If you enjoy alcohol, eventually you will want to see where the alcohol is made. All spirits makers have tasting facilities and tours. If you are visiting the area, going to a distillery is a pleasant experience. If you are in the Louisville area, the Jack Daniels Whiskey plant is worth touring, along with the many other distilleries. It is easy to spend time in the area. When you are walking around the grounds, you have a sense of how they make it and the people who make the alcohol. One of the hardest things for companies to do is break traditions and cut its home-based employees in order to cut costs. While investors like to see the discipline of cutting costs, whether they are, it is tough decision for the executives, particularly when the operations are hometown.

In an article by Bruce Schreiner of the Associated Press, spirits giant Brown-Forman whose flagship brand is Jack Daniels Whiskey is reducing its workforce by 12% including closing its hometown barrel-making plant in Louisville. Brown-Forman has a workforce of 5,400 people and out of the total 210 work in the barrel-making plant.

The company will outsource the barrels from an external source and expects to receive $30 million from selling cooperage assets. The company has been making barrels since 1945 – raising barrels and honing the craft using wood to create distinct flavor characteristics to bourbon.

The reasons for the cost-cutting comes as American whiskey producers face changing consumer trends and renewed tariff threats. (when President Trump imposes tariffs on another country, they impose tariffs on American products including high profile whiskey).

According to the Kentucky Distillers’ Association, a record 14.3 million barrels of bourbon are aging which is a large inventory.

Industry wide challenges include that younger adults are drinking less alcohol and threats of a trade war. Retaliatory tariffs have cost Kentucky’s bourbon industry a half-billion dollars in exports since 2018.

Linking to dividend paying stocks, in every town and city there are plenty of bars and alcohol shops selling beer, wine and spirits. There are many companies in the industry although some of the biggest names are owned by the biggest companies. Whatever the trend of the young people who buy and consume, the larger companies buy a brand and use their abilities to market brands to sell their brands. While an individual may be attached to a certain brand, which one is popular goes up and down and sometimes companies must do the difficult thing to maintain profits.

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

Many mergers are announced and some go through, some do not, and some become political because jobs and traditions are seen in the roots of the company. Every community needs economic activity to grow and maintain services for the people in the area. The longer the company is in business, the more people are attached to it. Then a merger is announced, and people and politicians react. The biggest story in the news has been the US Steel sale to Nippon Steel.

In an article by Danielle Kaye and Laren Hirsch of the New York Times News Service, a few months ago, Cleveland-Cliffs announced a possible buyout of US Steel for $7 billion, Nippon Steel increased the offer to $15 billion.

The Board of Directors of US Steel believed the offer by Nippon Steel was the best one, then politicians had their say. President Joe Biden said no for a number of reasons, including national security. President Trump said he supports steel workers.

Lourenco Goncalves, CEO of Cleveland-Cliffs is resubmitting his possible merger.

There is always a wrinkle in the cloth, and US Steel and Nippon Steel have sued the US government.

US Steel was once the world’s largest steel producer, but the company has fallen in global rankings in recent years. Concerns about its long-term future are rooted in a failure to quickly adopt alternatives to traditional mills that are more energy-efficient and cost-effective. US Steel has argued Nippon is the only buyer that can make substantial investments in multiple steel mills and protect jobs.

It is expected that President Trump’s administration would take a less aggressive approach to merger enforcement than the Biden administration predecessors.

Linking to dividend paying stocks, when a merger is announced, investors have a wide range of interests from short-term to long-term. Politicians change every 4 years or less, but they have a voice which represents their districts and/or state. Often times investors can outlast the outside voices as long as the company is making a profit or it prudent to find alternatives and watch the action from the outside and then buy back at lower levels.

