Everyone has a bias, and those of us who went through college or university are the worst. Our bias is the knowledge gained from attending the college or university translates into a higher than average paying job in the economy. If you go back before WWII, it has a given because few people went to post-secondary education. When the GIs came back, Washington helped with discounted mortgages, access to post-secondary and the economy changed to a service economy which helped many of them to achieve higher than average paying jobs. The economy is continuing to change and while the goal of post-secondary education is a noble one and if you can go you should pursue the education, the high paying jobs are not the only jobs with a post-secondary education. (Hint, if you go by a heating and cooling contractor, count the number of trucks, if the number is 10 or more the owners are likely millionaires.) However, the people who write the news did receive a post-secondary education.

In an article by Claire Cain Miller and Courtney Cox of the New York Times News Service, AI is being used in the office and fewer people will be needed, the research has found. ChatGPT and Google’s Bard are tools that can rapidly process and synthesize information and generate new content.

Erik Brynjolfson, a professor at the Stanford Institute of Human Centered AI says to be brutally honest, we (society) had a hierarchy of things that technology could do and we felt comfortable saying things like creative work, professional work, emotional intelligence would be hard for machines to ever do. Now that has is upended.

A range of new research has analyzed the tasks of US workers by the Labour Department’s O’Net database and hypothesized which of them large language models could do. The results indicate between 1/5 and 1/4 of all occupations. A similar study by OpenAI of 923 occupations found that large language models could do up to 80% of the work. There is a good reason to expect jobs will decrease.

It is not always a bad thing, Morgan Stanley uses a version of OpenAI’s model made for its business that was fed about 100,000 internal documents, more than 1 million pages. Financial advisors can find information to help answer clients’ questions quickly. This allows more time to talk to clients about wealth management. Often times an advisor is reading or in meetings about companies, now the information is closer to their touch.

Most resume services use some type of AI to go through the applications.

Law firms deal with a great deal of information and the research time and preparation time goes down with an AI program, such as Harvey. Even with the program, you still need a lawyer to determine strategy, opening remarks, what to negotiate on.

A study of customer support agents found that AI increased productivity by 14% overall and 35% of the lowest skilled workers.

Linking to dividend paying stocks, as an owner you are expecting the use of AI to go throughout the company resulting in increased productivity and lowering of costs while selling more goods and services. This will result in the steady profits and the ability for the company to pay dividends. To the overall economy there will be dislocations, but as an investment you are only worried about the company(ies) you invest in.

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

In all industries there are conferences, but some become the place to be if you are in that industry. If you are an economist, then Jackson Hole was the place to be in August.

In an article by Jeanna Smialek of the New York Times News Service, the reporter was wondering why Jackson Hole as opposed to other places? Jackson Hole is located 55 miles from Jackson, Wyoming in the valley of the Teton mountains. It has a large conference facility in a western theme.

In the 1920’s when Jackson Hole had 300 people, it was the place to go for outlaws to be hide from the law.

Due to the location and the conservationist era, John D Rockefeller Jr. bought great amounts of land, built a lodge and donated the lands to the Grand Teton National Park.

In 1982, the Kansas City Fed was looking for a location to hold a conference and liked Jackson Hole. The conference had begun in 1978 permanently moved to Jackson Hole. The attendees liked the location and many economists have gathered over the years.

Now days, Jackson Hole has about 11,000 people and for the 120 economists speaking or just attending means your star is on the rise or is the place to be seen.

Linking to dividend paying stocks, when you invest in quality your star always rises. The example of Jackson Hole is a conference, but it is about ideas about where the economy is going and why. When you invest in a profitable company which can pay dividends through the market cycles investors realize the profits are consistent and that makes it more valuable to own for the long term.

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

In every country, the government of the day tries to help business export goods and services to generate export dollars. In every embassy there are people which help business explore opportunities and access government supports. For most people that do not deal with exports, many do not realize the full extent of the supports.

In an article by Andreas Rinke of Reuters, the volume of investment guarantees provided by the German government to companies investing in China has decreased dramatically. This year $76.3 million in guarantees have been issued according to a document seen by Reuters, this is less than 10% of the $950 million in guarantees issued over the whole of last year.

China became Germany’s biggest trading partner in 2016 and both countries prospered from Germany selling the precision machinery that let China become the main supplier of manufacturing goods to a globalized world.

Due to competitive pressures and the war in the Ukraine, Germany changed its policy on China. The trade between the 2 countries was $320 billion in 2022.

