Every country has a particular festival when their citizens spend money to enhance the festival. It can be related to birthday celebrations of the country or you can go to the card shop to see what future celebrations are coming up. When analysts examine the country one of the things they look for is a bump in the sales during festivals. In countries such as the US, consumer shopping accounts for 2/3s of the GDP, other countries try for a consumer society, but most are not near the US totals.

Economies evolve from agriculture based to manufacturing to services and as they evolve consumer spending becomes more important. One country where you can see the trends in the last 30 years is China. The country was agarin for centuries, then manufacturing moved into China and now as manufacturing moves to other countries, China is supporting the consumer society or how is it going?

In an article from the Associated Press, China had an online shopping festival known as 618. The festival runs from June 1 to June 18 or 618. The biggest retailers in China are JD.com and Alibaba as opposed to Amazon in the US. During the festival, Chinese e-commerce platforms offer discounts and incentives to consumers to buy stuff.

This year the festival results were weaker than pre pandemic levels. There were many reasons, but one reason is Chinese consumers have been price-conscious, looking for deals and trading down across most product categories.

Consumers bought cosmetics and luxury goods which had good sales because of the discounts.

Linking to dividend paying stocks, all industries have events or festivals where sales tend to be higher than normal. The issue for investors is to know what and where the events are held for the industry and the results. If the results are very good, it is a reason to continue to hold onto your investments, if the results are soft, perhaps it is time to look for alternatives.

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

If you have a Facebook account occasionally people post what they eat, which is a good thing, and one of the ways they were cooking it was many people bought an Instant Pot. The pot works well and the food is tasty, and people were creative in ways they were using the device as the devoted ones are called Potheads. The problem for the company called Instant Brands, during the pandemic sales jumped and Instant Pot became a best seller. After you have one, do you need anymore? If you have a kettle to borrow water, how often do you buy a new one?

In an article by Jesus Jimenez of the New York Times News Service, Instant Brands the maker of Instant Pot, Pyrex, Snapware, and CorningWare filed for Chapter 11 bankruptcy. The company went the Chapter 11 route rather than outright bankruptcy because it can access $132.5 million in funding and will restructure its business. Essentially the creditors will take less or equity in the company.

Ben Gadbois, President and CEO of Instant Brands said tightening of credit terms and higher interest rates impacted our liquidity levels and made our capital structure unsustainable.

Barbara Kahn, a marketing professor at Wharton School of Business, not the official reason for the restructuring is debt burden. It is common for companies dealing with a lull in sales to have debt burdens.

S&P Global, the credit rating and analytics corporation, downgraded Instant Brands rating because of lower consumer spending in the discretionary categories. Instant Brands sales were down 21.9% in the 1st quarter relative to the same quarter last year.

Linking to dividend paying stocks, debt can be a wonderful aspect to individual and corporate balance sheets, but if it is too much something will suffer. The issue for investors is when does debt become too much? Sometimes when sales increase dramatically, sometimes when the company buys another company at a high price and commodity prices turn downwards, there are those times as an investor you want to lighten your holdings or take profits and find alternatives as you monitor your investments.

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

If you pay attention to inside the beltway, the House Republicans have a committee on regulations, they want to take away as many as possible. The House Democrats believe regulations to stay because if you take them away, companies will and in the past move to the grey area. The grey area is where some of the processes are not quite illegal or can be charged with a violation, but pretty close. A number of years ago, people heard that baby formula from China was not healthy for babies and some of it was. Perhaps the companies that made baby formula sent out the message, we do not know, but it was not uncommon to hear regulations were stronger in the US than China. Regulations tend to go in cycles so maybe the pendulum will change.

In an article by Ana Swanson of the New York Times News Service, one of the regulations the US government is pushing is to penalize some items coming from China with heavier taxes or regulations, what is the reaction of companies in China? Some companies are moving their headquarters and some of their production facilities out of China.

