For millions of consumers, part of the daily routine is to have a cup of coffee or more to start the day and sometimes throughout it. There are multiple coffee shops to choose from, you can buy the beans or instant, coffee products are there to help you. In the depression, there was an expression, brother or buddy can you spare a dime or enough to buy a cup of coffee. Coffee was and is still part and parcel of living in America. Have you ever wonder about why coffee and the business behind it? In a book called Coffeeland by Augustine Sedgewick published by Penguin Press, NY, 2020, the author looks at the history both good and bad of coffee.

In 1928, due to a number of planters including James Hill’s coffee mill, coffee trees covered a 1/4 of El Salvador’s arable land and employed a 1/5 of its population. Salavoran plantations generated per-acre yield 50% higher than Brazil, producing an annual coffee crop than made up of a 1/4 of the country’s GDP and 90% of its exports.

Mr. Hill had arrived in El Salvador in 1889 as a travelling salesman of fabrics from England. He eventually became a tailor and married a lady whose family owned a coffee plantation. Mr. Hill then moved to his farm and became a coffee grower. The next step was to set up a coffee mill and send beans to San Franciso.

400 years ago, coffee was only found in Yemen and controlled by a small group of merchants. The control meant coffee was available in Europe, but it was expensive and not available to the masses of people. In England, coffee and tea were available but they were both expensive because the Dutch through the Island of Java (now days we know it as Indonesia) controlled the spice markets as well as having a monopoly on tea. By 1825, the British East India Company had access to Chinese ports and flooded the British market with inexpensive Chinese tea. Britian became a tea drinking nation, and the Dutch changed Java’s production from tea to coffee.

In the 1700’s and 1800’s, European countries all had colonies around the world. The Europeans moved coffee plantings moved around the world, particularly to Central and South America. Some of the islands of the Caribbean had wonderful soil and weather for coffee plantations and soon the island of Saint-Domingue, which we know as Haiti became the world leader producer of coffee, producing half of the world’s crop. The work was done by slaves.

Haiti had a slave rebellion, and the planters left the country and some of them took residence in Brazil. By the 1830’s Brazil had over 50% of the world’s annual supply with the work of the slave trade.

In the 1880’s the slave trade in Brazil was over and the industry was in disarray because it needed to pay people to do the work and in Java a fungus affected the coffee trees. The production in Java fell from 13% of the world’s market to 5%. This left an opening for other countries who grew coffee, as well as the price of coffee increased 50%.

The largest opening was for Latin American countries to the all-important US market. During the civil war, the military gave its soldiers coffee as well in the 1820’s the US became the first world power to import coffee duty-free or free trade. The free trade in coffee was part of President James Munroe vision of a greater influence in Central and South America or what is now called the Munroe Doctrine. Coffee became a working person drink or there was a growing market in the US as well the US government could influence governments through coffee particularly infrastructure improvements, governance – to ensure US interests are safeguarded and finance – offering loans through development banks to expand coffee production.

Linking to dividend paying stocks, for every commodity, there are multiple stories behind it to be where we see it now. Most of them involve who has the largest market share, who can influence the price and over a period of years can profits be made. After that you can add in government influence, labor markets and booms and busts to shake out the industry. As an investor you need to focus on at what price does the company make money using the commodity.

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

In his second term, President Trump has done many things by Executive Order and within the law, the phrase emergency powers act has often been used. In the past, Presidents had to go through the House and Senate to pass bills and even though President Trump’s party has a majority in each of the legislative body he has gone around them. Time will tell what happens if the Democrats ever have a President, will he or she be able to do the same thing? President Trump’s big economic push has been tariffs. Whether you think they are good or bad, one has to ask is there really an emergency on a broad tariff policy?

In an article by Andrew Chung of Reuters, the US Supreme Court agreed to take up the case the Justice Department appeal of a lower court’s ruling that President Trump overstepped his authority in imposing most of his tariffs under a federal law meant for emergencies.

The Supreme Court begins a nine-month term on October 6 and for the Court, they placed the court on a fast track, scheduling oral arguments for the 1st week of November. A decision will be made before December.

