In basic economics taught at the high school level the charts of supply and demand are taught. It is done for a couple of reasons – if guns and butter are the example, if you produce more guns, you will likely produce less butter and vice versa. The basics are always what you have to go back to as you evaluate companies.

In an article by May Angel, Marcelo Teixeira and Jessica Dinapoli of Reuters, the supply and demand will affect coffee prices.

In the past year, the cost of arabica coffee beans has near doubled owing to 4 successive seasons of deficit as adverse weather makes it harder to grow enough of the delicate bean to meet consumer demand.

Coffee roasters are pushing for increased prices, however grocery stores and supermarkets are pushing back to postponing signing new supply deals to the point some grocery stores have run out of stock. In Holland, the Dutch supermarket chain Albert Heijn ran out of product. When the shelves were restocked, the prices were higher.

One of the world’s largest coffee roasters is JDE Peet purchase prices have increased significantly.

In Brazil, which is a global supplier of coffee beans, one of the worst droughts on record happened and supply decreased.

According to Reg Watson, director of equity research at Dutch Bank ING, prices are expected to rise between 15 to 25%.

A large Brazilian roaster called 3 Coracoes raised roast and ground prices by 14.3% on March 1, having previously raised prices 10% in December and 11% in January. In Brazil, prices in the stores have increased 40%.

Data prepared for Reuters by market research firm Nielsen show the volume of roast and ground coffee sold in North America and Europe the world’s biggest consuming regions fell 3.% as prices rose 4.6%. As prices rise, the consumer either buys less or pays more.

JM Smucker owns Folgers which sells to Walmart and Target, expects a decline in volume starting in May as it will raise prices again, its CFO Tucker Marshall said at a conference call.

Consumers are more willing to trade down from brands to private label or in-house brands produced for the supermarket to cut on costs and provide cheaper alternatives.

Linking to dividend paying stocks, in commodity-based companies, the supply and demand is a critical feature to be examined. At what cost will consumers move from name brands to private label brands. People have a reasonable idea giving the normal demand, but how much for a cost factor determines what people will do? It is both an art and science.

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

Tariffs have been used by every country in the world in order to ensure economic activity is done in the country. The difference with President Trump is he loves using them or threatening for across the board issues. He also expects tariffs will reverse 40 years of supply system management in one month. There are valid reasons why the supply system has built the way it has and tariffs will likely not change the system. It can affect at the margins, both margins for companies and at the edges, however decisions are rarely simple, they are complex. We will see how permanent, the tariffs are.

In an article by Timothy Gardner and Marianna Parraga of Reuters, the President has many tools in his tool kit and President Trump signed an Executive Order based on the 1977 International Emergency Economic Powers Act authorizing his administration to impose 25% tariffs on imports from any country that buys Venezuelan crude oil and liquid fuels.

There are a number of issues with Executive Orders, the government has to prove in court that there is an emergency, although going through court takes time. The other issue there are refineries in Houston area that are designed to refine heavy tar sand oil. Most of the oil comes from Canada, but with the tariffs of Canada, the next logical step in heavy tar sand oil from Venezuela.

Fernando Ferreira, director of consultant Rapidan Energy’s geopolitical risk service, said assuming it withstands litigation, I can see this becoming an attractive option for the Trump administration to exert pressure on US adversaries in addition to traditional sanctions.

China is the biggest buyer of Venezuelan crude with 55% of its exports or 500,000 barrels a day. The crude tends to go through Malaysia or becomes Malaysia crude.

Both Venezuela and China slammed the US government for flagrantly violates international trade rules. Although the World Court moves at a slower pace than courts in the US, countries have the option of going there. The other aspect is if the US imposes tariffs, the country has the ability to impose tariffs on American goods. Besides higher prices who wins?

Linking to dividend paying stocks, capital allocation is based on reasonable stability but to do the investment and for the investment to pay off. This is when the priorities of the government and the priorities of the company do not align up and companies will announce future investments but do little because there is no stability the rules will stay in place for any length of time.

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

When a new President is elected, they normally follow the rule do no harm or allow things to run the way they were before but with a different administration. There are always things the new government does because it did not like what the previous was doing. After they fix those problems, the reality of the situation comes up and most like the status quo.

President Trump likes to shake things up, and that can be a good thing, it the messaging allows people to adjust. Unfortunately, sending the country into a recession is not a good thing.

In an article by Matt Ott of the Associated Press, US consumer confidence continued its sharp decline as Americans views of their financial futures slumped to a 12-year low over tariffs and inflation.

