The internal combustion engine for the world meant mobility to the masses however one of the consequences is the gasoline powered car produces exhausts which contributes to climate change because of the numbers. Part of the solution is to move towards electric where there is little direct exhaust for climate change. There will be other concerns what to do with millions of batteries, but one solution first.

In an article from Reuters, Toyota Motor Company announced it has plans to invest $6.9 billion in plants to make batteries in both Japan and the US.

This follows the announcement by Honda that it had partnered with LG Energy Solutions to build a $4.4 billion lithium-ion battery plant for electric vehicles in the US.

All auto companies will need batteries particularly because the largest market of California will not allow new sales of internal combustion engines after 2030.

Linking to dividend paying stocks, all companies react to government regulations, some are leading edge, some wait until they have to, and some in between. Ideally a profitable company can and will stay up to date with the latest trends and they have the resources to buy companies that are leading edge to maintain their market share. What do your company investments do?

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

When Russia invaded Ukraine, the G7 countries decided to punish Russia without shooting its bullets and one of the ways it did that was to put sanctions on the country. The sanctions including financial considerations – if a bond was US payable, the Russians would have to use their internal mechanisms to pay the bond because the US put on a hold on their money outside of Russia. All countries have some money in other countries for diversification. The holds on the money outside of Russia caused concerns and worries and technically Russia defaulted on some bonds, because even though Russia had the money, the transfer agents could not allocate interest payments to the bond holders.

In an article by Alexander Marrow of Reuters, Russia had some options up its sleeves. In July the Russian President signed a law to give companies until the end of 2022 to issue bonds in a simplified procedure on the local market.

According to Ekaterina Nagaeva, director of the bourse’s listing department, they hope the first issue of bonds happen in late September. Replacement bonds would be a substitute for the Eurobonds that Russian companies can no longer service because of sanctions.

The bonds can be issued in rubles or in foreign currencies allow one term allows for the lender to demand repayment in rubles, rather than the foreign currency.

The Moscow Exchange is trying to go back to what was consider normal, but many investors will not be involved due to sanctions.

Linking to dividend paying stocks, events happen all over the world and companies must adapt to the events. The issue is how long does it take to adapt? In the case of Russia, their economy is based on oil and gas and prices went up which means there is money in the system. If there is money in the system adaption takes a little shorter time, in this case 6 months. When an event happens to your investments, you have to consider how long will the company adapt or is it best to seek other alternatives and watch the company on the sidelines till you believe it is adapting?

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

In the north east were the writer of this blog lives, we do not think about water too much because there are numerous fresh water rivers and lakes. However, we do see droughts affecting Europe, the west and southwest and that leads to thinking about water. Without water there is no civilization, many communities in the past, ceased to exist because their source of water changed or dried up and without water humans do not exist. If you are surrounded by fresh water, you do not expect not to have water.

In Israel, the country was formed in a desert, realistically most of Israel is desert and one of the reasons why the country was formed the way it was because no one wanted the land but the founders of Israel did. For generations the government of Israel has been working on ensuring their citizens have water to live, to grow food and to be a vibrant society.

In a book titled Let There Be Water by Seth Siegel published by St. Martin’s Press, NY, 2015, solutions about living with a lack of seemingly fresh water is written about. The book offers hope for countries around the world to learn to do some of the things Israel does.

The tips include:

using drip irrigation for watering of crops (70% of the water usage is by agriculture, drip irrigation lowers the number by being more effective)

desalinate salt water to gain fresh water (Israel uses this water for their drinking purposes)

treat nearly all the sewage to a high level of purity and reuse it for agricultural purposes

demand all appliances be water efficient

replace infrastructure before leaks begin and fix them when they show up

give financial incentives for technologies that save water

There are more but those are the biggest ones which can both save water and use water more efficiently to allow the society to grow.

Linking to dividend paying stocks, all companies start with coming up a solution to a problem. Once the problem is solved the company has the choice to grow and see if others both inside the country and outside the country have the same problem. Israel and its water companies are becoming a trusted source for other countries to ask for and receive solutions to their problems. It is the reason why there are ETFs which track water companies. Water companies can help solve the lack of water by saving water and the companies are becoming billion-dollar companies.

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

If you are a small to medium sized investor, one of the many ways to continue determine what your asset mix should be is to read. The are multiple publications both on line and in print for your work or to earn an income. But if you read other things you may pick up an interesting idea. For example going to the public library is a good thing to do.

Recently picked up a book called The Secret Life of Groceries by Benjamin Lorr published by Penguin Random House Books, NY, 2020. Most of us who do not work at the grocery store do not pay attention to what is on the shelf and how it gets there, but people in the grocery stores do. Some of it is interesting, some of it is background information rarely to come to the foreground.