The Act President Trump has used is called the International Emergency Economic Powers Act or IEEPA. The tariffs remain in effect during the appeal to the Supreme Court.

The question is who can impose tariffs Congress or the President? Since the IEEPA was passed in 1977, it has never been used to impose tariffs. It has been used to impose sanctions of governments.

Linking to dividend paying stocks, some of these companies will have operations outside the borders of the US. Many of them will have used existing supply systems to lower costs to maintain margins to make profits to reward shareholders. If you own manufacturing or retail shares, you have likely heard or seen the CFO say tariffs are making an impact on our business. If things change at the Supreme Court those stocks will likely get a bounce in stock price, however it does through concerns elsewhere in the economic system or President Trump will likely have to raise taxes.

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

If you are a dividend investor, automatically you focus on the equities or the stock market. If you are invested in utilities, banks, oil and gas companies, both the stock price and the dividend to equal a total return has done well. However, the alternative to investing in the stock market is buying bonds which is much larger than the stock market.

In an article by Jamie McGeever of Reuters, President Trump’s administration has been focusing on borrowing more at the ultrashort end of the curve, while pushing the Federal Reserve to cut rates. The ultrashort end of the curve is US Treasury bills. Every week there are sales of the 4 week T-bills and the size has reached $100 billion for the 5th consecutive week.

In the article the benchmark 10-yield is the lowest since April’s Liberation Day, while the 30-year bond is backing away from 5%. Investors lending to Uncle Sam for 10 years are getting 4.08%, while investors lending to Uncle Sam for 4 weeks are getting 4.2%. The good news for Uncle Sam is the the $100 billion sale was 2.78 times over scribed or there is very healthy demand.

The big problem is rollover risk. Concentrating sales at the front end of the curve means the government has to refinance a large portion of the debt more frequently. An extreme case of rollover risk was in 2008, when real estate mortgage back securities went into default, all short term paper connected with real estate did not rollover. We are nowhere near that, but a risk is a risk.

Increase T bill issuance has been well absorbed so far, but cash going into bills is depleting liquidity pools and buffers in other parts of the system. The Fed’s overnight reverse repo facility is almost empty, and total bank reserves at the Fed are declining.

No one knows what the lowest comfortable level of reserves for the banking system is. In 2019, a sudden drop below $1.5 trillion triggered significant money market volatility and a spike in overnight rates. At the present time, the reserves are in the $3 trillion area,

The result of moving to the issuance of more T bills is the total outstanding portion of federal debt is 21%, slightly below the historical average of around 22.5% but above the recommended range by the Treasury Borrowing Advisory Committee of 15 to 20%.

As long as there is constant demand for the debt, then the issuance of $1 trillion of new issuance coming soon will not be a concern to the market.

In the world of finance, there are many moving parts and as long as the market has confidence in the system, then it all works. If the market finds a good reason to be worried, then interest rates have to go to ensure demand continues. Politically President Trump can call for lower interest rates but the market will determine what he has to pay. Given interest rates have a direct reflection of dividend stocks, if the government has going to ensure you 7%, would you buy stocks or bonds? Fortunately, the rates are low and should be going down because the economy is slowing, which makes buying a profitable company that can pay dividends a valuable thing to do.

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

Ever since WW II, the world has evolved into countries that have significant advantages to specialize in those manufacturing companies. The advantages allow them to sell products for less than other companies can sell and make a profit on them. The countries allowed lower cost items but shifted its economies to more services and their standard of living improved, so most people were content with the system. President Trump loves tariffs and given he is President has moved the world to deal with tariffs. The world of manufacturing is adjusting to the tariffs, and it takes time before domestic manufacturing builds the items that were being imported.

In an article by Kevin Draper of the New York Times News Agency, if you think of green and yellow tractors, you likely think of John Deere, headquartered in Moline. Illinois. The company has 30,000 employees across 60 facilities across the country. More than 75% of its machines are assembled in the US or 25% of the components are imported.

