Sometimes themes about possible solutions to the world’s problems gets ahead of the profits. For example: one method to increase the production of electricity is to tap the wind or wind power. In countries around the world, wind power was done at a small scale and it works wonderfully. One can easily think about the Netherlands or Don Quixote charging at giants or reality windmills in Spain. In every country the wind blows or seems to blow more than other places and tapping into the wind makes common sense.

In an article by Christoper Stitz, Stine Jacobsen and Jacob Grohnolt-Pederson of Reuters, the 3td largest industrial wind power groups are based in Europe and are Siemens Energy AG, Orsted A/S, and Vestas Wind Systems but they are not expecting a good 2024.

Siemens Energy, the world’s largest maker of offshore wind turbines expects a loss of $2.9 billion. The wind division had to deal with the cost of addressing quality problems.

China is the biggest customer for wind projects is on track to increase global renewable capacity 2 and half times by 2030.

Similar to other manufacturing processes costs are rising for raw materials, there are regulatory delays.

While demand is still good, the terms and conditions of the projects are too difficult for investors and project developers to take.

Danny van Doesburg, senior portfolio manager at Dutch APG Asset Management said, the market is not functioning anymore and a solution is for a stronger role for governments to help deliver a functioning model that distributes profits throughout the value chain.

All three wind companies are cutting costs to make a leaner more efficient company.

Linking to dividend paying stocks, you may like an industry but it is important to understand how they make enough money to make profits. If there is a big demand for the products who makes the highest margins and why are they sustainable? Once you have an answer invest in those companies who may or may not be have the highest public profile.

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

Sometimes what is great for the individual, is not so great for the company. When TV was invented and there were 3 networks ABC, CBS and NBC for better or worse people watched those networks and advertisers were delighted because they could segment the population and aim their advertising at a specific audience, but with enough appeal for a general audience. As time went on more TV channels appeared then was the rise of Superstations tied to satellites. This had the effect of making fans of sports teams from thousands of miles away, because the Superstation carried the local team – typically Atlanta and Detroit. The rise of the internet brought streaming services and now as individuals we have many choices. The choice is good for the individual, but there are many brands which advertise in search of a general audience. For a time, the salvation was sports broadcasting because sports shows are live TV. Sports TV was very profitable, which is the reason why professional sports teams rose in value or the TV contracts with the leagues became larger. However, as sports was the profit leader, competition came into the game and while sports TV is very important, the profitability for the broadcasting companies has fallen.

In an article from Reuters, Fox Corp, Disney’s ESPN and Warner Bros’ Discovery are teaming up to deliver a sports streaming service to capture younger audiences and to save costs.

The service will be an app on your phone and aimed at those that never had TV. With the internet, there are less reasons to bring TV into your home or through a cord. There are many options or cord cutting which means cancel the TV subscription. The app to be unveiled in fall of 2024 would have a new brand and an independent management team.

Linking to dividend paying stocks, all industries go through changes and the best ones can adapt to it. In the case of broadcasting companies, while the public may focus on the content, the profits are made in advertising rates charged. The greater the popularity of the show, the higher the rates of advertising or supply and demand. With high rates, there will be competition because of improved technology but a platform still has to have verifiable viewers that will tend to spend money on products and services. Often times, large profitable companies can adapt because they can either buy the new companies or throw money at the problem to find the elusive solution. Sometimes the solution is out of reach and shareholders will say what were they thinking? and find alternatives.

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

If you examine the weather, you would say it has changed. Why it has changed and what will happen in the future, we do not know but people have theories. One of the biggest is the use of fossil fuels, which we are not going to stop using today. Maybe in 25 years we will use less, we do not know. We do know if all of us used coal to heat our homes, the pictures of Bejing and LA of smog would be seen in many other places. Bejing and LA are built in valleys surrounding by mountains which tends to trap the air until the wind blows it clean. In the books about Jack the Ripper, the London smog was a main character. Every year there are more alternatives – hybrid vehicles, heat pumps rather than oil furnaces, greater efficiencies of fuel for internal combustion engines, however all these take time and money to change over from the normal.

