Most people live in urban areas and as more people move around the urban areas, they tend to get crowded, or congestion begins. 50 years ago, the thought was to build new highways and that would solve the problem. The issue is it does for the first few years, but soon the new highways are congested, and the road system thoughts begin again. Ideally there is a mixture between transit and the road system which allows people soon level of choice. There are advantages and disadvantages to taking the car and riding transit for the individual and society at large. One suggestion that seems to successful in London, England is to bring in congestion pricing system on vehicles. This solution tends to send more people to transit either subway or the commuting train system.

In an article written by Philip Marcelo of the Associated Press, the city of New York has imposed a congestion price on vehicles through a $9 toll if the car enters Manhattan neighborhoods south of Central Park. The city says city traffic has brought modest but measurable traffic reductions.

When governments get elected, they often know what they do not like. The Trump administration through the US Transportation Secretary Sean Duffy will work to stop the tolls.

The other side of the issue is the state government through the Metropolitan Transportation Authority which runs the New York subway and other public transit. The MTA had plans to use the money from the tolls to issue bonds that would fund billions of dollars in improvements and repairs to the city’s creaky and cash strapped transit system which carries 4 million riders daily.

Who funds the transit system when all governments are cutting back expenditures?

Linking to dividend paying stocks, when governments are in place during the first 100 days, they often know what they do not want, but not necessarily what they do want. After 100 days, it will be their job to find solutions, because they are now responsible. There are always tradeoffs in government policies, and it is up to the private sector to find the opportunities in the tradeoffs. After the 100 days, the administration should signal what it does like and what kind of regulations it will or will not impose and then companies can try to work within the system until the next election. For dividend paying stocks, the ideal is to work beyond the election cycle to see the opportunities that will allow to continue making profits to pay dividends.

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

President Trump likes tariffs, he sees them for many things, and he has implemented tariffs before. He may do them again, but given he has done them before, what were the results?

In an article by Jason Kirby and Mark Rendell of Reuters, the short answer was higher prices for consumers and pain for American manufacturers.

A 2024 paper by David Autor, Anne Beck, David Dorn and Gordon Hanson found that few jobs were created in the protected sectors. Import tariffs on Chinese and on goods had neither a sizable nor significant effect on US employment in regions with newly protected sectors. Foreign retaliatory tariffs had clear negative employment impacts particularly on agriculture, and these harms were only partly mitigated by compensatory subsidies.

While the 2018 tariffs didn’t do much to significantly boost jobs, they did boost prices.

A recent study by the US International Trade Commission assessed the impact of the steel and aluminum tariffs on production, prices and downstream industries. It estimated prices went up 2.4% in steel and 1.6% in aluminum.

US Steel and aluminum producers ramped up production after the tariffs, $1.5 billion more steel and $1.3 billion more aluminum. However, the tariffs had a significant negative impact on downstream industries.

Industrial machinery, cutlery, and auto parts and manufacturing were all hit hard causing a decrease in production values of $3.4 billion.

The biggest beneficiaries of the tariffs in 2018 were American steel producers, whose profits surged.

Linking to dividend paying stocks, similar to all government actions there will be winners and losers. In the case of steel and aluminum, the story is 2018 was if you owned the producers that is a good thing, if you own the companies that use the materials that was a negative thing. If President Trump goes ahead with his proposals, be sure to evaluate your holdings and make adjustments.

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

When Henry Ford started selling vehicles, he wanted to be vertically integrated and every part of the car which came off the line of the Rouge Plant in Detroit was made by Ford. This created a lot of jobs and as long as the Model T was the number one seller, it was not a problem. Similar to many companies that do not innovate much after it has a number one position, competition continued as well as Ford’s demand you can buy any Model T you want as long as the color is black. Eventually, that sentiment and others led to the decline of Ford and the rise of GM.

GM’s rise led to the management system of the President of GM called the Alfred Sloan which led to the GM system which held that every income group needed their own vehicles. Given the pricing and 5 car systems of Chevrolet, Pontiac, Buick, Oldsmobile and Cadillac the idea was the more income you earned, you would move to a different vehicle in the GM System. It worked till the difference between the cars was more cosmetic than anything else as GM was using the same base for the different brands. Eventually GM stopped producing some of the brands, because consumers saw limited value.