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

In the world of insurance, the idea is to collect lots of premiums and hopefully pay out little. If there is a payout, the avenues of re-insurance are there for companies to hedge their losses to a wider and potentially wealthier group of companies. The people who determine the policies, we all pay are called actuaries who have degrees in actuarial science – the discipline that applies mathematical and statistical methods to access risk. For most of us know, have low insurance rates, not collect against accidents to keep low insurance rates, but because of various law regarding use of the automobile and having a mortgage, insurance payments never go away.

Natural disaster are the worst thing for an insurance company, because it is nature everyone should be covered, if everyone is covered expenses quickly rise. The issue is what happens after the disaster has gone and rebuilt has started and life returns to normal. Changes in rates can happen.

In an article by Andy Sullivan of Reuters, the wildfires in Los Angeles affected all aspects of the city including the wealthier areas. The Pacific Palisades is one of the most expensive neighborhoods in the US, it was also one of the most affordable insurance costs in the country. Reuters examined insurance and real estate data to come to the conclusion.

The scale of the losses anticipated, changes in regulatory issues, and now that a wildfire has gone through the neighborhood – the risk of another likely will send insurance premiums upwards.

Philip Mulder, an University of Wisconsin professor noted measured against home values, insurance costs were cheaper in the Palisades than in 97% of US postal codes.

This relatively low-cost insurance was from consumer-friendly regulations in California kept a lid on prices, but the insurance companies have been scaling back the coverage they offer.

Sangmin Oh, a finance professor at Columbia School of Business and other researchers found that homeowners in more loosely regulated states effectively subsidize homeowners in states such as California where the industry is more regulated, despite the risk levels.

Homeowners in Pacific Palisades paid a median insurance premium of $5,450, according to data complied by Dr. Mulder and Dr. Keys of Wharton. The amount is less than residents paid in Glencoe, near Chicago. It was also less than those in paid in New Orlean’s Ninth Lower Ninth Ward.

In California, consumer-friendly policies led to price controls which limit price increases. The insurance companies are struggling to make a profit and 7 or the largest 12 insurance companies have paused new policies. In addition, 1.72% of policies were dropped in 2023.

The alternative is a state-run insurance which provides bare-bones policies. More than 450,000 homes were covered by the California Fair Access to Insurance Requirements plan in September, 0 40% increase from a year earlier. The fund is administered by the state but funded by insurance providers.

Linking to dividend paying stocks, some of the big insurance companies have been a wonderful investment, but as there are more natural disasters, the profitability falls. In a natural disaster happens all classes of insurance are hit, will rates increase and coverage become more barebones? can companies raise rates to ensure margins?

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

Unless you live near the ports, you likely do not think much about them. Every city on a lake or ocean has a port, most of us think about the recreational facilities first as we may use them from time to time. Whether it is a marina or walking trails or wharf businesses or ferries, but most of us do not pay attention to who runs the ports. At one time every port was run by a quasi public facility to boost the economic activity of the city. Now days it has changed.

In an article by Ana Swanson of the New York Times News Service, President Trump’s claim that China runs the Panama Canal is false. The Panama Canal is operated by an agency of the Panamanian government. The President of Panama Jose Raul Mulino said Mr. Trump’s claims are false, the government of Panama runs the Canal.

There are issues with China for the Chinese government has invested heavily in building ports throughout the world. Given that China is the world’s largest exporter, private Chinese companies play a major role in shipping and port operations, giving them significant influence over the movement of global goods and strategic positions from which to monitor other countries’ activities.

If you go onto You Tube and examine the Belt and Road Initiative, you will see China has invested in ports in Asia and Africa. The Chinese typically offer assistance to countries, but then all the work is finance and done by Chinese companies. Also on You Tube are wonderful videos of Chinese ports operating with few people.

In the last decade 2 private companies have arisen called DP World based in the UAE and CK Hutchison based in Hong Kong. CK Hutchison is a publicly listed conglomerate whose largest owner is a family of Hong Kong billionaires. One of the divisions of the company is Hutchison Ports PPC which for decades have operated seaports around the world including in Panama. The division operates in 53 ports in 24 countries including the Netherlands, Britain, Hong Kong and Australia.