In an article by Hiroko Tabuchi of the New York Times News Service, all business is essentially done through credit, if there is less credit, business has to adjust. In the case of coal industry, prices fell compared to natural gas and to generate electricity many power companies switched over to gas. Under those circumstances it was easier for banks to say they would no longer finance new coal mines. However, coal that is used in steel making is still financed. One of the banks that said they would no longer finance new coal mines was Bank of America and the climate activists rejoiced.

Two years later, the policy has changed to enhanced due diligence. The policy on the website has changed and according to the article, the bank has declined of what its risk review would include.

Many years ago, the bank which I worked at helped financed mega oil projects and it brought in considerable fees. It is hard to give that up and they have not (I still own shares in the company). The other aspect to mining, is similar to many other industries, robots can do more of the work particularly underground.

Linking to dividend paying stocks, when price of a commodity falls, investors turn to alternatives. When the price comes back up, they buy the companies that deal with the commodity. Money moves in many directions looking for the elusive return to maintain good margins and the company to make a profit. There are many investors with a wide variety of degrees of risk and every day they are active in the markets. Government policies affect the markets, but sometimes government policies are ahead of the reality of the market, this is good and bad. When policies are ahead, then incentives are needed for the market to catch up. Most of the time governments are behind the market, and incentives are needed to level the market. Investors want a good return and it is easier to gain a good return if the company is profitable.

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

In retail there are a number of different segments to in and they all have different strategies to appeal to their base customer. If a product is appealing to a wide range of people product placement in movies and TV are important. If a product appeals to high end customers, it has to be exclusive or feel exclusive. If the product is aimed at young people, music is a key.

In an article by Ben Sisario of the New York Times News Service, Universal Music Group whose artists include Taylor Swift, Drake, U2 and Ariana Grande pulled its music from TikTok.

The company said TikTok was offering unsatisfactory payment for its music, allowing its platform to be flooded with AI-generated recordings that diluted the royalty pool for real, human musicians.

Recordings from Universal were deleted from TikTok’s library and Universal videos were muted. TikTok put notes saying the sound is not available or sound removed due to copyright restrictions.

TikTok said Universal was greedy and chosen to walk away from a platform with over a billion users that serves as a free promotional and discover vehicle for their talent.

How advertisers are reacting, will depend how long the dispute will last.

Linking to dividend paying stocks, in order to sell their goods and products all companies need a distribution system and for some companies the systems rarely change. For other companies depending buys their goods and services, change is a constant. With your investments, you need to know how the process works and how the bottlenecks are typically straightened out.

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

Often times you will hear or have read about a company, and somewhere in your brain you store the information. Then you will see it more and it slowly comes to the forefront for you to decide what to do with your investments. Once you own an investment you can hold it or do nothing, but you need reinforcement to hold onto it or seek alternatives. One company you will know is Amazon and for many years, it spent more money than it made or was in a growth phase. Over the past 3 years it has changed to more areas of profitablity.

In an article from Reuters, Amazon.com Inc beat 4th quarter estimates as new generative AI features in its cloud and e-commerce businesses spurred robust growth during the holiday season.

AWS or Amazon Web Services is the world’s largest cloud services provider. The division posted revenues of $24.2 billion up 13% which was in line with expectations of the analysts. (the cloud services of Microsoft and Google and 2nd and 3rd).

Amazon recently made an investment in AI company called Anthropic which is chat-bot maker. The products will be used in the cloud.

Most people know Amazon because it is the 2nd largest shipper of goods behind the US Post Office and Amazon has changed strategy to build smaller fulfilment centers with the top 10,000 items closer to customers. In this fashion, the last mile delivery is either the same day or next day. During the key Black Friday and Cyber Monday days, customers worldwide bought over 1 billion items from Amazon.

If you buy regularly through Amazon, the average person will have a Prime membership because of the free shipping. Prime membership is a key strategic asset for Amazon. Generally, anyone with a Prime membership will have a reasonable income, which means as a group they are valuable to advertisers. Amazon has the 3rd largest advertising revenues behind Google and Meta. Not every company uses Amazon, but the service Buy with Prime enables subscribers to receive same day or next day delivery for merchants not on Prime.

In addition, with Prime membership comes other features such as Prime Video. Similar to Netflix, Amazon introduce a higher fee for no ads which is expected to bring in $3 to $4 billion in revenues.