The Conference Board reported that its consumer confidence index fell 7.2 points to 92.9. Analysts were expecting 94.5.

It is important to remember about 60% of the US economy is people shopping and buying things. People who love to shop and buy are the lifeblood of the economy, those that are more frugal are important, but the shoppers are the key.

With all the cuts in government jobs, people in non-government jobs tend to cut back because many have grown up when you have a government job, there is job security. You will not get Silicon Valley money, but you have job security. That sentiment is gone and ripples through the economy.

While government talking heads will tell you one thing, the real evidence is from the nation’s largest retailers. Walmart has slashed its profit forecast for this year.

Target Corp’s sales and profit slipped during the crucial holiday season where sales and profits are made.

Mays, Best Buy, Abercrombie & Fitch and Dollar General have grown cautious about their expectations for 2025.

The Conference Board survey shows purchasing plans for both homes and cars declined. If you buy a home, the home will need to be furnished. Then afterwards there is always something to do or week to week repairs and improvements.

In March, President Trump announced a tariff on everything, then he walked it back and imposed tariffs on products on April 2. People know prices will go up, because the solution to build in the US takes billions of dollars of investments and the companies have to know the tariffs are permanent or very long term. If prices go up 25%, but companies need 50% increase before it makes economic sense to change their allocation budgets, prices go up.

Linking to dividend paying stocks, the US economy has evolved to a consumer spending one and when consumers in general cutback it is not good. When you know 50% of households live paycheck to paycheck, the amount of free spending consumers seems to go down every year and every company fights for their share of those dollars. However, it seems for particular events, there still seems to be high demand for products. All of which means is being selective with your stock picking is a good idea.

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

It is good to have alternatives. In life that is a good saying, for it means there are options if something does not work out. It is easier to adjust. In the business world, senior management’s job after ensuring the company makes a profit to pay dividends is the allocation of capital. The allocation is a long-term project which means politicians come and go, what is best for the company?

In an article by Liz Lee of Reuters, China’s economy czar Vice Premier He Lifeng, recently met with the heads of American companies to say China is open for business. The companies included: Apple, Pfzier, Mastercard, Cargill, Eli Lilly, Medtronic, and Corning Glass. All companies with international operations.

Several global investment banks liked China’s moves with Nomura, ANZ, Citi and Morgan Stanley raising their forecasts for the country’s 2025 economic growth by 50 basis points.

The reason why the Vice Premier was able to talk to them was the annual China Development Forum was held which attracted 86 company representatives from 21 countries.

President Trump has placed 25% tariffs on imports, but the US is not the only game in town. China is the world’s second largest economy and can easily move goods around the world.

Linking to dividend paying stocks, similar to many towns and cities, states say they are open for business. If companies like the business environment, they can tolerate the political environment because profits are the end result. All profitable companies are courted by a wide range of people to encourage investment, which is why there are few cuts in that area. A profitable company has options, and with dividends you can have some to.

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

Before every election, executives review the politics and determine which one would make life easier for the company. Individuals may look at the parties and determine what is in their self interest? what is best for the country? if they both align so much the better. For executives, it is what is best for the company to make profits? hopefully for most companies while there are advantages and disadvantages for both, the companies can work with either party.

In an article by River Akira Davis of the New York Times News Service, before the election, Toyota thought a second Trump administration would be good for them. President Trump campaigned on dismantling policies that shifted autos from fossil fuels to electric, Toyota liked that and donated $1 million to the Trump inauguration in January. There was hope among the dealers and executives of Toyota.

Then the Trump administration put on 25% tariffs.

Japan is one of the world’s largest automobile exporters and the US is the biggest market for companies such as Toyota, Honda, Nissan, Mazda and Subaru. The tariffs could easily wipe out 40% of Japanese growth this year.

While other vehicle makers were coming out with electric vehicles, Toyota stayed with hybrid ones.

Japan made about 1 million of the 2.3 million cars it sold in the US outside of the country.

Over the past 70 years, Toyota has invested $50 billion in the US and employes 49,000 people.

Most Japanese automakers do not have excess production capacity in the US which means they would have to build. Unfortunately, it takes about 4 years to design, build and equip a new factory. The allocation of capital requires a solid business case, and according to Michael Robinet of the S&P Global Mobility, right now they do not have it.

