If you were in the Board room of the oil giants you would know that exploration of oil is a long-term, high-risk business. Big ticket offshore projects typically take 5 years to develop from discovery and another 10 years to return the initial investment. However, as a source of profit, it can easily return 15-20%. If an oil and gas company invest in shale, the turnaround is less than a year. If an oil and gas company invest in renewables, the return is 8%, what should you do?

In an article by Ron Bousso and Nerijus Adomaitis of Reuters, according to data and industry executives, there is a return to developing offshore oil and gas projects.

When Russia invaded the Ukraine, because Russia is a large oil and gas provider, the European Community decided to embargo Russian oil and gas, the prices of oil and gas went up. Profits flowed to the companies and flushed with cash, the big oil and gas companies are drilling offshore.

Baker Hughes is a oil services firm and the number of rigs drilling is higher than prepandemic levels. Wood Mackenzie analysts project a continued increase in activity and forecasting drilling to grow 25% by 2025.

The International Energy Agency forecasts that global upstream oil and gas investments are set to increase by 11% to $528 billion in 2023.

The area that is seeing the biggest demand for offshore rigs is US Gulf of Mexico, South America and off the coast of West Africa including Namibia where Shell and TotalEnergies are drilling.

Linking to dividend paying stocks, while the world is changing, higher commodity prices drives investment levels in the mining world. With higher prices come higher rewards or higher profits and the ability to pay healthy dividends. If you invest in commodities, watch the price not the politics.

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

If you think about Henry Ford and the making of the Model T, a vehicle for everyone as long as you wanted the car in black. At the Ford Rouge Complex, the Ford Motor Company owned all parts of the production. The company had interests in the steel making, the parts, and was one of the largest employers in Detroit. At some point, carmakers including Ford decided it was better to the assembler of vehicles and not own all the products and parts or to contract it out. It seems we are moving back in time again for EVs.

In an article by Clifford Krauss and Jack Ewing of the New York Times News Service, without the product of lithium, carmakers will not be able to build batteries, no batteries no EVs. This has led to carmakers to mines in Chile. Argentina. Quebec and Nevada to lock up lithium for their battery factories in Michigan, Tennessee and Saxony, Germany.

Established mining companies do not have enough lithium to supply the industry as electric vehicles become more popular.

In the past, automakers let battery suppliers buy lithium and other raw materials on their own. But lithium shortages have forced carmakers to directly acquire the have it sent to their factories, some own by suppliers and others owned partly or fully by the automakers.

Sham Kunjor of GM, noted we quickly realized their was not an established value chain that would support our ambitions for the next 10 years. GM has signed deals with Livent, a lithium company in Philadelphia for material from a South American mine. Then GM invested $650 million with Lithium Americas to develop the Thacker Pass mine in Nevada.

Ford has made deals with SQM, a Chilean supplier, Albemarle based in Charlotte, North Carolina and Nemaska Lithium of Quebec.

There are many companies trying to mine lithium for the mineral is abundant but not always easy to extract. Countries such as Bolivia, Chile and Argentina have large reserves. The risk with any commodity is prices go up, supply increases and prices drop too less than profitable. At the moment, the big winners are the miners who signed long term contracts with the automakers.

Linking to dividend paying stocks, in every industry there are supply chains and they develop to ensure the highest productivity and lowest cost are built into the system. Examining the supply chain allows the investor to pick where the best margins are and tend to remain.

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

Hopefully as an investor, you have a chance to read books during the summer and some not related to your work. Once in a while it is good to read stories about injustice because you can relate the reasons to other evaluations you do. A good example is the book The Cadaver King and the Country Dentist by Radley Balko and Tucker Carrington, published by Public Affairs, NY, 2018. The book is written by 2 lawyers about wrongful convictions in the legal system, focusing on the coroner’s office in Mississippi. If you are similar to me, the only time you have paid attention to a coroner is through TV shows such as Quincy and CSI – Las Vegas which are and still are popular viewing.

Given that many of think about the coroners office as part science and part medicine or following the facts, the book paints a different story of what was normal. When something is part science and part medicine, many different theories and ideas come into the normal operating procedure and may help find the guilty party guilty. However, some of the procedures helped convict innocent people, because there was a need to find someone guilty and the evidence pointed to one person or another. What will seal the deal?