A recent report by Strategy Risks, an analytics firms, said that no direct links specific to Panama had been found between CK Hutchison and the Chinese Communist Party, however it is believed the company has shared information with various Chinese state-linked entities on business projects.

Linking to dividend paying stocks, just be being successful and growing, the company will be seen as an agent with the government. However, in every business, sometimes the government is wonderful, sometimes it needs to be eliminated and most of the time they work together as their interests intersect. Businesses have their own interests and government has theirs, hopefully it is mutually beneficial than not.

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

In the world of business and politics, they are overlap and that can be a very good thing for a business. The government through its many boards and agencies can help a company but making it harder for the competition to compete. The business benefits by the increased barriers or access to lower cost of funds, maintains employment in the area and local and national politicians tend to stay elected. It can be a win-win situation for all those concerned.

Sometimes the government has its own agenda, which does not align with the business. In the case of US Steel being acquired by Nippon Steel, the government’s agenda does not align with Nippon Steel. Nippon Steel is owned by Japanese shareholders. The government has a desire to keep US Steel majority owned by US resident shareholders. The bad news is US Steel need a major capital commitment to continuing using its blast furnace steel making facilities. The government has an image of what US Steel was and would like it to rise again without the help of Nippon Steel.

In an article by Aatreyee Dasgupta and Alexandra Alper of Reuters, President Joe Biden made a decision to block the sale of US Steel to Nippon Steel and he has the ability to do it. Part of his rational has a national security issue.

US Steel’s Board of Directors and Nippon Steel still want to merge, and they are seeking a solution through the courts. They have filed a lawsuit saying the President violated the Constitution and made a bag decision using the National Security clause and the process was flawed.

The problem for Nippon Steel, courts generally give great deference to how national security is defined and implemented.

The other problem is also political, President Trump is not necessarily for the merger, but maybe.

From a financial standpoint, US Steel has $1.8 billion in cash, down from $2.9 billion in 2023. Nippon Steel has promised to invest $2.7 billion in US Steel’s Gary, Indiana and the Mon Valley Steel works near Pittsburg, Pennsylvania. Without the investment, US Steel will continue to invest in newer electric Arc furnaces at its Big River plant in Arkansas, rather than the blast furnaces.

Linking to dividend paying stocks, when a merger is announced, both parties have many vested interests in seeing the process through. In the case of US Steel, there was a competing offer from Cleveland-Cliffs at $7 billion, however it was well less than Nippon Steel $15 billion offer as well as the other issues Nippon Steel has said it will do if it succeeds. With all mergers, it is easier to say they will walk away or fold than to continue the battle to the end, because as the process goes forth, the executives who back the merger will certainly be let go if a competitor wins. Seeing who benefits and who loses is a good way to examine a merger. President Trump while at a meeting with the Japanese Prime Minister, said an investment not a takeover will happen.

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

If you watch B movies from Hollywood, there will be in the group beach movies and ski movies. People go to resorts both for sun and skiing. Once you have many people particularly around the same age together, there are multiple movie scripts possible and generally the supporting pictures of the landscape can be spectacular and a wonderful break for the movie goers. One of the aspects that is not shown is the cost of living for those who work at the resort, the focus tends to be on the guests to the resort.

In an article by Mead Gruyer of the Associated Press, one aspect of the ski resorts is ski patrollers. These are experienced skiers who wear crosses on their arm and are there when someone falls and potential injury. If you have skied, you are aware that you can easily fall. Once you learn the basics and slowly work your way to more advanced runs, the likelihood of falling decreases and skiing is fun.

The biggest ski resort operator is Vail Resorts which owns 43 properties on 3 continents and specializes in the winter season. Ensuring there are enough ski patrollers which allows them to operate all their lifts to the top is an important element of their operational efficiencies. At one of Vail’s properties – Park City Mountain Resort which is about an hour’s drive east of Salt Lake City, the ski patrollers went on a mini strike for higher wages. Similar to many resort towns, the employees find it hard to find places to rent given their wages, work is easy to find, reasonable rent much harder.

