In democracies, political parties need money to run elections. Many who support a party will donate money and most will be under $100 or what is called small dollar donations. Most people who give money on the small dollar donation do not expect much reward from their government but have an expectation of good government by their definition. The difference in what is good government is often the difference in which political party is in power. Once someone goes above $500, they want something more tangible from the government, including if they personally know the person running.

Elections are expensive and billions of dollars were spent on the past election, including $1 billion by the Democrats and $ 400 million for the Republicans directly. The rules were loosened up to allow for third parties to spend for one party or the other and they spent $500 million plus. The issue is what do people want for their money?

In an article by Nathan Gomes and Zajeer Kachwala of Reuters, Elon Musk who founded Tesla, Space X, bought formerly Twitter to become X, SolarCity, xAI, Starlink and others, what does he want or expect from President Trump? After the election of President-elect Trump, Tesla shares jumped 14% on the expectation the new administration will help Tesla. It has been reported Mr. Musk spent around $250 million on supporting Republicans.

Some of the above companies do not fit into President Trump agenda, some do. What benefits will Elon get? Mr. Musk is leading a committee to cut costs, will any of the billions his companies have received from government be cut? or are they good investments? what will or will not Mr. Musk recommend to be cut?

Linking to dividend paying stocks, most profitable stocks align themselves with lobbying groups to ensure their interests are taking care of when legislation is proposed. Most politicians want to meet with senior executives of profitable companies because they have a wide range of assets including a portfolio in many states. It is a balancing act and as long as their interests are taken care, companies can work with either the Democrats or Republicans, it is seemingly easier for one over the other. You do not necessary see in the front pages the quid pro quo question of what do you want that you see with Elon Musk, but it is there.

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

During the great housing crisis in 2008, many homeowners across the US and Europe saw house prices fall which meant that when it came time to renew the mortgage, people were underwater. This causes a problem both for the homeowner and bank which has the mortgage. Legally, they can only offer a mortgage to 95% of the value and how does the homeowner get a mortgage for the other part. It was cheaper to walk away and foreclosures went up. The problem in the longer term is once a house is foreclosed there is long process before it goes up for sale and anyone moves in.

In an article by Keith Bradsher of the New York Times News Service, in China foreclosures are on the rise. The roster of homes seized and list for auction leapt 43% last year, according to official data. Numerous banks have disclosed increases in mortgage defaults during the first half of 2024.

The legal system is struggling to keep up with evictions.

The increase in evictions and foreclosures piles pressure on China’s banks. They face other losses related to the real estate meltdown, including on loans to local governments, property companies in default and buyers of unfinished apartments that developers never delivered.

To make matters worse, corporate borrowers in China have long posted real estate as collateral. The value of the collateral has decreased.

According to Alicia Farica-Herrero, the chief economists for Asia at Natixis, banks have long been the best ally and instrument of Chinese policy makers, soon they might be the largest problem.

China’s mostly state-owned banking system earned more than $600 billion a year in profits before setting aside reserves to cover losses on unpaid loans. The issue is the banks pay money to China’s government treasury for income taxes, transactions fees and dividends, to the tune of 1% of China’s economy.

China has over 90 million empty apartments after a decade long construction boom. Many foreclosures involve the 2nd home often occupied by friends and family of the owner.

4 years ago, there was practically no foreclosures. During that period, new rules were passed which made evictions harder. Bidders who buy apartments in foreclosure auctions must often purchase the apartments unseen and then work with neighbor officials to persuade the occupants to leave.

According to analysts at UBS at least 7 million apartments sit unfinished across China. 4 million were bought for $350 billion in mortgages. That is about 7% of all the mortgages on the balance sheets of China’s banks.

Regulators are encouraging the banks not to foreclose on unfinished apartments.

Linking to dividend paying stocks, if you own bank stocks, while most banks make money as long as the reserve fund remains low, then it is a good time to own banks. Once the number rises, you need to seek alternatives. For all your investments you need to know what a good ratio is to determine whether you want to keep the stock or look for alternatives.

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

In all companies people get paid to do work and in all companies some make more than others and everyone wants more. Depending on the company, management often has a scale for most workers and the scale needs to be competitive in order to continually attract people to work there. Unless there is a recession and your workers will be happy to work there because the alternatives is bleak. Occasionally, companies will go for years and workers regret something they have given up and not received back, so the strike is not necessarily about the present working conditions but past ones.

In an article from the Associated Press, the 33,000 factory workers at Boeing voted to accept a contract to end a 7 week strike. The vote was 59% in favor and it was the 4th contract formal offer. The contract included a 38% pay raise over 4 years, ratification and productivity bonuses.

