When John D Rockefeller started Standard Oil, he started in the refining business. Eventually he did a deal with railways to transport the oil at cheaper rates to his refineries. Finally, his company finished the vertical integration by drilling for oil. To have a less expensive price than railways, Standard Oil built refineries to bring the oil to his refineries. Most people when they think of the oil industry, think of the drilling for oil and the pumpjacks that are in places where they find oil. However, the real issue is the refining of the oil to various products such as gasoline, diesel fuel, jet fuel, chemicals to build plastics, and all the other uses. Much of the how the refinery works depends on the sulphur content and similar to maple syrup how clean the oil is.

In an article by Florence Tan, Siyi Liu, and Robert Harvey of Reuters, if President-elect wishes to impose a 25% tariff on everything coming across the border from Canada and Mexico, he can. If he does there will be options for the oil producers in Canada and Mexico as well as consequences for refineries in the US.

The US accounts for 61% and 56% of crude exports from Canada and Mexico respectively according to ship-tracking data from Kpler.

Canada and Mexico export mainly heavy-sulphur crude that is processed by complex refineries in the US and most of Asia. A large Indiana refinery near Gary. which is south of Chicago recently spent $3.5 billion to upgrade to meet the supply of oil sands oil from Canada. If tariffs were imposed one would expect it to refine less oil.

After the oil is found, it needs to be transported by ship or train or on a pipeline, there are some refineries in the US which only take oil from a pipeline.

In Asia, the refineries are capable of handling the high sulphur oil and LSEG analyst Ann Pham said it would be expected if tariffs are imposed more Mexican and Canadian oil would go to Asia.

In Europe, Spanish refineries could take more Mexican crude, but it is more likely Asia could easily absorb any volumes not sold into the US. Exports of Mexican crude oil to Europe has averaged 191,00 barrels a day with 81% going to Spain. Canadian flows are 85,000 barrels a day.

Linking to dividend paying stocks, oil companies in general are some of the most profitable companies on the planet and have paid dividends for hundreds of years. It is not likely to change anytime soon particularly when the price of crude is expected to stay in the $70 range. If President-elect Trump decides on a 25% tariff across the board, a simple solution will mean complex decisions in the marketplace.

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

In business, there are supply chains and while most consumers will go to a retail store, those retail stores receive supplies from somewhere. In the world, there have been and are countries where the supplies can be received for less than it costs to do it locally. Every country has its advantages and disadvantages, however it is the one that you live in and make a living which is the best one. The difference between cost of acquisition and cost of selling is profit or margins. All businesses want the highest margins at a stable environment or for a number of years the situation remains the same. Every since the 1990’s, the cost of manufacturing and the ability to send the items to the US has been lower in the US. (If you ever watch a show similar to Shark’s Den – one of the sharks will say I have connections to China, we can lower your costs and increase the margins, if you choose me to invest in your company). When the entrepreneur says yes, he or she is buying into the supply system.

In an article by Alexandra Stevenson and Paul Mozur of the New York Times News Service, one of the inventions which is changing business is drones. In the world of inexpensive drones, the company US Skydio was the big hope. The defense industry and police agencies preferred a US manufacturer and Skydio was their first choice.

Skydio receives its supplies from various parts of the US and China. When President elect Trump said he would impose tariffs on China, China imposed sanctions on the US and severed the companies access to essential battery supplies. The move stops deliveries for Skydio’s customers including the US military.

The message from China, hit us with tariffs, we will hit you too.

The last time President Trump was in power, Beijing was fairly careful to meet the tariffs that the US put in place, said Jude Blanchette, a China scholar at the Center for Strategic and International Studies in Washington, DC. This time around, China will flex its muscles

China has been working on an unreliable entity list to penalize companies that undermine national interests. China will take steps that potentially choke global access to critical materials.

For many companies that rely on China than China does on them, Beijing has the ability to exact major pain. for example: Skydio has spent years building a supply chain outside China, but remained reliant on one crucial item: batteries.

Linking to dividend paying stocks, every company has supply chains and managing supply chains or logistics is important to maintain margins for the company to make profits. Likely your investments have many suppliers and that is a good thing until the President says it is not so good. Will they change and why would they change is the issue? How does your company protect its margins?

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

In less than a month from now President elect Trump will be President Trump and then the buck stops with him. On the campaign trail he made many promises, some will be examined, some will be worked on, some will be done, and some will fail. Often times the more specific the promise, the harder it will be to say he has done it. As with every government, there will be good things with the government and there will disasters and something in-between. As investors you have to try to figure out how the government will affect your investments.

In an article by Lisa Friedman of The New York Times News Service, one of the specific promises President-elect Trump made would be to cut electricity prices in half within 18 months of taking offices.

That type of policy would have an effect on electricity utilities who are some of the best dividend companies in the market. Utility companies are regulated and every year go before a government agency in charge of pricing and policy for the companies. Often the utility companies will say our costs are X, we expect to capital costs of Y and we need an increase of Z. The regulatory board goes through the numbers and determines the new electricity rate for consumers. Will they cut it half? highly unlikely.