Last November, Berlin introduced caps on the size of guarantees, offered by the government to protect investors from political risks such as expropriation, that could be given to investors in a single country. The measure was designed to diversify the portfolio of risks carried by the government and encourage companies to invest in a broader range of countries.

Linking to dividend paying stocks, these types of companies that often have export business to diversify themselves from their home country. You may have thought that the companies were using private insurance to protect themselves, but in some countries it is the governments providing the protection and limiting risks. In many ways the home country benefits from jobs but whether the government should be providing the risk insurance is up to them, however if a government program exists, companies would be foolish not to look at them and use them.

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

In every industry during the development something changed, we often believed the outcome of the industry changed the world for the better, but there were points along the way which may or may not could have been better. One example of this is the industry of sugar. If you are researching an industry it is often good to research the companies history as well as books that are not positive to the industry. A case in point is the book Sugar written by James Walvin published by Robinson, London, UK in 2017. The title of the book is Sugar – the world corrupted from slavery to obesity.

Most people start their day or sometime during the day have coffee and tea. Many people have sugar with their order and the drink works well. Coffee was a communal activity in coffee shops and tea was more domestic to be drunk at home. Tea came from China and then India and other parts of the world. As the tea imports increased the price fell and more people could afford to drink. In England, another factor was driven by domestic servants. In the 1700’s many people worked as servants (you may have heard of the series Upstairs, Downstairs) and the servants were given allowances for tea and sugar which replaced beer.

Coffee took longer to take hold as the drink of choice but over the years people took coffee breaks, restaurants attracted customers by offering inexpensive coffee and free refills. Grocery stores sometimes sold coffee as loss leaders to lure customers to buy other goods. In addition, in the Second WW II, coffee was a basic constituent of military rations. When the war was over it was part of their routine. (an interesting point is if you are investing in the food industry, part of your homework is known what the military serves as part of their normal routine). Coca Cola was helped by the US military in WWII. Coffee often has a bitter taste and sugar makes it easier to drink.

Sugar had entered people’s lives both at home and at work, and it was part of the routines of work itself. Bread, spread with sweet jam is carried to work, eaten at lunchtime or break. Sugar made working in a factory more tolerable.

Two of the products from growing sugar is molasses and rum. Molasses is found in baked beans and Rum was a ration of the Royal Navy from 1731 to 1970.

On the eve of the Civil War, the US imported 1,830 million pounds of sugar, In 1900 sugar imports were 4,007 million pounds, by 1920 it doubled. The sugar was primarily sugar cane and sugar beets.

In 1887, Henry Havemeyer consolidated 17 of America’s 23 refineries to create the American Sugar Refinery Company which controlled 98% of the industry. It was known as the Sugar Trust. You might know one of the brands as Domino Sugar, Franklin Sugar, Sunny Cane Sugar and Spreckels. In 1970 the name changed from American Sugar to Amstar Corporation. Eventually the British company Tate & Lyle and Flo-Sun owned by the Fanjul Brothers of Florida.

As volumes of sugar increased, the price dropped and entrepreneurs such as Milton Hershey and Frank Mars started business which uses sugar and has thrived into present times.

A new industry developed which was canning food and sugar was used to help with the preservation of food.

Where did the sugar come from after slavery was over? Cuba and Hawaii. Both countries depended on cheap labor. In Hawaii, the people came from Japan, Philippines, and India as indentured labor. In the late 1800’s Citibank was opening branches to serve the Sugar Industry in Cuba and the rising price of sugar. When the price dropped, Citibank kept the Sugar industry operating for 50 years until Castro and wrote off $45 million.

Governments have been involved in the sugar industry for generations because we all like sugar. In 1937 passed the Sugar Act which stayed in place till 1974, it made sugar the most regimented of all American crops. Cuba had 64% of the quota. After Cuba, the industry moved to Florida. The industry is centered around Clewiston, in 1955 there was 36,000 acres turned over to sugar cane, by 1973 the number was 273,000 to produce over 1 million tons by the mid-1960’s. The labor is supplied by migrant workers including migrants from Mexico. Governments have passed laws to help the sugar industry.

Sugar or sugar substitutes are in many of our foods because when they are as a consumer, we buy them more. If you check the ingredients list, salt and sugar are often found. Do we consumer too much sugar, likely but we like it.