Linking to dividend paying stocks, all these companies have assets that generate excess income to earn profits. In the case of Amazon, it has taken years of spending money to be in a position to realize the ability to make profits, but it will be a juggernaut similar to Microsoft and Google. Meta recently declared a 50 cent dividend will this force the other big tech companies to do the same? Doing your homework on how the assets increase revenues to generate profits to eventually pay dividends is the key.

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

All markets are partly a belief system, people tend to believe that prices eventually will go up. Prices may not go everyday, but overtime prices go up. The belief system encourages people to buy and sell the goods and products. In all markets there are quality or the best goods and there are some that should be discounted. When prices decline on a regular basis no one is quite sure what to do.

In an article by Daisuke Wakabayashi and Claire Fu of the New York Times News Service, the unwavering belief of Chinese homebuyers that real estate is a cannot lose investment, meant that real estate was 25% of the Chinese economy. The problem is for the past 2 years, real estate development firms have massive debts and sales of new homes have dropped considerably as well as prices continue to fall.

The sharp loss of faith in property, which similar to America, is the main store of wealth for families, what should the government do? The biggest developer, Evergrande Developments is being liquidated as it has $300 billion in debt.

According to Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at Natixis, the market has not touched bottom and there is still a long way to go.

For owners, there was hope on the horizon. the Chinese government had massive shutdowns during the pandemic and there could be pent-up demand for new properties as restrictions eased.

Nomura Securities estimates there are still 20 million units of presold homes waiting to be sold requiring $450 billion in funding to complete. One of the many problems is since 2020, the policy makers in Beijing, worried about a housing bubble effects on the banking system, rolled out rules to curb excessive borrowing of real estate developers. Without easy access to debt, developers struggled to pay off loans and finish building properties that were sold in advance.

Xiao Yuanqi, deputy director of China’s National Financial Regulatory Administration said the country’s financial institutions had an inescapable responsibility to provide strong support to the property sector. Banks should extend loans to property developers.

Since 2021, more than 50 Chinese property firms have defaulted on debt with the 2 largest firms Evergrande and Country Garden both gone into bankruptcy.

Country Garden said presales of unfinished apartments fell from the 9th consecutive month to $1.3 billion down 69% from a year earlier. In the 2nd half of 223, presales were down 74% for a year earlier.

Larry Hu, chief China economist at Macquarie Group, said the key thing in 2024 is if and when the central government would step in and take the main responsibility to stop the contagion. Mr. Hu believes the Chinese government could act similar to the US with the TARP or Troubled Asset Relief Program which essentially means the government takes the debt off financial institutions to allow them to lend again, in the hope that prices will rebound in the future and then the assets can be sold at a profit. In the US, after the housing crisis of 2008, there was the rise of hedge funds to buy subdivisions to rent out, will that happen in China?

Linking to dividend paying stocks, when profits are to be made, no one likes government regulations, once loses are happening, companies rush to have some sort of government regulation and politicians will agree. As investors we all love the free market system, but it is not really free, we all expect and hope for the investments we make there will be an exception if the market prices fall to new lows. In every industry, the government typically wants it to do well and encourages it, but when things go down, the lobbyists will look to the government for help because of the size, the scope or the value to the economy in general. Investing in profitable companies is never a guarantee that they stay profitable for years, but that is what you hope for and if the industry they are involved with suffers a downturn, move your money to other alternatives.

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

Most of us have some sort of routine which we start the day, because that is the easiest part to manage. The time we wake up, what we have for breakfast, the commute to work and then your work begins and things change because you do not necessarily control everything. That is normal and we tend to do it because one we like it and two your can concentrate on other things. Every once in a while, the routine is changed, whether it is the time you wake up, the breakfast or the commute, but something changes and we have to adapt.

In an article by Tim Hepher and Rajesh Kumar Singh of Reuters, United Airlines has approached Airbus about buying more A311neo airplanes. What has changed is Boeing’s concerns with 737 Max 10.

United Airlines has a long history of buying planes from Boeing and has not cancelled any orders but CEO Scott Kirby has removed the order from internal plans. The history of United includes companies they merger with such as Continental Airline that were long time Boeing customers. The problem for United is there are 2 manufacturers that dominate the passenger plane industry Boeing and Airbus and both have heavy back orders on their books. However, according to trade publication Air Insight, the companies are in talks about squeezing in if an opening should occur.