The Trump administration says they can lower prices by boosting oil and gas production, which is already at record levels in the US. President Trump plans to approve new drilling projects (releasing more federal lands for drilling), approve more pipelines and get rid of environment protection regulations that the industry says increases costs.

Industry experts do not see prices being lowered, unless the economy goes into a recession or is shut down similar to COVID. (Given the appointments, it is not likely the Trump administration will shut down the economy).

Ed Hirs, an energy economist at the University of Houston does not believe prices will be lower.

Most energy analysts agree if supply increases, it is possible for prices to drop but the US is part of well-integrated oil market, and the no 1 factor that drives prices is global conditions.

If it did, Edmund Crooks, vice chair of the America for Wood Mackenzie, an energy consulting company said that would invite different problems. Getting the price low would make it unprofitable for energy companies to drill. Energy companies would shut down production till prices rise.

Linking to dividend paying stocks, for companies that are based on a commodity the important element is what does the cost of product need to be to ensure a profit? Commodity companies are based on supply and demand and when one changes the price moves up and down. Unless President Trump plans to subsidize consumers, which his party does not like, it is hard to imagine prices falling in half and energy companies making profits.

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

For every investor, once you have savings you need to put it somewhere – it could be under the mattress if you thought the banks would fail, but since the banks have insurance, you are protected. You could leave it in a savings account, but the rates are very low. An alternative is money market funds which invest in Treasury bills back by the government. The fund will not be lose you money but it does not make a lot of money, however it is safe and secure.

In an article by James McGeever of Reuters, there is a record high $7 trillion of cash in money market funds.

Many strategists assume this massive pile of cash will start to shrink now the US Federal Reserve is cutting interest rates and investors seek alternatives. Will it move?

The road is lined with people trying to call the impact and timing of cash moving off the sidelines, says Adam Farstrup, head of multiasset, Americas at Schroders.

Money market balances have increased by nearly $40 billion since the Fed starting cutting rates in September, according to the Investment Company Institute, a global funds body.

Given the high levels of uncertainty surrounding the year ahead the environment is likely to be remain cash friendly.

James Camp, managing director of fixed income and strategic income at Eagle Asset Management suggests much of the money is not dry powder by rather as a permanent capital stock used for liquidity management.

In other words, the cash is likely to remain in money market funds.

Linking to dividend paying stocks, in every portfolio it is good to have liquidity if you think you will need to the money, however as trading settlements have changed to one day settlement, much of the stock market is liquid. It then becomes a choice. when you consider legendary investor Warren Buffett has billions in Treasuries (he owns 3% of the outstanding) what you choose will not be wrong. If you examine long term charts of owning Treasury bills and profitable dividend stocks, you will see dividend stocks outperformed. The reason for the outperformance is the dividends are paid, plus over the long term profitable companies tend to raise their dividends and including stock buybacks the share prices tend to increase as well.

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

Every company trading on the stock exchange has 2 values – one it believes is fully valued of their shares and how the market values the shares. Often it has 2 different values because the market is more pessimistic and sees headwinds or things that could change the outlook for the company. The market is always right. That does not change the viewpoint of CEOs who want the stock to reflect what their value is.

In an article by Benjamin Mullin of Reuters, the giant media and telecommunications company Comcast. The company was originally founded by Ralph Roberts and is now headed by his son Brian. The company has its roots in the cable TV network.

Comcast has expanded over the years from cable to owning Madison Square Gardens – The Knicks and Rangers; NBC Broadcasting and a host of cable channels. CEO Brian Robets for the division called NBCUniversal Media LLC the desire is to split the movie studio and theme parks from the cable TV channels. Many people have cut their cable or do not pay cable bills because they stream services. However, cable TV is very profitable business.

The cable channels generate about $7 billion of revenue a year and include: MSNBC, CNBC, USA. Oxygen, E!, Syfy, and Golf. Comcast would keep 1/3 of the voting shares, but Mr. Roberts would not serve on the Board of Directors or oversee its operations.

The new CEO will be the Chair of NBCUniversal Media Group – Mark Lazarus. If all goes well through the regulatory agencies, late 2025 or early 2026. Then the debt free company would be able to do acquisitions.

Linking to dividend paying stocks, all CEOs if they are honest, pay attention to value of their shares including what they think is fair market value and what the market’s value is for the shares. Often times there is change in the industry or society and the issue is how will the company come through the changes. What is the history of the company and changes? Does it need new management? The market always has many questions about the company.

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

Everyone who has lived a reasonably long life can tell you about changes they have seen. Most people do not take advantage of the changes, but they can recall how the area has changed, ideally for the better of society. The reason is infrastructure takes time because if they build it, will they come? If you build it, is government funding or support highly desired. Once the infrastructure is in place and more people start using it, then the other elements of more housing and shopping and everything else in between arrives. Once everything has arrived the price of the land also rises, but the big money is made before everything arrives.