Linking to dividend paying stocks, If you can find a product that consumers buy because they like it and have like it for hundreds of years, consumers will have a high threshold before they will not spend money on the product. In the last few years, we have seen price increases particularly in processed food and sales continue. From an investor point of view, those are desirable companies to own a piece of even though some of the outcomes for consumers are less than desirable.

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

In every industry during the development something changed, we often believed the outcome of the industry changed the world for the better, but there were points along the way which may or may not could have been better. One example of this is the industry of sugar. If you are researching an industry it is often good to research the companies history as well as books that are not positive to the industry. A case in point is the book Sugar written by James Walvin published by Robinson, London, UK in 2017. The title of the book is Sugar – the world corrupted from slavery to obesity.

Most of us including me really like sugar, it plays an important part of our lives. The fact that most of like sugar means sugar has played an important part of the history of the world. Prior to the 1600’s only the wealthy ate sugar and if you check out pictures of Louis XIV of France, you will not see him smiling. He had no teeth to smile with, but he loved sugar. Something changed and by the 1800’s, sugar was one of life’s essentials even for the poorest of working people. Sugar has remained in that position to the present and into the future.

If you examine sugar consumption, people eat lots with the highest in sugar producing countries of Brazil, Fiji and Australia with the Aussies eating over 100 lbs per person each year. Most of the sugar comes from cane sugar, sugar beet and corn or chemical sweeteners.

The problem with sugar is local sugar planters had labor shortages. The work is hard and for generations it was not mechanized expect in the mills to crush the cane to become usable for the consumer. The work was done by imported indentured labor but there was not enough of them and the plantations turned to the slave trade.

Sugar was first developed in Southeast Asia and China from the Ming dynasty traded the product including with Marco Polo. The crop came to Iran and Iraq through the Muslim empire across the Mediterranean into Spain. During the First Crusade, sugar cane saved Crusaders in times of starvation and nurtured a sweetness which survivors took home with them. The volumes of sugar production was small and the price expensive but the wealthy like sugar. At this time, if you check old movies the servings included the sugar bowl.

When Europeans discovered North America, after they looked for gold, they planted the crops from home and one of the crops that grew well was sugar cane. The pattern was to use the local indigenous people as labor to help clear the land and for cultivation. The next process was to bring in foreign labor. The people came from Africa and India.

The process began in Brazil and Brazilian sugar arrived in volume in Europe in the mid 1600’s. The mills were primarily in Antwerp (Amsterdam), Hamburg and London. The number of refineries in Antwerp increased from 40 to 110 between 1650 and 1770.

Until 1630, Brazilian sugar had no competition, at that time France and England acquired colonies in the Caribbean Sea. The islands of St. Kitt’s, Barbados, and Jamica were soon supplying English sugar while St. Domingue or Haiti was supplying French sugar. Sugar cane grew well and by 1770 over 90% of the 200,000 tons of sugar for Europe was coming from the Caribbean and two colonies Jamica produced 36,000 tons and St. Domingue produced 60,000 tons.

The sugar plantations were highly organized systems. The enslaved work force, like every acre of land was tabulated and regulated. Plantation paperwork, the ledgers of the plantation bookkeepers, documented every aspect of plantation life. Everything had a cost and a value.

Few questioned slavery, here was a system driven forward by sugar which yielded abundant wealth and wellbeing for everyone except the slaves. The volume of sugar brought down the price and the cost to buy sugar was affordable to everyone. In addition, in the military a sugar ration was given to all soldiers daily. Sugar was found from the highest priced shops to the local shop in towns and villages across the country.

Linking to dividend paying stocks, when you invest in a company, you are hoping they do well for their employees because often you do not work there. Your focus is the return on the investment or ROI, you see the returns and how the entire process works is less material to you as long as it is legal. Now days one hopes there are better ways to do the manual work and technology is continuing to improve which puts less strain on manual work. In our world, we may think would that have happened in the present time and the reality is it likely does. With every investment there are benefits to the investee and something negative about the industry, hopefully the negative continues to fall.

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

The oil patch has been an important driver of the economy for other 150 years and many people have invested in oil companies and the successful ones have paid dividends for centuries. At one time John D Rockefeller and Standard Oil controlled the world market but it was broken up to become the 7 sisters – Standard Oil of New Jersey became Exxon; Standard Oil of New York which became Mobil; Standard Oil of California became Chevron; Texas Oil became Texaco; Gulf Oil which merged with Chevron; Anglo Persian Oil which became BP and Royal Dutch Shell or Shell Oil. For generations, BP was the biggest dividend payer in the UK; Shell was the biggest dividend payer in Netherlands; Exxon was the biggest dividend payer in the US. The above points out investors receive lots of money from the oil industry. But how much?