Those big tractors which harvested the country’s corn, soybean and wheat crops are expensive. Some models cost more than $250,000 which is at rise of over 60% in the past 8 years. The article says at that price farmers and ranchers are looking at used tractors.

Demand for new agricultural equipment is largely determined by crop prices. When prices are high, farmers can buy new equipment. At the present time, prices are low with corn selling for 50% of the highs seen in mid-2022 Soybean prices are down 40%. John Deere expects sales of equipment to fall 15 to 20%.

If you watch YouTube there are videos of farmers attending meetings to try to get government help sooner than later.

Corn and soybean crops yields are expected to reach near-record highs according to the Department of Agriculture. The problem is buyers. The US has a large seller to China, but because of tariffs imposed on it, China has been buying from other countries. In addition, USAID was a large buyer for the crops to be sent overseas, but the President has dismantled the agency, who will buy?

The administration did pass a bill to depreciation costs to be a bonus allowing farms to receive a large tax break for equipment purchases. However, if a farmer is worried about paying the bills, depreciation is not a big help.

The good news for John Deere is the competition includes Kubota, Fendt and Mahindra and those companies manufacture most of their machines abroad which would be hit by the tariffs or be more expensive.

Linking to dividend paying stocks, with every industry there is always good and bad news, is the glass half full or half empty? Why will it change? Will the government help or hurt their operations? As an investor, you may love the industry but concentrate on whether the company makes a profit by focusing on how it makes its money, otherwise you are looking at a long-term holding.

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

There is an old saying, those who live in glass houses should not throw stones. In the world of politics, people try to justify a bad decision with facts. However, often times giving a little time and ability to examine the facts of the case, other examples come forth and one wonders why these examples were never the sword to die on?

In an article by Eric Tucker and Paul Wiseman of the Associated Press, President Trump wants lower interest rates, however the Federal Reserve sees headwinds that makes that decision difficult. The economy is slowing, which is good for lowering rates. but tariffs are driving up costs which makes it difficult to raise rates. One can go through a variety of good and bad aspects which the Federal Reserve makes. President Trump decided to go after one of the Federal Reserve Governor – Lisa Cook.

Bill Pulte, is the director of the Federal Housing Finance Agency which operates Freddy Mac and Fannie Mae mortgage operations. He had his team go through Ms. Cook’s mortgage records and made a criminal referral to mortgage fraud. He also made the rounds including CNBC where he said he was going after mortgage fraud and there was a very clear line in the sand and she signed the documents, because she listed two properties where she was the principal residence.

Ms. Cook’s lawyers insisted she did not engage in fraud.

Since Mr. Pulte’s line in the sand declaration, it is natural for a variety of organization to go through public records, it takes time and effort to find the various documents and sometimes involves some costs to the registrar, but documents can be found since they mortgages are technically public.

One would think that Mr. Pulte, who is on the Federal Housing Finance Agency would have a reasonable idea of the scope of the fraud and how many convictions. It turns out there was one. It also turns out banks typically suggest the customer to check the principal residence to make it easier to give the mortgage. The belief is people will pay the bill on a principal residence, and the bank is protected because it can sell the other property, it is not fraud. Thousands of second homes are listed as principal residences. Perhaps the rules or regulations should be changed, but as a government that wants fewer regulations, will it?

Some of the higher profile people it includes are 3 Cabinet Members of President Trump’s administration, and Mr. Pulte’s father, who is in the housing business, is that line in the sand big or will Mr. Pulte be making criminal referrals to people he knows?

Linking to dividend paying stocks, in the world of politics there are serious issues but sometimes they have a lot of noise because the regulations affect the governing political party. When you listen to the news and it relates to companies you have an interest in, ask is it noise or real policy?

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

When a politician says something particularly if it is slogan, while it maybe nice to hear, you may agree with it, you should not automatically invest in it. An example is President Trump said, one of the ways he was going to unleash the oil industry was to allow it to drill baby drill. This has meant changes in regulations to make it easier to drill and allowing drilling on more federal lands. For those in the oil industry, that can be good thing, but the oil and gas industry is a commodity based which means it is dependent on the price of oil. Too much of a good thing is bad for prices.