The next phase was the introduction of Japanese cars into the US marketplace. At first the autos were inexpensive, but broke down often. Then the quality improved and US quality went down, soon people switched to Japanese brands. If you know someone who has a Japanese brand and their odometer is above 100,000 miles, the Japanese brand often is expected to go further than the US brands. Part of the reason was the Japanese system was the car company put together the parts, but they were made by supplier companies whose purpose was to produce good parts. The US companies agreed with the system and moved to putting things together and the rise of supplier companies to the auto companies. All the 3 major auto companies spun out their supplier companies to stand alone businesses and only put things together under a just in time process. This also saved them on inventory costs.

The supplier companies are both innovative and cost driven. This means when NAFTA was signed and then ratified again by the USMCA agreement, whatever country or state has the greatest benefit, the car companies and their suppliers would locate in that country. The system developed that integration was important aspect of the system. Another aspect is the number of jobs in the manufacturing of vehicles has gone down because of the use of robotics. A manufacturing company supplying the auto industry used to be worth 10,000 plus jobs, now the number is 3,000 and declining.

In an article by Eric Atkins of the Globe and Mail, an across the board tariff that President Trump has proposed would devastate the US auto industry according to Ford CEO James Farley.

The tariff would send costs up that would be needed to be passed on to consumers in the form of higher prices and it helps South Korean, Japanese and European companies who would not be subject to the Mexican and Canadian tariffs.

Sherry House, Ford’s CFO said about 90% of the company’s steel and aluminum comes from US sources. However, many of Ford’s suppliers use international metals that would be subject to the tariffs and that sends up costs to Ford. The higher costs would be expected to higher prices and likely job cuts and inflationary pressures.

Linking to dividend paying stocks, the most important aspect of a company is the allocation of capital to produce a return on investment. The allocation of capital is broken down to short, medium and long-term investments. No one allocates capital to build up manufacturing for the next administration to change the rules. It is the reason why companies like a sense of stability, they need to allocate capital under the existing rules, not hopefully what the rules will be in 5 years’ time. It is the reason why most companies would cut their long-term capital allocations, to buy back stock or return dividends in the hope that stability returns to the marketplace.

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

Everyone has a favorite place to eat away from home. It depends on many things how often you go there, but everyone has a favorite. Often times, a favorite is a fast-food place because they are easy to find and deliver a consistent meal. One of the reasons they are easy to find is the bigger fast-food companies have many franchises or operations.

In an article written by Savyata Mishra of Reuters, the biggest franchise company is McDonald’s. By 2027, they hope to have 50,000 restaurants around the world. Sales in the global department rose in the 4th quarter, aided by demand for its cheaper items and discounted offerings from diners in the Middle East, Japan and China.

Domestically in the US, McDonald’s sales were down 1.4%.

Value meals is helping McDonald’s recover traffic from the lower-income consumers, but will they drive stronger earnings in the long-term? wonders Northcoast Research analyst Jim Sanderson.

Chief Financial Officer Ian Borden says the fast-food industry overall still faces challenges with low-income consumers.

Quarterly adjusted earnings per share of $2.83 were in line with market expectations.

Linking to dividend paying stocks, often times the list of what companies to buy starts at what do you consume? then the homework begins, for example how many locations does it have? have you been to more than one? was it consistently good? who is the retailer aiming at? and the questions continue…

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

If you went to war, eventually you would target the other side’s infrastructure. The infrastructure creates jobs and ensures goods and services move around freely. The other side of the coin is by disrupting infrastructure, you break supply chains and cause delays. After the war, there would be a need to recreate the infrastructure along friendly lines. When the infrastructure is back in place, other aspects of living return to what was normal. For countries to control others, controlling the infrastructure is a key.

In an article by Andrius Sytas and Janis Laizans of Reuters, the Baltic states of Estonia, Latvia and Lithuania completed a switch from relying on Russia’s electricity grid to the EU system.

European Union (EU) President Ursula von der Leyen, said the switch took years in planning and marked a new era of freedom for the region.

The reliance on Russia’s electricity grid had been on the EU’s to do list for decades and every time, Russia invaded Ukraine, first in 2014 and again in 2022, the action gained momentum.

The Russian system IPS/UPS network was built in the 1950’s. The 3 countries emerged as independent nations after the USSR broke up in the 1990’s and joined the EU in 2004.

Linking to dividend paying stocks, there are industries which can be turned around on a dime and there are others that turn similar to the longest oil tankers. The companies that take time to turn around tend to be regulated more often, which means the government is giving them a semi monopoly like position. The infrastructure as up front capital cost to build, but once in place allows for revenues to surpass the interest on the debt and as long as the maintenance is reasonable, can generate cash flows which flow to the investor. Those are good companies to invest in.