In the global production of clothing, once it was in the southern US with many cities having large factories to make clothes, then it shifted to everything made in China. An example is Shein, a fast fashion app which people use to buy clothes. The company moved its headquarters from Nanjing, China to Singapore. The company has set up operations in Ireland and Indiana and lobbyists in Washington are calling in more American in nature.

TikTok is the most popular app in China and is available around the world. TikTok has set up operations in Singapore and Los Angeles.

Jinko Solar produces 1 in 10 or 10% of the solar panels installed globally. The company is headquartered in China, but it has set up a supply chain entirely outside China to serve the US market. The manufacturing facilities are in Florida, Malaysia and Vietnam.

Research by Altana, a supply chain technology company shows that since 2016, new regulations, custom enforcements action and trade policies that hurt Chinese exports to the US lead to setting up new subsidiaries outside of China, said Evan Smith the company’s CEO.

Linking to dividend paying stocks, all companies are dependent our supply chains and they evolve and have for centuries. If you think about the industrial revolution, the use of machines to drive down the costs of making fabrics and selling the fabrics to the former country which made them – India. With the advancement in robotics, perhaps fabrics can be made anywhere, we will see companies adapt. Some regulations will benefit the companies you have investments in, ensure that politicians do not throw out the baby with the bath water in a zeal to cut regulations.

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

During COVID pandemic, governments gave money to those citizens affected by the shutdowns, in general it was a good thing except for the fraud that was allowed to happen. One of the consequences was $4 trillion was put into the system, for many the money was a lifeline, for some it allowed consumer savings and spending higher. For the financial system, there is excess money in the system. What will the Federal Reserve do?

In an article written by Naomi Rovnick and Harry Robertson of Reuters, BNP Paribas estimates excess global liquidity has risen by $640 billion since the 3rd quarter of 2022 and is unsustainable by central banks as they do quantitative tightening.

BNP Paris says its base case is for global liquidity to fall 6% to 9% by end September and 7 and 11% by year-end.

The Federal Reserve in March loosened financial conditions with an emergency credit facility for cash starved banks, Japan’s central bank is buying government bonds to push money into the system, and Europe’s Central Bank is selling down the government bonds it holds at a relaxed pace.

Total global liquidity, a measure of cash and credit in the world economy has risen to almost $ 170 trillion in June, according to Crossborder Capital was $158 trillion in October.

The US Treasury is set to rebuild its general account by issuing $1 trillion or more of short-term bills, potentially at rates appealing from risker assets.

Linking to dividend paying stocks, the global money supply when there is excess capital tends to push stock markets higher because the money has to go somewhere. Eventually federal reserve banks print less money and the stock market has to move up and down based on more fundamental reasons. When the markets move on fundamental reasons, it is good to be a dividend investor because profitable companies that can pay dividends are worth more and as a long term investor you benefit.

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

If you like chocolate and many people do, however most of us really do not know about the raw material, we are only concerned with the finished product. The raw material of chocolate is grown on cocoa trees and in the world of commodity exchanges there is a price for cocoa. If you compare consumption in the growing country to that of Europe, you might wonder why is the number so low? could it change and why?

In an article by Geoffrey York of the Globe and Mail, the cocoa trees in the Ivory Coast country in Africa provide 40% of the global supply of cocoa beans to Europe and the US. However, in the Ivory Coast the consumption of the finished product in a chocolate bar is about 5 ounces versus 19 pounds in Europe.

To change the marketplace in the Ivory Coast. a chocolate manufacturer owned by Cemoi of France is making chocolate bars for the country beginning with the most basic bar which sells for 10 cents. The manager of the factory Lona Ouali, estimates cocoa producing countries are retaining about 6% of the $140 billion revenue that is generated by the global chocolate industries.

The country of Ivory Coast and Mr. Ouali would like to see more value added manufacturing in the country because similar to all crops around the country, farmers and those that pick the crops do not make the bulk of the money selling the harvest to consumers. However, much of the system and transportation networks are designed for the farmers to grow the crops sell to the manufacturers who change the cocoa bean to cocoa butter or cocoa cake and export it to Europe and the US.