In an article from Reuters, CEO Ryan Lance of ConocoPhillips said the company will cut 20 to 25% of its workforce in a restructuring. The price of oil and gas has fallen which translates to cutting expenses including staff, slowing capital spending and reduce drilling.

Costs have risen by about $2 a barrel, making it harder for the company to compete. CEO Lance said the controllable costs has risen to $13 a barrel in 2024 from $11 a barrel in 2021.

ConocoPhillips has identified more than $1 billion of ways to cut costs and improve margins on top of the more than $1 billion it cost savings from its acquisition of Marathon Oil last year. The reorganization should be completed by 2026.

Linking to dividend paying stocks, the 3 largest oil companies in the US – Exxon, Chevron and ConocoPhillips are profitable companies but they still need to retain margins to generate profits to reward shareholders. The process maybe easier to drill for oil and gas, but market prices determine when and how much they will bring on stream to ensure they continue to make profits. Listen to the politicians but invest on the commodity prices determined by the market.

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

Shortly after WW II, in the western countries the men came back from the war and started to have large families which lead to the baby boom generation. The influx of population meant that services had to increase which led to increase schools, portables, then bigger high schools, expansion of post-secondary education and eventually a bigger workplace. By many measures it was a good thing. In addition to the baby boom population the economy moved from rural to urban from manufacturing to service industries. Many new industries came and still continue which has benefited millions of people. If we jump today, the baby boom is retiring, family size is down and while robots will help, society needs people.

In an article by Riham Alkousaa of Reuters, she writes about a German town called Altena. The town has about 20,000 people and if you ever lived in a small town, it has the classic signs. Altena has been an industrial town since the Middle Ages and is the birthplace of wire production.

Ironworks is still manufactured, but the number of jobs has fallen. The German government had a policy of letting in immigrants to the country and the town of Altena said they wanted some. There was empty apartments, there was high job vacancy for some service jobs, there was a need for more population and the services that go with it. How did it work out?

People tried to make the immigrants welcome, with support services and volunteers to help them show the ropes.

In 2024 roughly half of the 100 additional arrivals from 2015 were still living in Altena. Most of the rest moved to the bigger cities. There are advantages and disadvantages to living in smaller cities and advantages and disadvantages to living in larger cities, it is understandable people move.

Linking to dividend paying stocks, when you buy a stock and really learn about its operations, often times the company is operating in smaller cities and play a significant role in the economy of the area. From a macro perspective, sometimes there are cuts and relocations among operations of the company, it has an effect on the communities. We often like change to areas that do not directly affect us, but in reality we are all connected.

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

Understanding commodities also allows you to understand the world around you. For commodities are found around the world, it influences the governance of the country and equally important how and why the commodity price moves up and down.

In the book Gold, Oil and Avocados by Andy Robinson, published by Melville House, Brooklyn, New York, 2021 the author focuses on Central and South America’s economies through commodities.

Advertising works and advertising in the Super Bowl can work very well. In February of 2017, 278 million avocados were sold to be eaten during the Super Bowl game. In 2007, both California and Mexico produced the Hass variety of avocado, by 2020, 80% of the avocados consumed by US consumers came from the Michoacan area of Mexico. The demand for the avocadoes has transformed the area from 3,000 acres under cultivation in the 1960’s to over 180,000 by the early 20th century. The big issue is water, the trees that grow the avocados need a great deal of water and the water table is falling in Mexico. The alternatives are orchards in Columbia and Peru are expanding.

In Brazil, one of the biggest agricultural exports is Soybeans, it also happens the US is a big grower of soybeans. The number one customer is China and China has moved the US off the top of the list to Brazil. Soybeans are used for feed for pigs and chickens, and soybeans are shipped to Spain in Europe which has the largest pig and chicken factory farms. The interesting aspect is the grain terminals are operated by the big grain companies including Cargill of the US, ADM of the US, Bunge of St. Louis and Geneva, Switzerland and Louis Dreyfus of France.