Vail Resorts increased the hourly rate from $13 to $21 an hour in 2022. In 2024, they were offering a 4% raise plus $1,600 credit for new equipment. (after a 2 week, the strike was settled with increased wages).

For Vail Resorts, the good news was snow had fallen and ski conditions were wonderful. In Park City, Vail operates 41 lifts and 350 trails, according to its website.

Linking to dividend paying stocks, in every industry some quarters are better than others. If you have gone to a ski resort in summer, there are still terrific places to go because of the many trails you can walk or possible ride a mountain bike in the mountains. However, the bulk of the revenues are made when there is snow on the hills and people using the lifts and eating at the food areas. There is a reason why strikes are set against the main driver of revenues for a company. When you do your homework on your company, when is the best quarter expected? what the pinch point and how did the company resolve them?

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

In every economic activity there is a convention somewhere but at the moment Las Vegas is the biggest show in the US. Every city has a convention center, although they tend to more regional in nature, for people need to meet and see what all the suppliers arces e doing. There is a need for conventions some you will be interested in, some you will not be. The ones you likely interested in include related to how you make your money and the hobbies or relaxation activities you pursue. The others ones are for everyone other job that you have limited interest in and activities that have grown such as ComicCom and the like. You may or may not go, but there are likely shops which sell comics and people like particular characters, which means it is an interesting convention.

In our society today, the biggest technology makers come to the CES or Consumer Electronics Show in Las Vegas. It is the height of the US innovations and companies need to wow the consumer. (Recently saw a You Tube video on Las Vegas, which has many construction cranes as hotels, convention centers and sports arenas are built around the famous Las Vegas strip of hotels.)

In an article by Abhirup Roy of Reuters, the gathering in Las Vegas is one of the largest of manufacturers, analysts and suppliers in the US. (if you want to see what is going on in China – there are You Tube channels to see innovation, and there is a lot of it).

CES 2025 is used to debut products ranging from new automotive technology to quirky gargets as well as showcase AI. This year a hot topic is what does President Trump mean by tariffs?

According to Edmunds, nearly half of new cars sold in the US as well as a significant share of parts on the rest made outside the US. What happens to supply systems and how do they adjust? According to S&P Global if the US imposes tariffs, European and American carmakers would lose 17% of their profits. (in order to help the American autoworker, President Trump is willing to put the balance sheets of the companies in jeopardy).

At the CES 2025, Honda, Toyota, Bosch and Continental are expected to provide updates on self-driving technology. If you noticed Tesla shares moving higher, part of it is the promise of self-driving taxis.

Linking to dividend paying stocks, for the companies you invest in, one of the easiest methods to see what is going on in the industry and the trends is to attend a convention. There are multiple conventions around the US – local, regional and national and you will likely leave with a few ideas.

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

If you listen to the words of President Trump you will likely be confused about what parts he really means and what parts he is blowing air. In the decades past, what the President said and did was scrutinized and dissected by people around the world, with Trump you are never quite sure. One of the things the President said he was going to end the war between Ukraine and Russia on day one. Many people who have followed the war, find it hard to believe unless President Trump was essentially going to call Russia the winner and stop sending military support to Ukraine.

In an article by Patricia Cohen of the New York Times News Service, one of the ways the world has reacted to Russia was to impose sanctions. The sanctions included trying not to do business with Russia, for western banks with Russian accounts to place holds on the accounts (some of the interest has gone in the Ukraine war effort as more than $300 billion has a stop payment on it) and to ensure Russian athletes were not allowed to compete in international games, as well as a whole host of other activities.