In an article from Reuters, Ernst and Young wrote that spending on dividends and stock buybacks of the top 50 independent oil and gas producers hit $58.8 billion, topping the $55.1 billion allocated to exploration and development.

Combined profits of the group which includes DiamondBack Energy, Pioneer Natural Resources, and ConocoPhillips to $333 billion, over 30% more than $217 billion in 2014.

Last year’s investor payout was up 214% over 2021 and more than sevenfold over 2020.

Bruce On, a principal in EY’s strategy and transaction group, expects the trend will continue and a new outlet for the cash is acquisitions.

Returns benefited from strong oil and gas prices and a cost-consciousness that emerged after energy prices collapsed 3 years ago. Profit per barrel was $32 compared to $10 in 2014 when energy prices were about the same level as today.

Linking to dividend paying stocks, in our economy one can expect oil and gas industry to continue to make profits and pay dividends. Which company is the best choice is up to each investor but a profitable industry which has a long history of paying dividends is worth owning.

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

Most of us tend to be plodders, there are those who embrace the latest technology and know the companies that are leading edge, but most people tend to need a focal point to understand what could be. Sometimes what could be means what is, will change or could easily change dramatically and that has consequences, but it also has many benefits. No one knows until a few years down the line. When Apple came out with the first smartphone, people began to use it differently and the applications on the phone has changed the world to be a better place. If you considered half of developing world now has access to credit, before they only had access to money lenders at high interest rates. There are always benefits to some and many times to many and consequences for industries. If you think about cable companies and the move to streaming on smartphones. This year the defining focal point will be ChatGPT and the uses that are coming. To use ChatGPT, means an infrastructure will have to be in place and the company that is leading that process is Nvidia.

In an article by Don Clark of the New York Times News Service, the infrastructure has taken at least 10 years and it happens Nvidia made most of the correct decisions. Think about other larger chip companies who are not where Nvidia is, and the questions is why Nvidia?

Over the past 10 years, Nvidia has built a nearly impregnable lead in producing chips that can perform complex AI tasks such as image, facial and speech recognition as well as generating texts for chatbots such as ChatGPT. The company achieved dominance by recognizing the AI trend early, tailoring its chips to those tasks and then developing key pieces of software that aid AI development.

Jensen Huang, Nvidia’s CEO has offered customers access to specialized computers, computing services and other tools of their emerging trade. That has turned Nvidia into a one stop shop for AI developers.

According to the research firm Omdia, Nvidia accounts for 70% of AI chips sales and holds an even bigger position in training generative AI models.

Daniel Newman, an analyst at Futurum Group said customers are willing to wait up to 18 months to buy a Nvidia system rather than buy an available off the shelf chip from a startup or another competitor.

Mr. Huang, said we understood that the reinvention of how computing is done and we built everything from the ground up, from the processor all the way to the end.

In 2006, the company announced software technology called CUDA that helped program the GPUs for new tasks, turning them from single purpose chips to more general purpose chips.

In 2012, researchers used GPUs to achieve humanlike accuracy in tasks such as recognizing a cat in an image. Nvidia responded by turning every aspect of the company to advance this field. This effort has cost $30 billion in the past decade.

Besides collaborating with leading scientist and startups, Nvidia built a team that directly participates in AI activities such as creating and training language models. This lead Nvidia to develop many layers of software beyond CUDA which saves labor for programmers.

Nvidia is focused on the large customers and data centers and its chips are relatively expensive the H100 costs between $15,000 and $40,000 which is 2 or 3 times higher than the A100. However, Mr, Huang says if you can reduce the time of training to half on a $5 billion data center, the savings is more than the costs of the chips.

For smaller companies, companies such as Inflection AI and CoreWeave which allows computers to rent time on their computers rather than buying the chips.

Linking to dividend paying stocks, at the moment one of the reasons you want to own Nvidia is because it has the largest market share in chip manufactures for data centers. It is important to remember IBM and Intel had the largest market share in the past. Cycles happen and Nvidia made deliberate choices to concentrate on the promising AI market. That market was seen in the select government institutions but was not in the general public. Eventually the general public will have access to Nvidia chips and new competitors will rise, for now enjoy the ride and ensure Nvidia is continuing to be the choice for AI developers. If not look for alternatives.

