Long Beach are down 60% which means less stuff is being shipped across the Pacific. Retailers are examining the 145% tariffs and looking at doubling prices, how much will people buy when prices are doubled?

Trump official have admitted the status quo with China on trade is not sustainable, and some have wanted lower tariffs. The White House insists it will not do that unless a deal is reached for China to do the same.

In the meantime, after 80 years of global supply system, on Wall Street as public companies give their quarterly and annual reports, fewer are giving guidance of what to expect in the next 3 months.

Linking to dividend paying stocks, not all companies will be affected by the tariffs, at least directly. In many industries, they bring in parts from around the world to produce a good and sell it, they will be affected. Many parts come from abroad and when something breaks down or needs replacing, an added and expensive delay will result. (a very small example, is I bought a bicycle from a national retail chain during Boxing Week Sales to ride it when the snow was gone. The back tire was bent and needed a new one, it took 3 months. Fortunately, most of the time the weather did not allow for it to be ridden). The tariffs will affect companies indirectly for example, banks lend money to people to do things. If they are not buying but saving, they make less money. If people are laid off collection dates go up as bills are paid on the last minute or late. There will be companies making money because of large moats and near monopolies, hopefully you have them in your portfolio.

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

Whenever there is a crisis, in the business section reporters reach out to many analysts for their viewpoint and the analysts will run their models to set expectations. Later the analysts will do more analysis, but the first draft will be able to give a good idea of what will likely happen, given the existing conditions. In every industry there are analysts doing similar work, but the ones that are reported on tend to be the higher profile companies.

In an article by Irene Galea and Sean Silcoff of Reuters, they wanted to know how will the tariffs announced by President Trump affect Apple.

The design and headquarters of Apple is in the US, but Apple became the world’s most valuable company by leveraging global-supply chains to make its best-selling consumer products. With a stroke of a pen or Sharpie, President Trump has changed that strength to a vulnerability.

80% of its iPhones are made in China with the other 20% made in India. The majority of its smart watches are made in Vietnam and the Mac computer is made in Malaysia. All those countries were put with high tariffs by the President.

36% of Apple’s revenues were generated in the US. If tariffs remain the same, importing the goods would cost Apple $39.5 billion a year which would slash its operating profit and annualized earnings by a third.

The solution is to raise prices for consumers to offset the rates or absorb the expenses seriously eroding margins. Counterpoint Research co-founder Neil Shah, believes prices will need to go up a minimum of 30%. If prices go up 30% will demand drop? how much is the question.

The other option is for Apple to lobby for exemptions based on the projected announcement of a new AI factory in Texas as part of a $500 billion investment in the US over the next 4 years.

Linking to dividend paying stocks, while the questions are known to everyone, the answers are generally a range and how efficient supply chains are and how much to raise prices not affecting sales and margins is an unknown, only the consumer knows the answer. All dividend paying stocks have analysts falling their companies which is why many companies fall into the estimates of projections. For slow growth companies it is only when something goes wrong, that estimates are not in line, for growth companies, beating estimates is a good thing.

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

In all society, we make a choice to do something one way or another and as long as it is legal society reflects that choice. Because the underlying aspect is legal, then it filters into everything else that society does. Thus it becomes very hard to change, because the solution is not a simple one. A great example is the oil industry. The oil industry replaced the killing of whale for the oil that lit lamps to allow people to read in the evenings. Otherwise, we would go to bed after the sun goes down.

in an article by Seth Borenstein of the Associated Press, a Dartmouth College research team came up with the estimated pollution caused by 111 companies. About half came from fossil fuel producers: Saudi Aramco, Gazprom, Chevron, ExxonMobil, BP, Shell, National Iranian Oil, Pemex, Coal India and British Coal Corp.

The 111 companies was estimated to have caused $28 trillion in climate damage. To provide context, $28 billion is the sum of all the goods and services produced in the US last year.

The study determined every 1% of greenhouse gas in the environment causes $502 billion from heat alone.

The researchers started with known final emissions of products produced by the biggest 111 companies going back 137 years. They used 1,000 different computer simulations to translate those emissions into changes for Earth’s global average surface temperature by comparing it to a world with that company’s emissions.

The system is modelled on the established techniques scientists have been using for more than a decade to attribute extreme weather events to climate change.

Although it is interesting topic for research, society has to determine whether we still value and what fossil fuel companies to do their thing which benefits society at large.

Linking to dividend paying stocks, in many dividend paying portfolios are oil stocks and pipelines because they have a consistent return of dividends because the larger companies are very profitable, which allow them to pay dividends and raise them on a regular basis. Every industry has some downside and as an investor you can determine if you want to be directly holding stocks in that field. If you do, then the upside is profits and dividends.