An issue in the courts, we as a society tend to give people who have expert evidence a higher standing, particularly if they have a degree. We tend to place having a degree as equal to the best degrees in study, but should they be? What about the quality of their work, if someone claims to have worked on thousands of cases, how much time did they put into each case? If they are the go to expert for authorities, when do they disagree? how often? what is the bias? Are there patterns that develop that need to be questioned?

In the book, the authors focus on the state of Mississippi, for many years anyone over 21 could be a coroner and were. People who could not read or write and signed the form with an X were coroners. It is not surprising outside of natural death, underdetermined reasons showed up on the death certificate. That is ok under normal circumstances, except what happens when insurance money is desired or criminal cases rest on the coroner’s report? In the official headings, you would find a state coroner listed in the directory, but digging deeper you would find a very underfunded department. You would also find the fees for being a coroner low which ensures most people with medical degrees stay away from being coroner. What you may expect is not necessarily what you receive in reality.

In the book, the coroner’s department in Mississippi has changed, it is now being funded properly and thankfully the use of DNA evidence helps ensure fewer innocent people are found guilty but the damage was done.

Linking to dividend paying stocks, as investors you have an opinion of a stock and put money into buying the stock. Invariably someone will have a different opinion, why do you hold it? In your research you find a number of very good reasons to buy and good reasons not to buy. Investing is both a balancing act and narrowing down the list of stocks to buy. We only know perfect information looking back, we do not know what will happen in the future. The issue is when you examine the reasons to buy, how solid are they? what assumptions are you making? If the company is making profits, you can determine if you believe the company will continue to make profits. If the answer is yes, then it can pay a dividend and while the stock price will go up and down, your total return over the years is healthy.

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

When you buy shares in a company you are a part owner and you have some rights including voting at the Annual Meeting on the Board of Directors, the auditor and executive compensation. The other rights is to determine if you believe the company is headed in the correct direction. As with most things, some people or institutions own more shares than others and as CEO one of the first things you have to learn and do is count shares to have over 50% plus one. If you cannot count shares, eventually in an election, your side will lose and then you have to suffer the consequences. Generally, most shareholders vote for management, unless they are enriching themselves too much and much of it is either illegal or in the grey area. However all shareholders can voice their opinions.

In an article by Niall McGee of the Globe and Mail, the British activist investment firm Bluebell Capital is calling for the ouster of Glencore CEO Gary Nagle. To put in perspective, Swiss based Glencore is one of the largest commodities trading and mining companies in the world. Their reach is massive. For example, it owns 26 thermal coal mines in Australia, Columbia and South Africa. Thermal coal is used in steel making. Glencore is considering buying more coal assets in Canada through a company called Teck Resources.

Bluebell wrote the proposed acquisition of Teck is value destructive for Glencore.

Recently Glencore owns a grain handler in Canada called Viterra and has merged it into Bunge of St. Louis which is one of the 5 largest grain handlers in the world.

One of the problems with Bluebell voicing its concerns with Mr. Nagle is at the AGM, Mr. Nagle received a 99.43% vote of approval.

Linking to dividend paying stocks, for companies it is good there is wide range of individuals and institutions owning the shares of the company for they all bought for slightly different reasons, but they hold the stock. The slightly different reasons will translate into investors evaluating how the management of the company is doing and is expected to do in the future. With large organizations, there is always something to be done better, but profits matter. For some investors, as long as the company can pay a dividend, it can be held onto. When you see the news about your holdings you have the ability to evaluate and if you do not like it, find an alternative. if you like it possible capital gains will be forthcoming.

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

Most of us do not really know much about the mechanics of shipping, expect for many goods that used to come from China are now coming from Southeast Asia including Vietnam and India. The goods which come from very large container ships are designed to have a reasonably seamless flow from the manufacturer to the shipping container to the ship to ports to rail and trucks to a distribution center to the store and eventually the consumer. There are regulations along the way and one regulation being looked at is duty-free packages.

In an article by Kevin Freking of the Associated Press, under current US law, most imports valued at less than $800 enter duty free as long as they are packaged and addressed to individual buyers. The rule has many benefits. It speeds up the pace of commerce and lowers the cost for consumers. It allows for US Customs and Border Protection to focus its resources on bigger ticket items that generate more tariff revenue for the federal government.