One of the interesting pieces concerns something that almost everyone has in their home – the cardboard box. In the 1850’s, the cardboard box was invented. Life did not change until the1890’s when cardboard boxes were used for gentleman’s hats. Then a shift begins.

If you think about the western movies, in the town was services including a bar, hotel, law office, sheriff’s office and jail, barber shop and a general store. Most things in the general store were sold in bulk, which is why there were people to get whatever you wanted. After the cardboard box was being used for hats, there were many other technological changes including the preservation of food to move from fragile, expensive glass to cheap and hardy tin. Card stock, the thinner version of corrugated is perfected on an industrial stage for cereal and cracker boxes. By the 1900’s, the shift is momentous: packaged food is responsible for 1/5 or 20% of all manufacturing in the US.

The boxes eventually get a name or advertising on the box. Nabisco Brands begins to sell Uneeda Biscuit and it is a blockbuster, soon the company is selling more than 100 million packages of Uneeda Biscuits a year. The bulk items change to packaged items which gives the customer – choice. In 1916, the first grocery store offering self-service is opened, the store is called Piggly Wiggly and expands to become a chain. By 1930 there are more than 2,500 stores across the land. The chain is smaller today, but it still operates. In the 1940’s the grocery store grew in size from 6,000 sq ft to 9,000 sg. ft to 18,000 sg ft in the 1950’s to today’s Walmart and Costco of 200,000 sg ft.

Linking to dividend paying stocks, there are an incredible number of good ideas in the marketplace, but it does not necessarily to translating into national brands unless a number of other things that complement the process happen. The cardboard box is invented but it takes years before the logistics chain uses the cardboard box to its fullest degree. Often time you want to keep an eye on how logistics works for your investments.

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

One of the major concerns for the next number of years is climate change and people and companies will have to deal with. In every issue there is low hanging fruit because people can see the issue and it is readily available for solutions to be called for. It does not mean the issue is solved but there are starting points.

In Europe where climate change is seen everyday, countries such as France are going after low hanging fruit which also has political benefits. In the world of air travel, there are Boeing and Airbus planes moving people around and the manufacturers come up with energy saving measures on every new plane. For some, private jets are a way to travel and generally those either in high levels of government or corporations or very wealthy individuals have access to the planes.

In an article by Constant Meheut of the New York Times News Service, the aviation sector is considered one of the world’s top carbon emitters. And private jets are estimated to 5 to 14 times as much pollution as commercial planes per passenger, and 50 times as much as trains according to a study published by Transport & Environment.

In France, because of Paris and the Mediterranean Rivera (including Monaco) had the 2nd highest level of emissions from private jets in Europe, after Britain. In 2019, one tenth of all the country’s outbound flights were with private jets.

The result of this is there are now apps on social media which track flights. The government of France is considering limiting private jets usage.

Linking to dividend paying stocks, many profitable companies have their executives use private jets to save time and allow them to work. Social media will eventually track the flights for the environment, there are hedge funds which track executive jets to see patterns – why is a jet used by company A going to a place where it usually does not? who and what are they seeing? There is a need and usage of private jets but beware every year some aspects of corporate world is tracked for all to see and those that use the planes may have to justify it.

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

In every industry there is a the biggest market where the sales occur. By virtue of being the biggest market when governments change regulations, the suppliers will and have to adjust or they will be shut out of the biggest market for sales of their products. In the case of the automotive sales, the biggest market is California. If California is changing regulations, then other states will copy, there will be some states who say they will not change, but auto companies sell to the biggest markets not the smallest ones.

In an article from Coral Davenport and Lisa Friedman of the New York Times News Service, the Governor of California announced by 2035, there will be a ban on the sale of gasoline powered cars. It is likely hybrids are ok, but all the major companies have stated they will have a full line up of electric power vehicles by 2030.

In California, the regulatory body which made the decision is called the California Air Resources Board. The Board believes fossil fuel emissions are chiefly responsible for the warming of the planet and set interim targets of by 2026, 35% of the vehicles should produce zero emissions and that would climb to 68% by 2030. The reason why California could act in this manner is President Biden restored the Clean Air Act that allows California to set auto pollution and mileage rules. Former President Trump loosened the rules as part of free rules and regulations from business.

John Bozzelia, President of the Alliance for Automotive Innovation, which represents large US and foreign automakers, said the rules would be extremely challenging to do. The automakers in general want to see more electric vehicles on the road and issues on affordability, charging stations will need the help of state and local governments.

Linking to dividend paying stocks, government is important to all industries for it sets rules and regulations. If a company wants to block the competition, it will say the rules and regulations need to be toughened. If a company wants to make more money, they often say the rules and regulations need to be loosened. There is some sort of balance which the market place will tell for what sells is the key.