Boeing refused to bring back the defined benefit plan that was frozen a decade ago.

Bank of America analysts estimated Boeing was losing $50 million a day during the strike.

Behind the scenes, President Biden’s acting labor secretary, Julie Su, intervened in the negotiations several times, including the last offer.

The plants in Washington State produce the Max planes which is the cash cow of the fleet for Boeing. Without it, President Ortberg announced plans to layoff 17,000 workers and a stock sale to prevent the company’s credit rating from being cut to junk status.

In the national economy, Boeing is a major contributor to the exporter of goods as most of its planes are sold around the world. In addition, Boeing has continued to sign deals for new planes and has a back log of over 5 years of planes to deliver. Expect good results with the plants humming away.

Linking to dividend paying stocks, with all strikes there are a wide variety of interests to consider including pay (how does not want more) and the functioning of the company as a going concern. If a cash cow for the company is shut down, the stock price will fall which and then the company’s bankers will put pressure of management to get a deal. Every company after paying its employers contributes to the local economy and size does matter. During a strike there are pressures on both the employees and management, as an investor you want stability.

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

In the investing world, you want to know the cost of the inputs to the stock. What costs affect the stock the most? when you have an answer, you can determine if those how much do those costs have to go up before the margins mean no longer profits. There are many companies in the commodities related business and it is easier to see there. For example, some of the oil companies have been very profitable over the past couple of years, at what price of oil will they make money?

In an article by Alex Lawler, Mahe El Dahan and Olesya Astakhova of Reuters, OPEX + has agreed to delay a planned December output increase by a month. The biggest customer of OPEC is China and while growing, demand for oil is down from what it was. (partly as a result of slower growth, also China has the world’s largest solar farms or alternatives to oil).

8 member of OPEC + were due to raise output in December by 2.2 million barrels a day, that has been delayed to January 2025.

OPEC and Saudi Arabia have repeatedly said they do not target a certain price and make decisions on market fundamentals and in the interest of balancing supply and demand.

OPEC+ said the cuts of 3.66 million barrels per day will stay in place till the end of 2025. The next OPEC + meeting is for December of 2024.

Linking to dividend paying stocks, as an investor in a commodity you need to know at what price the commodity has to stay above costs in order to generate profits. Once you know the number you can easily determine if the company should be able to make profits to pay dividends. If the price of the commodity goes higher, expect higher stock buybacks and increased dividend payments. In addition, all companies have ideas of companies they would like to own, so expect more mergers and acquisitions. If those things happen, you can hold onto your stock for as long as the commodity price stays high.

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

As an equity investor you need to invest in the stock market and along the way some of the best investment dealers will offer you advice of what to buy. They would love a continuing big piece of your investment dollars and for you to trade on a regular basis. This is where if you are a trader or long-term investor comes into being. If you are a trader, the more trades you make and the larger you pool of capital is, the better Wall Street likes you. If you are a long-term investor and tend to hold, Wall Street needs to nudge you to do more. While often we think of Madison Avenue advertising firms selling you consumer goods, the same people help sell investments. For many good reasons we have seen the rise of ETFs and that is a good thing for investors.

In an article by Suzanne McGee of Reuters, the marketing geniuses of Wall Street are working overtime to create exchange-traded funds (ETF) focused on artificial intelligence as asset managers offer new ways to tap in to the market enthusiasm for AI.

According to data from Morningstar, more than 1/3 of the 2 dozen ETFs that include artificial intelligence or AI in their name have been launched in 2024.

The AI ETF group now has assets of $4.5 billion; nuclear power ETFs have $5.5 billion and cannabis has $1.37 billion.

Linking to dividend paying stocks, as an investor you have to remember that Wall Street offers good returns for your investments, it is also one of the best marketing machines in the business world. There tends to be the ying-yang of Wall Street. At some point you will decide what you want to be a long-term investor or trader, there will always be room for both.

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

If you think about the 20th Century, for the longest period of time, the nation with the most power has been the United States. With the rise of China first as a manufacturing center and now as a service economy, power dynamics in the world are changing. In the past, the United States government could highly influence the direction of the world, and it would be foolish for any country not to think it still can. But other countries are moving up and challenging the US and some are successful, and some are not. The changing power dynamics means occasionally what seems to be a simple decision is more complex because the other country can take measures on their own.

In an article by Keith Bradsher of the New York Times News Service, to make advance computer chips some rare earth minerals are required. Some of them are found in China or controlled by Chinese companies. For example Shenghe Resources biggest shareholder is the Ministry of Land Resources.