In 2016, the dollar requirement was changed from $200 to $800 and the volume has soared. The volume has increased from 220 million packages to 720 million in 2021 and 685 million in 2022. From a regulatory point of view, no one really knows what is in the packages. almost 2 million packages a day and 60% coming from China.

Last year, the Biden administration wanted to lower the number, but US business groups and key Republican members of Congress said no and would not support it.

If you know someone that shops with retailers Temu and Shein which ship directly to consumers, the retailers ship directly to consumers and avoid the duty free tax. Meanwhile the Gap and H&M with different business models paid $700 million and $205 million in tariffs in 2022.

The reason why business groups are against lowering the amount, is to import the goods they would have to hire a customs broker to process their shipments. Given the low amounts, lowering the amount would not collect a great deal of tax money, but cause considerable extra work.

Linking to dividend paying stocks, everyone wants a relatively smooth flow of goods which is the goal. Wat is the appropriate levels to raise revenues and allow for the flow. There is no one answer, however most investors believe the larger companies have the capability to implement whatever the government determines is the correct number for their needs. As investors in large companies we expect, they can adjust to government regulations, if you find the large companies are leading the fight against regulations it is good time to find alternatives.

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

In every layoff, everyone hopes it is the other person, because everyone was hired for a particular reason and the hiring people believed the person would make a significant contribution to the company. However, when companies announce layoffs, it is a numbers game and often times good people are let go. It is the hope of the company letting people go, that the people laid off will go to other firms and make a contribution and maybe the new firm allows the person to shine more than they were at the old company. Sometimes it actually happens.

In an article by Alexandra Olson of the Associated Press, the thousands of people who were laid off by tech companies are being courted by hotel chains, retailers, investment firms, railway companies and even the IRS. All those sectors are hiring software engineers, data scientists, and cybersecurity specialists despite the layoffs of Big Tech.

The biggest employer is the US government because they need to strengthen cybersecurity defences, and modernize the way they deliver benefits and collect taxes. The federal government is aiming to hire 22,000 workers in 2023.

According to CompTIA, a tech trade group, federal, state and local governments tech postings soared 48% in the first quarter in 2023 compared to the same period in 2022. In the tech industry postings are down 33%.

Why? according to Ray Dalio, in a talk at Goldman Sachs, if you think before the Apple iphone, nobody had a mobile selling strategy. Since the invention, if a company does not have a mobile phone strategy it is not likely in business. (Mr. Dalio’s Bridgewater Associates spends a great deal of time determining what inventions or innovations will add 3% plus market share to companies). (a number of years ago, working with institutional clients, they dealt with everyone but at the top of the list the allocation could go slightly higher, it was a fight to ensure an extra 3% market share).

The unemployment rate for tech talent remains tight, with an unemployment rate of 2%.

Abbott Labs, the Chicago based global health company is expecting to hire hundreds of software engineers, data architects and cybersecurity analysts over the next few years.

Jonathan Johnson, CEO of retailer Overstock has seen a 20% increase in applications for job openings.

The tech workers who were working in big tech are now looking at the government because although no one strikes in rich, stable jobs, a pension and the possibility of working on many different types of issues are drivers to apply.

Hilton hotels saw a 152% increase in applications to internships and full time jobs from tech majors on Handshake (a leading career site for college students and graduates) compared to last year.

Linking to dividend paying stocks, we all know in the knowledge based economy some skills are in higher demand than others, including tech workers. Determining where they are going to work can help see what companies are meeting the expectations of customers better. If expectations are met, customers tend to be repeat customers and that leads to continuing making profits to pay dividends. Those industries which are not high profile, must play catch up, but knowing the economy moves in cycles, they have an opportunity. Do the companies you have invested in, are they seen as a great place to work and good talent goes there?

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

If you know anything about Israel it is likely you are aware the landscape is primarily desert. The country has made great strides to move water from it normally flows to where the people are to allow for food and water distribution. Being a desert, it lacks the water for hydropower, the winds may blow but they do not blow enough for wind power, being a desert, it lacks vast tracks of land to build a traditional land-intensive photovoltaic power plants so what can it do? The solution is simple.

In an article by Ari Rabinovitch of Reuters, the government of Israel is passing a low to require all new non-residential buildings to have rooftop solar panels. Think about California and solar panels on new housing. Israel has a history of using sun-powered water heaters and they dominate rooftop landscape in cities, without them the country would need to produce 8% more electricity.