Mr. Ouali says it is difficult to make chocolate bars because the sugar is more expensive than in Europe, milk has to be imported from France and factory exports are hampered by customs corruption or logistical nightmares. For example, it can take 2 months to ship to the next country over which is Gabon because there are no direct roads and shipping routes. The biggest African country is Nigeria however it has protection measures for cross border production.

Linking to dividend paying stocks, ideally you want to invest in a company further up the value chain because the transportation system is designed to move the goods from one place to another for processing. When the good is processed it can be shipped back at higher margins and earn the company profits which can pay dividends. It is good to understand the raw material, but examine the finished material companies.

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

All large firms talk to the competitors, and it is good to learn what they are thinking and possibly doing. The large firms such as Goldman Sachs call them at Talks at GS; Google has talks, Bloomberg has talks and you can see and listen to them on You Tube.

On one particular issue, Talks at GS interviewed Marc Rowan who is the CEO of Apollo Global Management. The interviewer was Allison Mass, Chairman of Investment Banking of Goldman who knew Mr. Rowan from working with him and very likely Apollo is a client of Goldman.

Apollo Global Management was $550 billion under assets. The company owns Athene Retirement Services which is the largest provider of annuities in the US and growing in Europe and Asia. Apollo makes its money on the spread of providing safe secure annuities at a lower rate and investing money to achieve a higher rate. Apollo Asset Management has $400 billion in credit investments using alternative securities; $75 billion in hybird and $75 billion in traditional private equity investments. Of the $400 billion, $200 billion is involved with Athene or they invest in themselves.

In 2008, the investment in Athene Retirement was $16 million and in 2023 worth $330 billion.

Mr. Rowan views the investment world through the phrase – excess return per unit of risk.

The largest area where they expect to grow is investment grade of alternative credit. Although Apollo was $400 billion, the market is worth trillions and they are not a major player yet.

Ms. Mass asked Mr. Rowan what he thinks about the future:

a) there is an inherent lack of liquidity in the markets – nothing is liquid when prices fall, they are liquid when prices rise.

b) Index and Correlations – Mr. Rowan believes in the publicly trade fixed income systems there is no longer seeking alpha because of the rise of Index Funds and people in general are buying the funds when they have cash and selling when they need it. They do not really know what they are buying, i.e. doing a fundamental analysis. For stocks, the main index is the S&P 500 and 5 stocks are driving the equity markets. If people are seeking alternatives, Apollo is in the business.

d) Technology is changing all financial services. If you examine all process of the financial services industry – there is fintech competitor. In the next 5 years, everything change, the seamlessness with change.

e) Apollo tries to think beyond the status quo, what could be or should be rather than what is. Their culture is a healthy intellectual subornation which means all people in the firm should be able to question the process before a decision is made.

f) does the company have momentum? If they have it, they will find a way around the obstacles. If they do not have momentum, everything is a barrier.

Linking to dividend paying stocks, as an investor you want the steady dividends and the long term capital gains which come from investing in profitable stocks. The issue is doe the stock stay profitable and why? Looking at momentum in the company and are they optimistic for the correct reasons help you determine an answer.

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

If you read Forbes or Fortune’s wealthiest people, you will notice there seems to be more of them than less. After billionaires have accumulated various monster homes or large homes, they tend to to have some they collect and then they look to owning a sports team. If you think about the era before radio and TV, sports teams were very inexpensive, now some are selling for billions of dollars. This tends to mean besides the expectation the price will rise in the future, by owning teams there are billions of dollars to be made. In addition, sports brings out people to watch and some of those the owner wishes to influence. Who does the owner invite to sit in the owners’ box?

In June, the big announcement regarding sports financing was a merger between the LIV Tour and the PGA Tour. The PGA is the older established league, there are tournaments every week but a few of them offer greater prestige and money for winning. Then the LIV was started with Saudi money and a very large bankroll of money. LIV offered golfers in the top 100 of the PGA, large signing bonuses to play along with more prize money than the PGA. The PGA reacted to LIV with a scorched earth policy, if a player signs with LIV, they could not play in the PGA championship tournaments. Then in June, the scorched earth policy was finished, and the 2 leagues merged together for the good of the game.