In an article by Jane Margolies of the New York Times News Service, EV charging stations are bringing in revenues to the retailers nearby. Unlike filling up gas, it takes time to charge batteries and what will people tend to do – shop for something.

New studies say retailers’ charging efforts may well be paying off: one peer-reviewed study by researchers at Boston University and the University of Wisconsin-Madison published this year looked at the impact of nearly 1,600 Tesla Inc Supercharger stations in more than 800 US counties and found a 4% increase within 200 meters after they were installed. At 150 meters, the researchers found an increase of 5% in sales.

At the moment, there are more than 200,000 public chargers across 74,000 stations. It is expected more than 1 million chargers by 2030 to keep with EV sales. 60% of the grants have gone to fuel and convenience stores, rest stops and service plazas. Under President Biden’s $5 billion plan to fill in the gap, more EV stations are expected, will President elect Trump continue or cut the program? who will make up the difference? what will happen to EV demand?

It costs about $7,000 to install the slow chargers and up to $175,000 for fast chargers for a 20 minute charge.

Linking to dividend paying stocks, often times profitable stocks are profitable because they tap into existing infrastructure and make money on the built up one. Once it is in, the cash flows go up, while it is built capital costs go up. For the companies you invest in – how do they use the infrastructure?

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

If you have flown you likely have flown with the larger airlines – Delta, American, Southwest and United. All have feeder companies and operate with through hub and spoke and have a large share of the market. When companies have a large share of the market, there is a desire for competition and lower prices and as long as airlines can receive access to gates (although they tend to be a little further walk than the more established companies) it is possible to start an airline. Ryanair in Europe tends to be the model and Frontier and Spirit were established with lower fares. If you bought shares, they were up after COVID when all airlines’ stocks went up, but now regular ebbs and flows of the market is back and some investments are better than others.

In an article by Shivansh Tiwary and Rajesh Kumar Singh of Reuters, Spirit Airlines file for Chapter 11 bankruptcy protections although it will continue to operate. Spirit is a Florida based airline and is known for bright yellow planes. Spirit is struggling with years of losses; failed merger attempts and heavy debt loads. Spirit tried to merge with JetBlue, but the deal collapsed.

In a Chapter 11 proceeding, the airline continues to function, equity or stockholders tend to lose most of their money and bondholders have to take a cut to keep the airline in operation. The cut is trading debt for equity and existing bondholders will provide $300 million in debt-or-in-possession financing, which combined with available cash will allow the airline to function through Chapter 11 bankruptcy. Spirit’s workers will receive the same pay and benefits.

Discount airlines mean not having many conveniences, but prices tend to make up for it. If you do not have much luggage, it is a good alternative. If you lots of luggage going to the larger airlines is very competitive when considering the extra fees of the discount.

Linking to dividend paying stocks, generally you would only buy the big 4 of the airline industry because many companies have gone through Chapter 11 bankruptcies. It is wonderful to consider the low cost alternative as a customer, but as an investor stick to the larger companies.

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

When a President says something, it can have an effect on many industries because all industries are regulated to some degree or another. There is a balancing act between less regulation businesses generally like and protecting the buyer which consumers tend to like. Hopefully, there is a balancing act somewhere in between. If the government has too little regulation, there are enough people to see the hole and exploit the weakness in the regulations. If there is too much regulation, it is hard to do business or it tends to protect those already in the field. One of the things the President-elect likes to talk about is tariffs.

In an article by Jack Ewing of the New York Times News Service, President-elect Trump has said he wants to impose a 100% tariff on cars made in Mexico. What does that mean?

According to the Mexican Automobile Industry Association, Mexican factories produced more than 3 million vehicles of which 2 million were exported to the US. The others went to Europe, China and other countries. All the major auto companies have plants in Mexico including BMW, VW, Audi, Mercedes, Ford, Nissans and GM. When the big companies have their plants, they have their supplier plants (of all parts and tires) nearby for additional factories in Mexico. In addition, the large Chinese EV companies are building plants in Mexico.

The reason is partly NAFTA which became the US-Mexico-Canada trade agreement or USMCA.

Ilka Horstmeier, a member of BMW’s management board which produce vehicles in the city of San Luis Potosi said the decision to build a plant is a 40-year decision and much of the output goes to Brazil, other Latin American countries and China. The plant would continue no matter what the US government decides.

However, it is more typical of the American manufacturing companies that ship most of their output back to the US that would be in trouble with changing of tariffs. Would consumers pay more for their vehicle because it takes time to adjust to tariffs.

Linking to dividend paying stocks, what the President says and does affects profitable companies. It is the reason why they have a team of lobbyists to ensure the administration effects are narrow in scope. It is the reason why markets change and can change quickly but regulations are further behind the markets changing nature.

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