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

Most readers know about Amazon, FedEx, UPS and US Postal Service delivery service which brings parcels to your front door. When you think about the logistics, from warehouse to box to plane to van and to your door. Most of think about the last piece the van to your door because that is our immediate contact. However, there are companies that evolve around the plane or air cargo shipments.

In an article by Tim Hepher, Lisa Baertlein, Allison Lampert, and Valerie Insinna of Reuters, the people who run the cargo business are facing extra challenges now that COVID has passed. When COVID shut down passenger travel, the planes were flying but they were carrying cargo. Ever since planes have been flying, cargo has been a mainstay of profits. The early airlines were dependent on the revenues they made from carrying mail for the postal service. The mail was dependable and needed until the general public became familiar with flying cargo was the mainstay.

Jumping to the present time, during COVID, air cargo enjoyed record demand and when there is record demand it tends to mean higher prices for shipping. Since the end of COVID, demand has fallen, there is extra capacity in the system and freight rates are not going as much as costs.

When a passenger jet takes off, the lower level where passengers do not go is filled with cargo. During COVID, the airlines expanded the cargo space and now servicing passengers has taken back the space.

The global air cargo industry is worth about $200 billion a year.

Norwegian cargo analytics firm Xeneta, said in the next few years, shippers rather than the airlines will have the bargaining power and expect prices to decline.

An example is Western Global based in Florida recently filed for Chapter 11 protection. Even though Western Global does outsourcing for the US military. The carrier said the concerns are the unyielding and rapidly macro-economic headwinds that plagued the entire air-cargo transportation sector starting in late 2022.

According to data supplied by Xeneta, it costs $2.30 airfreight for 1 kilo (2.2 pounds). The price on the spot market is down 35% from last year and down 50% from the peak in 2022 of about $5.

The two big airlines Boeing and Airbus sell planes to shippers. Cathay Pacific, the 5th largest cargo carrier, has postponed a potential $2 billion order with Boeing. However, both Boeing and Airbus said 20 year demand forecasts for more than 2,000 new or converted planes remained intact.

Linking to dividend paying stocks, most readers work in a specialized industry, however in most industries the rules of supply and demand remain intact. If the industry is largely commodity based, the rules fit very well. If the industry is regulated, prices can increase according to inflation and supply and demand (for example utility prices). Understanding the business can make you a better investor.

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

During the month of August, one of the premier sporting events was the woman’s world cup played in Australia and New Zealand. In many aspects, the tournament was very successful about 2 million people paid tickets, for game between Australia and England approximately 70% of the TVs were tuned into the game and if you did not know Spain beat England 1-0 to capture the title. Behind the scenes is where sports can be interesting, if you watched the game the jerseys of England and Spain as well as all the other countries had a brand on it, what was the brand?

In an article by Katerine Masters, Amy Tennery and Helen Reid of Reuters, two of the largest sporting apparel manufacturers were represented in the final. Nike sponsored England and Adidas sponsored Spain.

In 2019, the last Woman’s World Cup, the US won the cup and Nike’s home jersey became the top-selling soccer jersey, for both men and women, ever sold in a single season. Nike executives told investors. Overall revenue in the 1st quarter after the tournament grew 10% including double digit growth in woman’s business. Sales were made after the tournament.

In 2019, the woman’s apparel business was 4 times it was in the 2015 world cup.

Of the 32 teams in the tournament, Nike had backed 13 teams and Adidas had 10.

Australia was the co-host of the tournament and their woman’s team went to the semi-final. This translated into 13 times as many jerseys were sold were compared to 2019. The semi-final game was the most watched TV in 25 years with up to 11.15 million viewers.

Adidas said it sees continuing demand for Spain jerseys and came out with celebratory apparel.

Linking to dividend paying stocks, in sporting events the appeal has to translate past the normal audience that will tend to go to or watch the game. When the public catches the event, many will pay for something to remember the game or the experience. In Australia, there was a large marketing promotion, but the Australians believed in the magic of the team and regular people made a difference. Companies send millions of dollars on trying to find the magic and you only know when it happens, but when it happens consumers open their wallets. Hopefully for a sporting event you have been caught up in the run for the magic. As an investor, if you see it, there are ways to make some money along the way, there are opportunities to be found.

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