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

One of the rules in investing is to be cynical. Every company and government has a public relations facility and they all use them. Often times they will be at competing sides, and each side has a different narrative. When a government talks about waste, they often mean, those that do not agree with us. In a democracy, there are supposed to be competing sides and generally something in the middle is taken because there both sides can be correct, but both sides can exist for the benefit of government regulations.

In an article by Douglas Gillison of Reuters, the Trump administration has stopped the work of the Consumer Financial Protection Bureau (CFPB). If you go in person to a bank, you will see the signs on the door. The CFPB is funded through member banks, trust, credit unions, etc. The idea is if someone believes the bank is doing them harm, they can go to an agency which can investigate to see if harm is done. Many times, if harm is being done to one, then it is being done to many. The CFPB also battles those around the banks including financial institutions which are predators, scammers and crooks. We all know, when the solid, dependable financial institutions start acting like predators, it is relatively easy to juice up a quarter or improve bonuses. This is when the CFPB sets in and it has won judgements of nearly $20 billion in financial relief for US consumers. (seemingly also everyone has been sued and paid fines). Some of the smallest independent financial banks have been rarely fined.

It is the exception for financial services companies not to be have been fined, they have a tendency to wish the CFPB to go away. If it does consumers will lose, because many companies pay fines, say they will change and then see in their database – we have X amount of customers, if we could receive 2% more in fees we will easily meet financial expectations and they add a fee to get the 2%.

Linking to dividend paying stocks, the theory is because they have been in business for a long period on time and can pay dividends, they need to cheat the system less. If you look through the lawsuits which have been filed, invariably most companies have lawsuits filed against them. Ideally the dividend paying companies learn from the lesson and move forward in their service to customers. When you read the press releases, be aware there are 2 sides with different views.

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

Wherever you live, you live near a border. If it is country, there is another country on the other side. In the region you live, you will vote in a particular area, those lines change with population changes and it has to do where you live. If you are near one of the borders, it is entirely possible you cross it and feel connected to another area because it is where you work, you shop, do recreation, but you do something outside where you live. The connection allows you have some sort of roots and you do not necessarily wish to change. In many ways, President Trump’s proposed tariffs are the same thing.

On of the good things about tariffs is it gives a very good understanding of how the economic flows of the country work or do not work, according to your viewpoint.

In an article by Niall McGee, Emma Graney, Nicholas Van Praet and Brent Jang of the Globe and Mail, they examined how Canada views the tariffs and what changes could they make, if they had to.

Canada is dependent of US markets – 95% of Canadian crude oil goes to the US; also 56% of minerals are shipped to the US to be refined and manufactured into value added products.

Canada’s iron and ore industry is the single biggest part of the Canada’s minerals and metals export trade accounting for $20 billion in 2023. 99% of Canada’s steel exports go to the US.

Canada’s aluminum producers send 90% of their product to the US, but the majority is sold in ingots. In theory, because the EU has a demand for ingots, more ingots could be sold to the EU.

The nickel industry sends the nickel to smelters in the US, but they could send more to the EU because they are a net importer of the metal.

Potash and uranium are some of the critical minerals Canada supplies, the alternatives are China and Russia.

The oil industry is dependent on selling to the US, mainly to refineries near Chicago and Houston area. For a variety of reasons which has never been changed, Canadian oil is discounted when sold to the US. Canada has pipelines but they do not go from coast to coast. Many years ago, a decision was made to stop the western oil pipelines in Ontario. The province of Quebec and east received the bulk of their oil from the US and the Middle East. The reason was financial, pipelines are expensive and come at a political cost and imported oil was less expensive.

In the US, President Trump was suggested building the Keystone Pipeline is back on the drawing board. The Keystone Pipeline is designed to bring Alberta tar sands oil to a Houston area refinery. The crude is similar to which comes from Venezuela’ s oil sands.

In border towns and cities, each depend on the other country’s citizens going across on a regular basis. If it is relatively easy to cross the border as a visitor, people will go across for recreation, tourism, hospitality, shopping and the list goes on. If the border crossing becomes very difficult, it is easy to find similar activities in your own backyard, just not the same.

Linking to dividend paying stocks, when there is a crisis in any industry, the media shines a light on the economic activities of the industry. You can learn a great deal, and if you want to know more on the why, there are books on the subject. There is always a risk in depending on a single user group for your services and products. Sometimes it is wonderful, and you can build great relations; sometimes it is not. Diversification is often a very good thing to really have.