The issue at Boeing is they do not know how long the latest concerns – a door fell off an Alaskan Airlines flight. All the doors need to be checked and what type of fix is needed and for the regulators to sign off on the safety.

United has 45 A350s on order to be delivered by 2030. The planes would replace Boeing 777s.

Linking to dividend paying stocks, many companies deal with single suppliers for the bulk of their products, partly due to history and partly due to mergers within the industry, however the same companies are quick to have backups or alternatives if the supplier’s reliability changes. One of the elements you are buying with a dividend producing company is the ability to pivot if necessary.

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

Most of us are local people, we live where we live and like it, as you are living in an area for a number of years you appreciate the surroundings more. Whether it is a hill or mountain in the area, a river or ocean to see water, and the list goes on. While we are personally local, the commerce around is global. Part of that is the design of supply systems, there is always another area where costs are lower or to maintain and grow margins, lower costs typically must be found. If a company can also raise prices, so much the better for the company’s revenues.

In an article by Paul Wiseman and Mae Anderson of the Associated Press, they show how global the economy actually is. The least expensive way to ship goods is by ship and with mega container ships carrying 10,000 containers, using water will always be the least expensive. The Red Sea connects to the Suez Canal which connects to Europe, it is trade route than has been used for thousands of years. On both sides of the waterway, various countries have undergone transformations of their economies and government. For a shipping company, going through the Red Sea saves the traffic around Africa. The path through the Red Sea means everyone receives their deliveries as quick as possible.

In the article, a company near Baltimore makes washable keyboards for hospitals and is named Man & Machine. The company imports parts from China and its normal route is to go to Europe and then the US. The issue is the normal passage takes about a month, with the Red Sea shut down, the secondary alternative is to through the Panama Canal, but the Canal has been affected by drought. If you think about the next alternative – truck or rail means extra costs. Will the customers wait and want to pay higher prices? Who eats the extra costs?

Tesla has a factory near Berlin, Germany, it was shutdown for 2 weeks because supplies were delayed.

Marks & Spencer is a British retail chain and has warned the new spring collection will be delayed as well as home-goods collection.

Roughly 20% of clothes imported into the US arrive via Europe going through the Suez Canal said Steve Lamar, CEO of the American Apparel and Footwear Association. The number climbs to over 40% in Europe.

A trip around Africa adds a week or 2 to the journey of the shipment and 25% of global shipping capacity was going around Africa. The cost of the container has risen from $1,500 to $5,500. The only good news, things could be worse at the height of the pandemic the cost was $15,000.

The good news is after the pandemic, global capacity rose as shippers brought more ships to the market. There is currently a state of overcapacity, which is the reason why prices have not jumped more.

In most of life, there are alternatives, it is possible to ship clothes by plane, but not furniture. The reason clothes go by plane is clothes are fashion sensitive.

Linking to dividend paying stocks, while most of our lives are local, the economy is global. The supply system is a moving part and we all depend on world peace. The good news is in business all great businesses have a plan B and plan C when something happens to the supply system. Very often they have used in the past and can tell good stories about it. In your research you might want to know how the companies uses its alternatives to maintain margins.

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

After accumulating money, many people tend to change their buying habits to more high end stores. In the large cities you can think about 5th Avenue, Magnificent Mile, Rodeo Drive and there are many others, but all in come you can spend lots of money on clothing and accessories.

In an article by Mimosa Spencer of Reuters, one of the largest luxury goods group LVMH who’s stable includes Louis Vuitton, Dior and Tiffany, sales worldwide were $35 billion in the final 3 months of 2023. The growth of 10% was just ahead of analysts’ expectation of 9%.

LVMH CEO Bernard Arnault said the highest end products are those that have the highest demand in the world. Mr. Arnault believed the trend was going to continue in 2024.

Spending in China has increased and business at Louis Vuitton from high end Chinese spenders in Europe reached 70% of the level generated in 2019, before the pandemic.

Spending by Americans and Europeans remains subdued, partially offset by Chinese tourists to Europe. Analysts expect sales to increase 5% this year.

Linking to dividend paying stocks, when your dividends have increased to the point where you can buy high end goods, you will likely be a customer for life. The dividends come to you on a monthly or quarterly basis and through any downturn the economy may or may not go through. With your dividends you can spend, reinvest or do whatever you wish, knowing the next quarter is only 3 months away.

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