Linking to dividend paying stocks, everyone has self-interest when investing. For dividend investing, your expectation is business conditions do not change that much or reasonable status quo. Change happens, but you expect because the companies make profits, they have the resources to deal with it. Sometimes, governments make decisions which throw out the business plans, how will the company and politicians adapt? How do you adapt?

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

If you think about how countries around the world spend money on defense, you will quickly notice that the US with an $800 billion dollar budget is far and away the highest. Then comes China and Russia. There is a reason for that. after WW II, the US government would not allow Germany and Japan and other countries in the Axis to spend more than 1% of GDP on defense so a repeat from WWI and WWII would not happen. The world had great peace for many years. The cold war developed and the US and Russia spent great amount on defense, this meant the rise of large defense contractors which exist in the US.

President Trump was elected and he wants to change things. One of the things he wants to change is the being policeman to the world and that can be good if he cuts the $800 billion defense budget to balance his own budget. However, the reality is US defense contractors have been the favored military companies around the world, will that change? Most of the money the US sent to Ukraine has come through defense contractors products.

In an article by Jim Tankersley, Jeanna Smialek and Melissa Eddy of the New York Times News Service, Europe is looking at spending hundreds of billions of dollars in their own backyard or on European miliary companies.

There is a growing consensus that new military spending is likely to offer some boost to European economies in the near term as military companies ramp up production.

French President Emmanuel Macron is pushing allies to buy French missile-defense systems instead of American ones. Portugal which previously bought American jets is looking at European jets.

The US recently unveiled a $234 billion loan meant to finance shared military development that will prioritize European made products. The loan says 65% of the products must come from member countries. European defense industries employ 600,000 workers which is less than the 3 million employed by automakers.

Defense officials caution this will not happen overnight and will take a few years to ramp up. There is an issue with standardization for example Ukraine has been sent 17 kinds of howitzers not all which use the same type of shell.

However, in WWII, we saw domestic production change to wartime production in reasonably quick timeframe. It will not take years, but a year or two and then sales from the US will fall.

Linking to dividend paying stocks, if you owned defense companies in your portfolio, it terms of making money they have been good for governments like to spend money on defense. Which companies can change and nothing in the defense industry ever seems to go down in price. Perhaps you want to begin to diversify your holdings to include European companies or at least as long as the US is no longer going to be the policeman of the world.

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

Every time you turn on your computer or open your smartphone, there is an expectation that whatever you are doing is reasonably secure. There are things you are supposed to do if you go to the coffee shop and do things, but for the majority, the reality is with the greater access to WiFi, the average person opens up and is ready to go. This means the programs the people use must do most of the heavy lifting so people can use their devices.

In an article by Deborah Mary Sophia and Krystal Hu of Reuters, Alphabet (google) offered $32 billion to Wiz as it doubles down on cybersecurity. The reality is more and more companies are cloud based businesses and the competition includes Amazon’s AWS, Microsoft’s Azure, Oracle Cloud, IBM Cloud and Salesforce.

Last year Alphabet offered $23 billion but was rejected by the Israeli startup. The company was valued at $12 billion in a private funding round in 2024 and had $500 million in annual recurring revenues. The company was showing a continual growth pattern. The company was formed in 2020, and an early investor was Index Ventures which held 11% of the company which will be worth about $3.5 billion.

The CEO of Google Cloud Thomas Kurian kept in touch with the Wiz people and came back with a higher offer. The deal is set to close in 2026. When President Trump was elected, Wall Street felt the new administration would be more favorable to mergers and acquisitions and we will see. Mr. Kurian believes it to be the case.

The cloud generated more than $40 billion in revenues in 2024 and major customers include Morgan Stanley, BMW and LVMH.

Linking to dividend paying stocks, most companies do not do everything inhouse, some do, but it is rare. The reality is the large companies use many suppliers and as long as the company is successful, then they will be relying on suppliers. If you like the company, then look at their suppliers and see where the recurring revenues are and that can be a good opportunity for you to own them as well.

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

In all industries there are conferences which the major players gather, and people discuss the future and hopefully some deals are made. In addition, if you are in the industry and want a job or examine the future the conferences are a great place to start. The conferences typically happen during the spring because in the northern half of the country, there was snow and ice. The spring is when the snow and ice melt, the weather gets warmer and outdoor activities resume in full. Every industry has multiple conventions but there tends to be a higher profile one.

In an article by Jeffery Jones of Reuters, the high profile convention for the oil and gas industry is called the CERAWeek by S&P Global in Houston, Texas. Legions of oil, gas and electricity executives are in the meeting halls of the convention. This year’s convention was seen as more important because of President Trump’s motto of Drill Baby Drill. To many of the industry it means, the lack of government regulations should mean greater freedom for the industry. What will they do with it?