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

President Trump has been in power for a couple of months and as an investor, the first thing you know is he has a bias towards higher stock markets, which suggests successful business will be able to grow bigger. As long as the company is within the laws, the government will get them leeway to do what they need to do. Under the previous administration, while the stock markets went up, there was always stricter regulations in the background to even the playing field for consumers. Sometimes what is good for the consumer is not necessarily great for the business.

In January, the President decided he loves tariffs and wanted to impose cross the board tariffs on its 2 neighbors and biggest trading partners. Given 4 years ago, the President had renegotiated the NAFTA agreement (signed when President Reagan was is office) to the USMCA and now was asking who negotiated USMCA anyways? (it was him). The President has the authority to implement tariffs, but I guess he forgot the other countries have a right to tariff the US. Given the complexities of the how trade works, to take advantage of every country’s economic advantage, there were going to be negative reactions to the American economy.

On February 3, the day before the tariffs were to take place, the stock market through all the institutional money ran their models and determined a trade war would cause all 3 countries to move into recession territory. Why the tariffs were going to be imposed, it was hard to rationalize and many new Secretary in the Cabinet tried to. What was the end game? Why did it need a blunt instrument to negotiate with your friends and biggest trading partners? Many other questions were unanswered, but the result was going to be higher prices, lower demand and recession in all 3 countries.

The stock market went down and after speaking with the President of Mexico and the Prime Minister of Canada, President Trump paused the tariffs, and his stated reasons were going to be addressed by the countries.

The real point of this column is doing his term, President Trump will do actions that will cause the collective actions of the stock market to go down, then the markets will bounce back quickly, when the real issues are understood. If this is going to be the pattern it is important to keep cash or cash equivalents, particularly from dividend regularly received. The pattern of stock market reacting falling and bouncing back means there is opportunity to buy stocks, from your homework, that are at lower prices. The stocks bouncing back and can pay a dividend means the total return is greater just by understanding the pattern of the President.

Linking to dividend paying stocks, when you receive the dividends, there is opportunity to do something with the money, It can be to reinvest, as long as you believe in the long-term future of the company, it can be to diversify your portfolio (which is a good idea when the market fell, how did your portfolio do, besides down, but how much down and what went up?) Dividends are a good thing to look forward to.

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

Headlines often talk about companies disrupting industries but that is only part of the story. The other part of the story is what the big companies did or did not do. What were the assumptions or rational behind the little company that grew to become a disrupter. The good news is what we saw in DeepSeek happens in the business community on a regular basis. Large companies grow become monopoly like, seemingly having it all and then slowly something changes to level the playing field. Once that happens, the large company has to allocate more resources to maintain its position.

In an article by Cade Metz and Mike Isaac of the New York Times News Service, when DeepSeek revealed in had created an AI system that could match the big players from the US in AI, Silicon Valley was shocked. They were surprised because Silicon Valley’s belief system was to do AI would cost billions and billions of dollars, which means that only a few could compete.

At Meta, the experts inside the company did a reverse engineering of how DeepSeek works and they discovered it was related to something Meta did a few years ago. Before 2023, Meta was working on its version of AI called Llama, in 2023 it gave it away or open sourced it. This means developers from around the world could use it, to build on it, to make it better and move things forward. Meta saw this as a good thing.

DeepSeek used parts of that technology as well as other AI tools widely available on the internet through a software development method called open source. The reason Meta released Llama on open source is because it makes its money selling online ads, not AI software.

Meta has created several war rooms where employees are reverse engineering DeepSeek’s technology. The purpose is to find ways to lower the cost of trainings its software and apply it to Meta’s own AI. Remember Meta owns Facebook, Instagram and WhatsApp.

Yann LeCun, who is Meta’s chief AI scientist says the correct way to look at what has happened is Open source models are surpassing proprietary ones.

If Mr. LeCun is correct, the raising of billions of dollars to fund the expensive way is that good?

Linking to dividend paying stocks, all companies have a mixture of internal and external systems. but only larger profitable companies have the resources necessary to analyze all the successes of the competition. What is the competition doing? how is it executing? how does that affect us and why are we worried? There are many things to be concerned with for every country, but the competition has the same issues. Why does the strategy of the company you invested in continue to work? Sometimes the answers can be summed up in a 90 second clip and often times that is good to allow you to continue to hold your investments.

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