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

When the President Trump decides to implement policies, most people have to accept what he has done and try to work with it. Then there are a group of people whose phones begin to ring to lobbyists to do what lobbyists try to do which is influence the policy, so it does not affect them. We all know in principle how it happens, once in while you see it, but the tariffs have seemingly brought in lobbying wider open.

In an article by Tony Romm of the New York Times News Service, when President Trump steep tariffs threatened to double or triple the price of iPhones, Apple CEO Tim Cook called the President and secured a reprieve for his company and the broader electronics industry.

The lobbyists saw what the President had done or made a carve-out all wanted a carve-out for their people. The agriculture, construction, manufacturing, retail and technology industries have plead their cases.

Then came the company CEOs, anyone who has shopped at Walmart or Target knows many of their goods come from China and Southeast Asia, the CEOs raised their concerns with the President. Target spokesman Jim Joice said they had a productive meeting. CEO Doug McMillion of Walmart acknowledged the many variables, but it was productive.

The EVP for government relations at the National Retail Federation, David French said his industry had sought a meeting with President Trump. While they may agree they want to purchase more goods made in the US, supply lines cannot be reconfigured overnight. Particularly if steep import taxes on machinery and other critical components result in substantially higher manufacturing costs. As well in the retail industry, companies order for 6 months out, not for next month.

Charles Crain, managing VP for policy at the National Association of Manufacturers wants the administration to scope out specific manufacturing inputs that we need to make things in the US.

Kip Eideber, SVP for government relations at the Association of Equipment Manufacturers said if the administration wants to strengthen US manufacturing and bolstering our global competitiveness, then there needs to be relief (or government grants and incentives).

Some business groups are warning the White House the companies may not be able to create the factories and jobs without stable financial markets, available labor and access to raw materials – all inputs that maybe more expensive by the rise in tariff rates.

Linking to dividend paying stocks, all people have the same goal, how they get there is the issue. For investing you are looking for solid, secure companies that will be in business for a number of years and can pay profits along the way. There will be some ups and downs in the marketplace but you are expecting the government neither overtly helps or hurts them, you are looking for steady as she goes, to use a nautical term. The less storms as possible, particularly self-made or you will looking to the lobbyists.

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

Most of us believe that technology is going to help produce a better world and hopefully for us large profits along the way. When we think about technology we often think of changes that happen, and it will benefit us. As long as most of us benefit, we think that is great. However, sometimes new technology creates disruption for others.

In an article by Keith Bradsher of the New York Times News Service, CATL the world’s largest supplier of batteries for electric cars said it had made breakthroughs that will allow it to produce batteries cheaper, lighter, faster to recharge, more resistance to cold and greater driving range.

Most of the changes are a couple years away from being widely available in new cars which would make them competitive in price and performance as gasoline-powered models.

CATL produces 1/3 of the world’s electric car batteries and supplies 16 carmakers including GM and Tesla. Its main rival are BYD which makes 1/6th of the world’s EV batteries which is used by BYD, Korean and Japanese battery makers.

CATL noted batteries typically represent 1/3 of the cost of EVs.

CATL is using technology to make sodium-ion batteries which keep their charge in colder weather. If you examine a map of China, the northern part gets cold. The good news for the US is the world’s largest deposit of soda ash is in southwestern Wyoming.

Linking to dividend paying stocks, for a number of years, gasoline powered vehicles had clear advantages over EVs particularly in long distance driving. As the cost falls and the ability to drive further, the relative advantage of gasoline power falls or becomes closer to even, if that happens what will an average driver in the US do? Buy EV or buy gasoline power? You will have to decide. How will the big 3 adapt?

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

In every industry, when something happens to one of the owners, it can put the company into play or someone wants to offer. There are wonderful assets in every industry, often times the founders expect to leave the company to their families, and the legacy continues. There are thousands of reasons why that might happen, but the possibility does open up.

In an article by Gleb Bryanski of Reuters, the company called ERG or Eurasian Resources Group once produced 1/5 of the world’s gallium, a rare earth material used in microchips and included on the US list of critical materials. (an idea might to examine the list and pick the best companies on the list and know that the US government has an interest in them). ERG stopped production of the gallium after China increased its output of the metal in 2012. In December of last year, China banned gallium exports to the US as part of the trade war.

In 2013, ERG was taken private in a $4.5 billion buyout by its 3 founders who owned 20% each as well ad the government of Kazakhstan owning 40%. In February, one of the ERG’s founder and Board Chairman, Alexander Mashkevich passed away leaving only one founder among its current shareholders.

James Cameron, once a Board Chair of Petropavlovsk has offered $5 billion for ERG. The Luxembourg based producer of copper, cobalt, aluminum and iron ore and has formed a task force to explore rare earth and rare metals in Kazakhstan. Recently Kazakhstan’s government geologist have found a deposit will 20 million metric tons. Mr. Cameron is working with Goldman Sachs and the letter he sent to the ERG Board said the financing will come from his own funds, other investors in the US and possibly Australia and the Middle East.