In the AI data center boom, the demand for electricity is a good thing for the oil and gas industry because many of the data centers demand will be met with natural gas powering the power plants.

In addition, the LNG or liquefied natural gas plants to sell natural gas outside the US is in full operation mode.

US Energy Secretary Chris Wright was in the meetings and said he was honored to play a role in reversing what I believe has been very poor direction in energy policy. Secretary Wright was a former fracking executive, said that there was no way wind, solar and battery power could replace the many uses of natural gas which fuels 43% of US electricity. (one might notice in Trump 2.0 few are talking about increasing coal to make electricity, mainly because of the price differences).

Rystad Energy issued a report that highlights natural gas as immediate critical fuel for data centers which need almost 100% up-time. The inventory of planned US gas-generation projects has ballooned from 6 gigawatts to 17.4 gigawatts.

Longer term, the desire is to examine nuclear power, but the timelines to have functional nuclear power plants is much longer than natural gas plants.

Jeff Currie, chief strategy officer of energy pathways at Caryle and former commodities chief at Goldman Sachs, believes energy is in transition. In the 1970’s it was energy security, then climate became a driver. The security-driven energy transition moves faster than the climate one. The balance of energy is security over affordability over the environment. If they become out of balance you end up similar to Germany. The German shift has 59% renewable but the cost has been higher energy prices for consumers and businesses.

Linking to dividend paying stocks, the basic in all commodities is the balance over security -affordability – the environment. What do you want to pay and what are you willing to give up? There are fewer simple answers, in the past it was growth or not to grow and generally society picked growth. It is expected, society is more complex with many more voices to be heard and essentially every group does similar actions. Governments play a role in the short term to allow for a decision to be made but sales need to be made at a profit and those supply and demand curves you learnt in high school do not really change.

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

In every market there are ebbs and flows of normal market conditions, but once prices rise all producers need to produce more because there is more money to be made, then there is a surplus and prices fall. In every market as long as it is reasonably healthy, there is expected demand that should be needed, then there is government incentives to do more. For example, the previous Biden government passed the Infrastructure Act to repair and replace bridges and roads and other things needed for cement, steels and asphalt. This would tend to push up demand for the products as the ability to do the work comes forth. The Infrastructure Act has helped steel prices rise, which is good for the industry.

President Trump has imposed tariffs on steel and aluminum, which he said he would and thinks it would be a good idea. With all ideas, there are some positives and negatives.

One side effect is what should the non-domestic exporters do? In an article by Heekyong Yang and Byron Kaye of Reuters, two South Korean steelmakers are considering investment options in the US, while Europe’s steel mills warn of a flood of surplus metals.

The 2 companies are POSCO and Hyundai Steel. A steel maker needs a base of customers to support it operations, however Hyundai Steel is considering a plant in southeast US. POSCO is looking at both India and the US for upstream steel processes.

In Europe, the expectation is if the US market is closed off, steel that would be sent to the US would go to Europe. The biggest steel maker in Europe is Thyssenkrupp Steel, and they said it would not be good for Europe in the long term. Another Germany steel maker, Salzgitter said protective measures in Europe would be needed immediately.

Luxembourg-based Aperam called for talks because neither the company nor its US customers would benefit from a prolonged trade conflict.

Austria’s Voestalpine said its revenues would fall and it is having discussions about price increases.

ArcelorMittal, the world’s second largest steelmaker, has operations in the US and plans to ramp up production.

Australia’s BlueScope produces 3 million tonnes of steel a year at its plant in Delta, Ohio says with higher steel prices, it will be good. In 2022, it spent $700 million to increase production with the help of the State of Ohio and local economic development agencies.

Late last year, Japan’s Nippon Steel wanted to buy US Steel, but was only allowed an investment.

The largest steel maker in the world is China Baowu Group with made 13,284 million tonnes of steel, then ArcelorMittal with 6,889 followed by China’s Ansteel Group with 5,565, Nippon Steel of 4,437 and Shagang Group of China 4.4145 and HBIS of China 4,100. The US companies are Nucor Corp with 2,060, Cleveland-Cliffs 1,680 and US Steel 1,449.

Linking to dividend paying stocks, with all government policies there are advantages and disadvantages and some unintended consequences. Tariffs may sound good, but all industries have their complexities which is why companies like stability.

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