In an article by Tony Keller, he notes Adam Smith the economist and writer of In the Wealth of Nations, published in 1776, noted Prices in a monopoly are the highest which can be squeezed out of buyers, in a competitive market they are lowest which the sellers can commonly afford to take.

Monopoly’s benefit by never fully supplying the effectual demand. Keeping supply below demand also allows leagues to set a price for creating or moving teams, including taxpayer funded bidding wars among cities.

In the past, each time a new pro league was created to challenge a monopoly league, the competitor drove up athlete salaries. But those competing leagues were eventually all either crushed by the monopoly or merged with it for mutual benefit.

The history includes the AFL merger with the NFL; the WHA merged with the NHL, the ABA merged with the NBA and the American league baseball merged with the National League baseball.

Linking to dividend paying stocks, as an investor you like monopoly or monopoly like investments because they have the ability to raise prices and maintain market share. If you are customer you might have to pay more, hopefully your dividends cover the increase. In the corporate world there are always competitors and in every industry, people are trying to disrupt the industry one way or another, fortunately for monopoly like companies they have the abilities to buy out the competition and use the tools of the competition to build margins and maintain profits. If the investments you own are not doing mergers and acquisitions, it is time to seek alternatives.

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

Supply and demand is a wonderful explanation for commodity prices. For consumers we like to see as low price as possible, for producers they like to see as high price as the market can and will bear. For investors, as long as the price remains about the cost of production, the market will go up and down, but as there is stability in the market, all is good.

One of the easiest places to see supply and demand at work is the price of oil. During the global pandemic, the price of oil went down because people stayed home and demand fell. When countries opened up again, the price went up to record levels and has since fallen because demand in China has been relatively low as economic activity is not robust.

In an article by David McHugh of the Associated Press, the OPEC countries met in Vienna, Austria to determine countries production allocations. In addition to OPEC countries, Russia was included. Some countries such as Russia wanted no cuts in production, because they need the currency. While others such as Saudi Arabian agreed to a cut because they want a higher price. Saudi has large plans to diversify their economy away from oil and need $500 billion to build a new city called Neom.

Linking to dividend paying stocks, if you have investments in company that deal with commodity’s much will depend on the price of that commodity. If you own a major dividend paying company such as Exxon, the profits have increased with the higher price of oil and the company increased stock buybacks and special dividend payments to shareholders. Over the long term, shares in Exxon have done very well. The large producers want stability first, higher prices second which is a good thing for shareholders.

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

If you fly commercial planes, the likelihood you will be flying a passenger plane built by Boeing or Airbus is very high. The 2 companies dominate the industry and the 2 companies help generate one of the largest portion of export products for the US and France respectively. While other companies make planes, Boeing and Airbus dominate.

In an article by Tim Hepher, Aditi Shah, and Joanna Plucinska of Reuters, the biggest airline in India is going to order 500 more Airbus passenger planes. Indigo has a 56% market share in the world’s 3rd largest avaiation market. IndiGo has ordered from both Boeing and Airbus. IndiGo previously ordered 830 Airbus A320 and the new planes are narrow body A320. IndiGo is in discussions for 25 A330neo or Boeing 787 widebody jets.

IndiGo aims to double its capacity by the end of the decade and expand its international markets. The airline has a codeshare partnership with Turkish Airlines, American Airlines and KLM.

India and China each have a billion people and with more people becoming middle income, planes and the railroads are the choice of travel. China has spent billions on its infrastructure, India is the next country to spend on its infrastructure as people move about in the world.

Linking to dividend paying stocks, most countries want to be similar to the US with a heathy middle income group to support the consumer goods and service. Some countries have all the wealth at the top, but where the middle grows so do goods and services. We all grow up with ideas of what other countries are like and some change for the better and it is important if you own shares in global countries they have a presence in the changing countries. Do you know about the markets you investments do business in? If you are travelling during the summer, you can mix business and pleasure to see how countries are changing – either for the better or what you remember them as.

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