The Chinese government has imposed restrictions on rare earth minerals that are either mined or refined in China. If you think about food grown by producer and traced to your table, the Chinese government passed a regulation that all exporters must provide authorities with detail, step-by-step tracings of how shipments of rare earth are used in Western supply chains. This gives China authority over which overseas companies receive scarce supplies.

China is taking greater corporate ownership over the mining and production of metals. 3 state-owned companies are taking over all the mining and production of rare earth minerals.

China has moved to control the supply chain of obscure chemical elements that are needed by semi-conductor manufacturers. The country restricted exports of antimony, gallium and germanium.

National security officials have tightened the flow of information about rare earth. They have labelled rare earth mining and refining as state secrets. The Ministry of State Security has arrested and sentenced people to leaking information to foreigners.

The White House released a statement that China had cornered the market for processing and refining of key critical minerals, leaving the US and our allies and partners vulnerable to supply chain shocks and undermining economic and national security.

The statement refers to the demand for Artificial Intelligence chips and who gets them and who does not.

Linking to dividend paying stocks, details are important. Politicians love to saw things that seem simple, but the reality is much more complex. If you invest in a profitable company, then it should be working with the government. The government will have its agenda, but often it fits nicely with the corporate agenda and as an investor you like that for seemingly the government has the company’s back. If that happens politics is working for you and the company.

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

If you live in an urban area, the reality is most people do not really think about how their food came to the place it is. Whether that is a restaurant or supermarket, if it is a restaurant we look at the menu and decide what we want to eat. If it a supermarket, we pick a variety of foods and put some of them together to eat. How they got there and why they are there is less of a concern that if is good to eat or do we want to eat it? A book called Food Routes by Robyn S Metcalf published by The MIT Press, Cambridge, Mas, 2019 does. The book examines the logistics of eating.

Ms. Metcalf works with a nonprofit called foodandcity.org to really search where and how our food arrives at our plate. In the food industry there are 4 very important ingredients – reliability, trust, adaptability and technology.

Reliability is requisite because consumers expect some degree of consistency in products they consume. A reliable supply chain allows for consistent pricing and quality.

Trust comes from experience. Food suppliers rely on the transit of assets and funds in exchange for products human consume.

Adaptability because failure to deliver food happens. Most of us use the global supply system, even if we do not know it, and there are friction points that cause the supply chain to halt, break, leak or misdirect our food. The most glaring example is Hurricane Helene in western North Carolina. How does the system adapt?

Technology includes AI to make it easier for consumers to track their food to ensure they trust it. Technology is the big ingredient that will drive our food system forward. This includes more greenhouse growing closer to the consumer.

Interesting facts

Shipping containers were invented by Malcom McLean in the 1950′ and 1960’s. There are 20 million shipping containers in the world and about 6 million are on cargo ships. Shipping containers transport 70% of what we eat every year and account for half of all seaborne cargo.

For war time logistics, the pentagon does it best – ensuring military personnel are fed on time and on budget. That includes mobile kitchens and tracking food shipments. The US military and the Colonels who run have been in the thick of logistics planning for decades. (the old saying armies run on supply chains, target the supply chains and the front lines do not get fed).

In any disaster in the US, FEMA depends on private and public assistance. On the private side, Wal-Mart and the big food companies have plans to ensure food and water are available as they use their incredible distribution networks. An example is Sysco partners with the Red Cross to plan food distribution through the Red Cross network. Sysco also sends in its mobile kitchens once the US Weather Service declares a hurricane watch.

Big data is used and in demand by every food company.

Linking to dividend paying stocks, behind the scenes in the food industry there are billions of dollars in the logistics to ensure the consumer buys again. Most of the time, the consumer does not worry about how the product came to the store, but it is at the right price for their budget. As an investor you should have an understanding of the logistics of the company to determine how well it works. If it works well, other things being equal the results will come in. Often times, one of the few areas the company can control costs is on the logistics side.

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

When you are investor, the ideal thing to invest in is a company which is profitable and growing. A company you can hold on for a number of years, if it does a stock split so much the better and overtime the value of the holding becomes larger or your wealth increases. That is the ideal but if you examine the top companies 30 years ago or 20 years ago or 10 years ago things will change. The change is the hard part because if you bought a profitable company and made money you will have an attachment to it – your read the financial reports, you read stories about the industry and you are thinking you have a winner in that group. However, names change over the years and some companies while still profitable are less profitable and you hope they can turn it around. We all do it, but the lesson is what did you miss over the years, before you bought an alternative.