Once the war is ended, and ideally it is sooner than later, what happens to the sanctions? While in the west, the idea of the sanctions was to put pressure on the Russian President, he has successfully remained in office and seems to be more powerful than before. The Russian President was hampered by lower oil and gas revenues, which sent up inflation and perhaps slowed Russian involvement in the war. Russian banks pay in excess of 21% for savings.

Similar to all organizations, alternatives have been found, they just came about more slowly. Russia has expanded trade with China and India particularly selling oil and gas to make up for the loss of European Union markets.

Linking to dividend paying stocks, for companies the sanctions are akin to regulations from the government which forces the company to do break up or pay large fines. Within the new Trump administration there are more people who wish to do less and allow companies to make their own decisions – good or bad for the consumer but should be good for the company. With all administrations there is hope for a better future, but time will tell who really benefits.

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

If you listen to politicians on a regular basis you are aware that simple slogans work well. The slogans allow different people to think about the slogan differently and somewhere along the line it is possible they intersect. One of President Trump’s slogan is I love tariffs, a tariff on everyone. Tariffs are nothing new, countries have been using them since global trade was invented going back to the Industrial Revolution. A classic case was England which was the dominate country at that time, imposed tariffs on India’ wool industry. The wool was sent to the factories of England and returned as manufactured goods. The tariff was on long as England controlled India, it was only broken with the time of Mahatma Gandhi and India’s independence.

President Trump wants to impose tariff on China and he has the right to do so. Companies affected have the expectation to do work arounds, so that a slogan may or may not be effective.

In an article by Ana Swanson of the New York Times News Service, in 2018 Arnold Kamler then the CEO of Kent International which makes bicycles. One of the things he did was shifted production to new facilities in Taiwan, Vietnam, Malaysia, Cambodia and India (notice he did not shift production to the US). All those countries were exempt from the 25% tariff had the bike been shipped from China. The effect of the tariffs because of the new factories pushed up costs meant bicycle prices at Walmart and other stores were increased.

The change in the supply system was called by Gita Gopinath, the first deputy managing director of the International Monetary Fund, was connector countries. This means when the US and China impose tariffs on each other, countries such as Mexico and Vietnam benefit. Whether this is a good thing or not is an open question.

Brad Setser, an economist and senior fellow at the Council of Foreign Relations says the tariffs reduces bilateral trade but does not impact global trade. The US trade deficit with China has fallen to $278 billion in 2023 from $417 billion in 2018. However, US trade deficits have increased with Vietnam, Taiwan, Mexico and elsewhere.

It is unclear how effective President Trump’s tariffs will be against the creativity of global companies that are driven by strong financial incentives to maintain access to the US market.

In many industries, Chinese companies have moved production from China when heavy tariffs were placed on them. One example is solar panels. Companies moved production to other Southeast Asia countries where there were no tariffs. Then US companies had to lobby Congress to include those countries or a time lag.

In China, companies such as Sailwin, Vanzbon and Tetakawi are advertising services helping Chinese companies do turnkey operations through finding factory space in Mexico and recruiting workers there, allowing them to export to the US without tariffs.

The other solution is courtesy of the large accounting firms, using accounting and tax tricks which US companies use, to make it appear that their shipments from China are lower, and thus pay fewer tariffs without making major changes to their supply chains.

Lynlee Brown, a partner in E&Y’s global trade practice said there were many strategies that companies could pursue to reduce tariffs. For example, if a part came from Vietnam, it might be reported the whole thing came from Vietnam even though the final assembly was in China and exported from China to the US.

Another lever companies could use is valuation. The companies can officially lower the value of the import by stripping out the intangible costs and recording those to other subsidiaries. By lowering the value of the import, the tariff is less.

Linking to dividend paying stocks, the reality is US based companies do the same thing as Chinese companies and that is why the slogan may not be effective as one thinks. If the government tries to stop Chinese companies, they run the risks of the lobbying efforts from the US companies who also benefit. The world can be complicated, but still moves forward.

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