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

When you have savings and want to invest the money, besides the stock market you look at returns on interest rate vehicles. As a saving you have something somebody is looking for – money and what rate of return would you take to allow them the use of it. As a saver, you are at the top of the food chain and at the bottom are the people who can not save and need to use high cost money mart type of chains. As a saver, you would not want to take a loan, but the companies do serve people in the market place. Take the same way of thinking to the corporate market, ideally treasurers save money and have A and BBB ratings. The interest rate will be closer to prime or what the Federal Reserve charges the banks. But some companies do not have savings, but they could and they are in the junk bond or pay higher interest rates.

In an article from the New York Times News Service, in the middle week of August, companies raised $4.1 billion in junk bonds. That total was higher than the total offerings in July. One of the companies which raised money was Royal Caribbean Cruises which raised $1.25 billion at 11.63%. If you ever cruised with Royal Caribbean, watch out for fees, they need to raise money to pay their debts.

Royal Caribbean is using some of the money to pay back debt it raised in 2012. At that time, Royal Caribbean raised $650 million at 5.25%.

Linking to dividend paying stocks, all companies will go to the bond market for companies have lots of reasons to use the money. Chief Financial Officers are always examining when they raise money is it better to raise with equity or bonds? As a investor you can easily determine what the rating is on the debt of the company. The higher the rating, the lower the investment world sees as a risk. There are many funds which do not invest in low rating companies, you can have the same standard for the rule of investing is try not to lose your money.

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

If you read headlines from Europe you likely read about the weather – it was sunny and hot. While for many people that might be a good thing, it is not good for agriculture and water levels. The lack of rain in Europe has caused crops not to grow and similar to California – wildfires have flared up, in addition the rivers that flow through Europe are much lower than normal. The lack of rain and higher temperatures means people turn to air conditioning for longer periods of time. This pushes up demand for electricity. How does Europe generate electricity.

In an article by Jason Horowitz of the New York Times News Service, some of the electricity goes from gas power plants, however due to the war in Ukraine and Russia, the President of Russia wanted Europe to support Ukraine less so he had Gazprom slow gas distribution to Europe.

Europe had to turn to over sources including hydro power from Norway. If you think about Norway images of steep fjords, where there is abundant water to generate electricity are found and many areas have hydro plants. The hot summer has been hurting Norway with reservoirs (think Lake Mead in Nevada) are going down. This means salmon swimming upstream to spawn have lacked enough water to migrate as well as hydropower reservoir supplies, provides 90% of Norway’s electricity as well as exports to other countries, have sunk to the lowest levels in 25 years. The shortages have caused tension – higher prices for electricity and political tension – other countries need more power.

Norway did not have much snow during the winter and has experienced the dry spring, April was the driest in 122 years which caused the reduced water levels in rivers and lakes.

Linking to dividend paying stocks, when you invest in an utility company particularly one that uses hydro, there is capital cost to put up the dam, but then the dividends should be standard operating procedures. The regulators ensure prices go up to ensure good maintenance and people costs, but after that it should be good for stockholders. Climate change affects everyone, it is important to understand what and how your company adjusts to it which meets your expectations.

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

If someone mentioned wealth funds, you would likely think about countries with oil and consider countries in the Middle East. There are some very wealthy funds in the Middle East although most are tied to the Kingdoms which means there is less for the average citizen. In fact, the largest sovereign wealth fund money does come from oil and gas but is located in Norway. The government of Norway owns oil and gas reserves in the North Sea and has very strict rules on the spending of its oil money. The result is Norway’s Sovereign owns approximately 1.3% of stocks traded on the stock exchange. The fund has over $1.3 trillion in holdings and owns 9,300 companies globally.

In an article by Victoria Klesty of Reuters, the fund which made the second highest profit last year, over the first half of the 2022 lost $223 billion or 14%. Not to worry, markets have recovered in July and August which means the second half is looking good.

The fund manager is Norges Bank Investment Management whose CEO is Nicolai Tangen. At the end of June the fund held 68.5% in equities, 28.3% in fixed income, 3% in real estate and 0.1 in renewable energy infrastructure. On the equities, the fund is a large shareholder in big tech such as Meta, Amazon, Apple and Alphabet.

Linking to dividend paying stocks, often times we believe if the we had a little more money we would have institutional sized portfolio and be sheltered from the ups and downs of the stock market. The reality is the market goes up and down, however dividends help protect your overall return. Investors and Investment management professionals are studying companies from around the world and make decisions. As a small investor, the issue is why do you own the stock – does it continue to make profits, can it pay its dividend, then you can hold and reap the rewards.

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