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.

Most people know about Apple’s iPhone. It is designed in the US, made in China and is the number one seller in the 2 of the biggest markets in the world – the US and China. Apple is moving production from China to India because the economy of the country is growing and soon it will be the number 3 market in the world. Meanwhile Apple has to deal with the Trump administration.

In an article by Tripp Mickle of the New York Times News Service, the present tensions between China and the US is making life difficult for Apple.

The next generation of iPhone will include AI features, that is a given. In recent months, the White House has been scrutinizing Apple’s plan to strike a deal with Alibaba Group to make the Chinese company AI on iPhones in China. They are concerned that the deal would help a Chinese company improve its AI abilities, broaden the reach of Chinese chatbots with censorship limits and deepen Apple’s exposure to Beijing laws over censorship and data sharing.

3 years ago, the US government succeeded in pressuring the company to abandon a deal to buy memory chips from a Chinese supplier Yangtze Memory Technologies Corp or YMTC.

Walking away from an Alibaba deal would have far greater consequences for Apple’s business in China, which accounts 1/5 of the company’s sales. The partnership with the Chinese tech company is critical to bringing AI features to iPhones in one of the world’s most highly regulated and competitive markets. the rivals are Huawei and Xiaomi.

Officials at the White House and the House Select Committee on China have raised the deal directly with Apple executives.

The concern with AI is will it become a crucial military tool for the Chinese?

Linking to dividend paying stocks, most of us focus on the great aspects that AI can and will allow consumers, but AI can also help the military infrastructure, after the internet was partly funded with military dollars. From Apple’s perspective, because economies such as China developed on the cell phone, they are integrated into people’s banking and personal lives. There is an enormous amount of data to capture and sell to people. Sometimes the largest companies have shared common interests with the home government and sometimes the interests are less intertwined.

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

Investing involves risk. Risk means there are things you know and things you do not know. For most of us, the risk is manageable, but what if your task involved the macro level? Fortunately, we have books and articles written on the subject, and one book is called Averting Catastrophe by Cass R Sunstein, published by New York University Press, NY, 2021.

Mr. Sunstein is a professor at Harvard, and for a few years worked in the White House to develop a social cost of carbon. Mr. Sunstein focuses on public policy and regulation, and he believes in the maximin principle which calls for choosing the approach that eliminates the worst of the worst-case scenarios

For certain regulatory problems, many people accept the Precautionary Principle. The central idea is that regulators should take aggressive action to avoid certain risks, even if they do not know that those risks will come to fruition.

People tend to be loss averse, which means that they view a loss from a status quo as more undesirable that they view an equivalent gain as desirable. When we anticipate a loss of what we not have, we can become genuinely unhappy or afraid in a way that greatly exceeds our feeling of pleasure when we anticipate some addition to what we have.

Loss aversion is closely associated with another cognitive finding: people are far more willing to tolerate familiar risks than unfamiliar ones, even if they are statistically equivalent.

John Maynard Keynes wrote you are dealing with “uncertain knowledge”, there is always information while it is possible to consider what is probable, there is no scientific basis on which to from any calculable probability whatever. We simply do not know.

The Principle of Insufficient Reason holds that when people lack information about probabilities, they should act as if each probability is equally likely.

Linking to dividend paying stocks, investing is about risk and the more you understand the principles and psychology of risks, ideally the more you can deal with it. There are a number of different principles, and your investing style will determine which ones you fit into. When you buy dividend paying stocks, there are two ways to control the risks – buying a profit company and receiving a cash payment on a regular basis. Profitable companies tend to trade at higher multiples and receiving a payment allows choices – buy more, diversify, and the list goes on.

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

All companies have a statement of values and for customers and potential customers it is very hard to disagree with them. The companies say their intended purposes and because we agree with them, as an investor you can feel good investing in the company. But do the companies actually live up to it?

In an article by Anne D’Innocenzio of the Associated Press, one company that lives up to its statement of values is Walmart. The company is the biggest retailer in the US and it makes low prices a priority. If you have ever shopped there, you will see price drop and the slogan all over the store.

Executives at the $750 billion company told industry analysts, they were doing everything in their power to absorb the higher costs from tariffs as ordered by President Trump. However, given the magnitude of the tariffs, higher prices are unavoidable.

For all those companies importing from China, President Trump increased tariffs across the board to 50%, then 90% then 145% and has come down to 30% for 90 days.

In the retail world, companies order 6 months in advance to have inventory for the season because during the winter, not many people buy shorts. They buy jeans, heavier pants because it is cold out or there is a time lag with retail.

CFO John David Rainey said even though the quarter had good sales, we are wired to keep prices low, but there is a limit we can bear, or any retailer for that matter.

Mr. Rainey said the retailer did not pause shipments from China as a result of the tariffs, because it did not want to hurt its suppliers and wanted to keep merchandise flowing. 2/3’s of Walmart’s merchandise is sourced in the US, with groceries accounting for 60% of Walmart’s US business.

China represents a big chunk of volume for certain categories such as electronics and toys.

Walmart is asking suppliers to swap input materials for components if possible.

CEO Doug McMillon said for some goods simply cannot shift production or produce easily in the US and that will not change for the foreseeable future.

Walmart earned $4.45 billion or 56 cents a share for the quarter. Revenue rose 2.5% to $165.61 billion.

After the earnings call, Treasury Secretary Scott Bessent called CEO McMillon and tried to explain to the public that Walmart benefited from lower gas prices, and that when companies talk about the possibilities, they have a shareholder’s duty to talk about the worst-case scenario. Secretary Bessent was hoping that will not happen, but prices do rise.

Linking to dividend paying stocks, companies report every quarter and the bigger companies often come into the financial press. If you own a smaller company, then industry specific publications will report the results as well as the company’s website under investors always has information for investors. The industry publications help you see trends and what is coming next and you can evaluate if your company is still hitting your targets.

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

If you remember back to April when spring was slowing coming in, the weather started to be warmer and there was much to look forward to. Then President Trump announced Liberation Day and the stock markets went down because this was a drastic change to global supply chains.

In an article by Jamie McGeever of Reuters, he asks the basic question, what was the point of all that Liberation Day chaos and confusion?

President Trump is the self-styled Tariff Man, although it took till mid-May before he realized the companies that import the items will charge higher prices to consumers. One can argue the economic merits of his agenda, but was the strategy and implementation?

3 days after Liberation Day was announced, $6 trillion in stock value was wiped out. It has taken a month and half to come back, but only because tariffs were changed to lower or semi-manageable.

According to the Yale Budget Lab, the tariffs are forecast to raise $2.7 trillion in federal revenue over the 2026-35 decade. This is up from an estimated $2.4 trillion. For the extra amount, the Yale Budget Lab believes the US economy will be 0.4% smaller.

Meanwhile, for an economy that runs on consumer spending, US consumer and business spending has slumped to its lowest levels on record and expectations of higher inflation is the highest in decades. At the moment, until people determine some sense of stability, spending is on hold.

Faith in America as a reliable partner has clearly diminished. As HSBC currency analysts reminded their readers: trust takes years to build, seconds to break and forever to remake.

Linking to dividend paying stocks, in the chaos that went through the stock market, we saw institutions selling, but retail investors holding. Partly because if the government made the mess, it could do better and fix some of the mess, which allowed stocks to return to their previous levels. The issue was the time delay. When you invest in the stock market, the record shows overtime the assets perform well, but during the time they also fluctuate in values. When to sell is very hard to know, but overtime the values tend to go up. If you buy a company that makes profits, it values bounce back faster than those that do not make profits.

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