In an article by Steve Lohr and Don Clark of the New York Times News Service, one of the names for the past 30 years was Intel. The computer chips that powered many computers was Intel and one of their advertising slogans was Intel inside.

In 2005, long before the Artificial Intelligence or AI was considered an investable technology, Intel’s Board of Directors was presented with a proposal to buy Nvidia. The price was about $20 billion. The proposal was eventually turned down because Intel had a poor job of absorbing companies and it would have been Intel’s most expensive acquisition.

Today Nvidia is worth over $3 trillion and Intel is worth about $100 billion. Will somebody buy Intel?

The story of how Intel got left behind in the AI is representative of the broader challenges the company now faces. There were opportunities missed, wayward decisions and poor execution. The trail of missteps was a byproduct of a corporate culture born of decades of success and high profits when Intel’s chips and Microsoft’s software were the twin engines of the fast-growing personal computer industry.

The culture was hard-driving and focused on its franchise in personal computers and later in data centers.

It was a corporate ethos that worked against the company as Intel tried and failed, repeatedly, to become a leader in chips for AI. Projects were created, pursued for years and shut down because Intel’s leadership lost patience or the technology fell short. Investments in newer chip designs invariably took a back seat to protecting and expanding the company’s money-spinning mainstay – generations of chips based on X86 architecture.

In terms of profits, it was a very good course of action, profits roll in.

Going back to Nvidia, Intel’s microprocessors chips excelled in rapidly executing calculations one after another, Nvidia’s chips delivered superior performance in graphics by breaking tasks up and spreading them across hundreds or thousands of processing working in parallel – an approach that would pay off in AI computing.

After the Board decided not to buy Nvidia, Intel worked on a project called Larrabee effort. They spent millions of dollars to be better at graphics than Nvidia. Larrabee was a hybrid, combining graphics with Intel’s PC-style chip design. The chip was not that good and did not meet expectations, after spending millions and every quarter falling behind, the project was cancelled in 2009. Nvidia became a leader in graphics and now the AI revolution.

Linking to dividend paying stocks, profits are wonderful to an investor. Profits in one area will eventually lead to a decline. If you think about a company similar to P&G, they have multiple brands making billions of dollars or are diversified. If the company you invest in is making most of its profits in one area, enjoy it, but be aware that at some point there will be a change and they will make less or grow less.

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

All CEOs report to the Board of Directors and ideally the CEO and Board of Directors work together to implement the plans of the CEO. The Board is to provide direction on policy and discuss who the next leaders are because even though it seems some companies go run on autopilot, they do not. When a company makes a profit and things are going well, the Board of Directors are not in the limelight, however when the company loses money who is on the Board is very important. Are members of the Board providing good governance? are they asking questions? or are they seemingly going along with the CEO and picking up their compensation packages? When there is a boardroom fight the issues come to light.

In an article by Dawn Chmielewski of Reuters, Disney announced the James Gorman with become Chair of the Board. Mr. Gorman was formerly the CEO of Wall Street investment firm Morgan Stanley and did a terrific job. (my bias is I own share in the company). Recently he changed the structure of the company through acquisitions to become a wealth-management powerhouse as well as investment bank. Often times when a new CEO comes into being, some of those who were considered successors leave the company to take leadership positions at other companies. Morgan Stanley has kept the 3 names that were considered as leading candidates, which is a rare thing.

The past history of Disney is Bob Iger was CEO for a decade and transformed the company to a media powerhouse through acquisitions such as Pixar, Marvel and Star Wars franchises. He became Chair and his successor did not perform as expected and was let go and Mr. Iger took over as CEO planning on staying for 2 years but that has been stretched out to 2026.

Mr. Gorman’s task as Chair of the Board will be to find a replacement for Mr. Iger. The skills Mr. Gorman learned and used at Morgan Stanley to find a new CEO and retain talented people in the organization should be transferable. Reuters reported the 4 top contenders to be new CEO are: Disney Entertainment co-Chair Dana Walden; Disney Experiences Chair Josh D’Amaro; ESPN Chair Jimmy Pitario and Disney Entertainment Co-Chair Alan Bergman.

Linking to dividend paying stocks, if you like sports you will notice there are many teams that play the game but not all of them challenge for the Championship. They all have talented players, they play in the same arenas, what is the difference? Why should not all of them challenge for the cup? Sometimes it is the people and team or culture of the organization. Sometimes it is the execution of the game plan. Sometimes it is something else. For your investments are the independent directors ensuring the company is on the right track?

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