Ron Eifer, who heads the Energy Ministry’s sustainable energy division, says you cannot cover the entire Negev in solar panels because of electricity will be lost over long distances from generation to usage in the cities. However, a simple solution is to use rooftops and Mr. Eifer believes eventually 60% of the rooftops will be dual use – roofing and to generate power.

Israel’s government incentives includes permit exemptions, tax benefits and small producers are paid a premium for electricity.

Linking to dividend paying stocks, all governments use regulations to influence behavior and soon the behavior becomes the normal. In theory and sometimes in practice, sometimes the normal means new industries and employment opportunities open up. For example, someone has to make the solar panels or import them, someone has to put them up and someone has to connect the panels to the grid to ensure the electricity is used. All of those actions start with time delays, but as time goes on, they generate employment and opportunities to the economy and in the end it is the correct thing to do. Some of the actions will translate in larger companies generating revenue to make profits along the way and it is up to you to do your homework to see which company is best to invest in.

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

Every industry has a convention, and many have multiple conventions, but one convention tends to be more important than others. During the convention one result is multiple deals are signed or they are negotiated for months before, but they are signed at the convention. In the airline industry, the world’s largest air show is the Paris Airshow and/or Farnborough in Britain.

In an article by Tim Hepher and Joanna Plucinska of Reuters, the two biggest airlines in India – Air India and IndiGo signed multibillion dollar deals for passenger planes to be provided by Airbus and Boeing. The 2 companies dominate the marketplace or are essentially a duopoly in supplying civilian passenger planes. Air India signed a deal for 500 planes and IndiGo signed a deal for 470 planes. This should tell you something about the market in India. It is the world’s fastest growing aviation market. The list price of 500 planes is about $70 billion, but companies receive discounts for large orders.

Boeing and Airbus are similar to the automakers, they do not make all the parts but supplier companies send them the parts and the companies put together a plane. For example what kind of engine is in the plane? Signing contracts for 1,000 planes means the factories will be busy for the next few years, which means the supplier companies will be busy for the next few years.

The other aspect of the show is defense suppliers and deals were signed for example France’s Thales will supply 13 long range air surveillance radars.

Linking to dividend paying stocks, for your investments part of your homework is to determine where the most important convention is held that public companies announce deals. Then you can either attend or watch the results of the convention. If the results are optimistic for your investments, you can continue to hold and see the results translate to profits and the ability to pay dividends. If the results from the most important convention are downbeat, then you maybe to buy more shares at lower prices in the anticipation of good results in the future or find other alternatives.

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

If you have read books, you likely have read Sherlock Holmes or Dickens stories, because they are both well written and very popular. If you think about the air quality in London, England it was described as foggy, but it reality it was a mixture of coal burning ashes and fog, at the time England used coal to burn for heat. The ashes went up the chimney into the atmosphere and caused air pollution. Cities such as LA and Beijing because of their bowl structures or due to the mountains around the city also face atmosphere problems as the pollution is caught in the bowl till the wind blows the dirty air away. As a society we have been living with coal for a long time and for a long time it was less expensive to burn coal to generate electricity. Politicians may say we all should go green, but then reality has a way of reaching up its head.

In an article by Kate Abnett of Reuters, the European Union countries have the strongest desire to go green and not burn coal or fossil fuels for energy consumption. It is a noble goal and EU energy ministers meet of a regular basis in Luxembourg to reduce coal consumption.

At the meeting, the issue of Poland came forth. Poland generates 70% of its power from coal. Poland is beside Ukraine and the EU is helping Ukraine. The EU used to have 40% of its power generation from gas coming from Russia, it has been replaced with gas coming from the US and Norway. After stopping oil and gas from Russia, electric bills for individual and business users went up, since then they have dropped a bit, but as much as the energy ministers want to have no coal, there is political reality and the targets to stop using coal will be extended.

Linking to dividend paying stocks, politicians often times have aspirational goals and that is a very good thing, however to move from what exists to what could be better takes time. If you own shares in energy companies, although they are dependent on supply and demand, the reality is no government is going to stop the oil and gas industry from doing their jobs to maintain energy security. As a shareholder that is good to remember, although some of the subsidies that have grown up with the industry maybe slowed in the future, till reality says bring them back. An example is the Oakland A’s major league baseball team is moving to Las Vegas, they need to build a new stadium and government subsidies were asked for, debated and eventually agreed to.

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