Beef cattle is been a growing industry in Brazil with 85 million head of cattle which is more than the US and Australia. One of the biggest meat companies is called JBS and one of the many ranches has over 150,000 cattle. Most of the ranches are what used to be the Amazon Rain Forest or as one hotel clerk said, the rain forest starts to the west of us. As the trees are replaced, the land is used for cattle raising and soybean farming.

President Trump calls the Gulf of Mexico the Gulf of America and among other things it is blessed with is oil. In Venezuela, they have enormous store of heavy oil which similar to Tar Sands in Canada has to extracted from the earth and then becomes oil to use. The problem for oil refineries is they have to be specialized in heavy oil and there are refineries in Houston and in China. For heavy oil, the price of oil has to be about $55 a barrel, when it goes below, activity slows down to a trickle. Offshore of Brazil, Mexico and Guayana are huge oil fields but once again the price of a price per barrel has to be high because the floating oil platforms are very expensive to build, maintain and move oil and gas once it is found in commercial amounts. All the major oil companies from around the world are active in the Gulf of America. This leads to what is America’s interest and what will America do to protect its interests and be aware sometimes governments change.

Linking to dividend paying stocks, many investors own shares in commodity companies, for example ever since Standard Oil became ExxonMobil and it has been a dividend paying company and it reliably pays a dividend every quarter. As investors you focus on the results of the company, how it does its business is for others to be concerned about as long as it is legal, but in reality, there is a footprint that is made. How big it is and how it is overcome, that may be left to greater minds.

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

Understanding commodities also allows you to understand the world around you. For commodities are found around the world, it influences the governance of the country and equally important how and why the commodity price moves up and down.

In the book Gold, Oil and Avocados by Andy Robinson, published by Melville House, Brooklyn, New York, 2021 the author focuses on Central and South America’s economies through commodities.

When Columbus made trips to the Caribbean Islands and Mexico, he eventually brought gold back with him and stories of more gold and silver to be found. The Spanish government sent a new group of explorers, the Conquistador whose purpose was to send gold and silver back to Spain, as well as Catholic priests to change the religion of the lands. Enough gold and silver were sent back to Spain to make it the wealthiest country in Europe and have a significant influence of religion and governance in Europe. The mountains of the Andes contain vast mineral deposits including gold and there are many mines still operating and to be found. Ever since gold was found, the best way to separate it from the rock is to use mercury and cyanide. In means that pools or ponds of water with the chemical are formed, and with multiple mines operating it is not hard to find one that breaks. The water of minerals gets mingled with good water causing the river to die for a period of years. In addition, finding gold means people flock to the area and there will be and are conflicts on whose land it is.

The term Banana Republic does not refer to the clothing store of the same name but the food many of us eat on a regular basis the banana. The banana was imported into the US and people developed a habit of eating them. As the demand grew the consolidation of companies grew and a company called United Fruit emerged as a dominant player. For years, the headquarters were in Boston, and it was a great dividend paying stock. The banana republic term is the way the company managed its operations. The company backed by the US government’s intervention, if necessary, essentially took over a 1/3 of the country for its operations. it ran the plantations, the railroad, the ports, the utilities – mail, light, telegraph and telephone to ensure bananas were available for consumers. If the government objected or wanted great changes, the government through the CIA and other agencies changed to politicians who interests aligned with the company and the US. Eventually the government broke up United Fruit to the companies we have today.

The book discusses minerals of niobium, coltan, and diamonds, potatoes, copper, lithium. quinoa and silver.

Linking to dividend paying stocks, if you consider Thomas Edison, he famously said he made thousands of experiments to ensure he learned the best one to ensure people could use the light bulb. Not only did he have to find a light bulb that people could use but the materials the light bulb could be reproduced at an affordable price. The final result is essentially what we have today and then industries were formed to produce the raw materials and the finished product. Every product goes through the same stages, invention to finding raw materials to finding alternative materials at the right price for the right market. Many of those rights have alternatives, which is good for consumers. For investors the question is why is that the right …

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