Linking to dividend paying stocks, while everyone hopes to find a company that can last a long time and be passed on your heirs, it is often harder than you think. Reviewing the Forbes or Fortune top companies from 20 years back to now, you will see changes. If you own the ones that are still at the top, that is good. Most people also own companies that have faded and are need of a shakeup. Sometimes the shakeup is new ownership and that is why you need to do your homework to ensure the reasons why you own the company are still valid and profitable to you.

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

Often governments turn to the biggest players in the industry for advice because whatever government policy that is done, there will be a cost and large players have the ability to analyze the potential costs to them. Then the company can decide to hold prices or try to raise them in order to maintain their margins. One would think the President of the US with access to some of the biggest companies in the world for advice, would have done that. Perhaps he did, but perhaps he outlined what companies thought he would do and did something else.

In an article by Niall McGee, the largest aluminum producer in the US is Alcoa Corp. The company discovered aluminum and at the time quickly became more of the largest holders of bauxite reserves (the raw material}. In addition to bauxite, the process in very energy dependent or the need for long term inexpensive hydro is needed. Fortunately for Alcoa, a spot was discovered to be perfect in Quebec and the Canadian government essentially gave away the hydro rights to the company which ensured inexpensive energy inputs. A number of years later, with Alcoa controlling more than 90% of the market, the company was broken up by the US government and the Canadian division became Alcan.

The way that it worked was Alcan made the aluminum, and the processing or manufacturing of the product was done in the US. The system has worked very well until President Trump imposed tariffs on aluminum which drives up the cost.

The CEO of Alcoa William Oplinger is appealing to President Trump to drop its tariffs on Canada because the US does not have domestic capacity to fulfill its needs, and any attempts to meet that demand would put a strain on the electricity grid.

On a conference call, CEO Oplinger said even if the US aluminum capacity could be maxed out, the country would face a shortfall of 3.6 million tonnes. To build a new smelter years as well as additional energy production. The new production would require 7 new nuclear reactors or the equivalent of 10 Hoover Dams. Who will build those?

Until the smelters are built, the most efficient aluminum supply chain is through Canada which currently supplies 70% of the US needs. Thus to support the downstream processing jobs, we need to have upstream aluminum production that can be Canada. (it is noted: the system in place means 90% of aluminum cans used in Canada are made in the US).

Alcoa is a top 10 globally producer of aluminum and the chemical compound of alumina. It is also one of the world’s biggest bauxite miners. The company operates in 28 locations and 9 countries around the world and is headquartered in Pittsburg.

Linking to dividend paying stocks, one of the reasons to invest in these companies is besides the ability to make profits and pay dividends is senior management should have connections into government to ensure policies tend to affect them the least. The companies ensure analysis into all aspects of their operations is comprehensive and constantly worried about alternatives. One would think policy makers would want to reach out to the senior management before enacting policies which hurt them, because they have to be reported in financial press when the companies are negatively affected. People will question the administration is this the outcome you were expecting?

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

One of the justifications for the trade war between the US and China is the dependence of China of the US consumer market. Some of the biggest retail stores carry many items from China or originated in China. Sometimes the pieces are made in China and put together in the US and can be called an American product. However, for China the US represents 12% of the items they export.

In an article by Eric Reguly of the Globe and Mail, as President Trump escalated his trade war with every country around the world, all countries are looking at alternatives. One of the biggest alternatives is the EU or European Union of countries.

President Xi Jinping met with Spanish Prime Minister Pedro Sanchez.

President Trump met with Italian Prime Minister Giorgia Meloni.

President Xi Jinping urged the EU to embrace a fair international trade environment and jointly resist unilateral and intimidating practices.

One of the elements the Chinese could do is order more Airbus from the EU as opposed to buy Boeing. Boeing is the biggest contributor to export sales.

The EU has long considered China a strategic, economic and political rival.

China has been making investments in some EU countries such as Hungary. Billions of dollars are flowing into the country particularly in auto plants and battery production facilities.

Italy has been trying to reduce the equity stake held by China’s Sinochem in Italy’s Pirelli, one of the world’s biggest tire manufacturers and exclusive supplier to Formula 1 cars. The government of Italy considers Pirelli a strategic asset and national industrial treasure.

Linking to dividend paying stocks, in large businesses because they are large tend to be viewed by their host country as very important which results in many partnerships and relationships, Some are easily figure out, others not so much. For example why was Sinochem allowed to buy a 37% stake in a national treasure? It is complicated and about money, Pirelli needed it. What does that mean for the future – it is complicated and about money.

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