For the average person, the prices they pay tend to be retail which means cost of product plus margin added in and if it makes sense, they look to lower the cost by buying wholesale or when things are in sale (although most of the time it just means the margin for the store is lowered to make room for the new items at higher margins). The average person would love to get the costs the big chains receive, for the big chains will be offer volume discounts and a host of other things. It is also expected, the big chains will have a better understanding of the market, because they have people monitoring it to ensure their negotiations reflect where the market is going.

In an article from Reuters, a store with over 39,000 stores and one of the biggest sellers of meat is suing the large meat processing and packing companies for allegedly conspiring for years to limit beef supplies and making the company pay higher prices.

If you follow the large meat processing and packing companies, you will aware that over the years there are fewer companies and the ones that exist are very large. The companies include JBS, Tyson Foods, Cargill and National Beef.

One would think large companies dealing with large companies, they would benefit perhaps small and medium sized companies would be at a disadvantage. However, McDonald’s wrote in their brief: only colluding meat packers would expect to benefit by reducing their prices and purchases of slaughtered cattle because they would know that their conspiracy would shield them from the dynamics of a competitive marketplace.

The meat packers have denied any wrongdoing in related cases that have consolidated in Minnesota federal court. McDonald’s filed in the Brooklyn federal court.

Cattle producers who said they sold animals directly to the meat packers for slaughter said they lost billions in the alleged scheme.

McDonald’s is seeking unspecified monetary damages and a court to order an end to the alleged price-fixing conspiracy.

Linking to dividend paying stocks, it is not unusual for companies to be sued, it is unusual for a relatively small number of companies that control the market to be sued by someone else than the government. McDonald’s wants money and lower prices to ensure it keeps its margins. Should it win, it would receive compensation, but courts move slowly so do not expect the money quickly coming to the company or potentially lower prices at McDonald’s. One thing the Donald Trump lawsuits have taught everyone, if there is an ability to cause delay, delays will happen. It is generally not a great idea to invest based on lawsuits.

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

After every natural disaster, the first concern should be the people and making they are safe and relatively secure. Then the next task is clean up and then submitting claims to the insurance companies.

If you live by a creek or river, you are aware that there are high and low points for the water on a normal basis. You are reasonably aware of the worst case in recent years, then there are the 1,000-year possibilities. If you live by a creek, you are not expecting the 1,000-year possibility and likely will not have flood insurance. You will likely have the regular non flood insurance. What happens if you live by a creek, water levels rise, trees and debris block a bridge or dam and the water detours onto your property and you have water damage? What happens if you live in an area that has seen many floods due to hurricanes?

In an article by Sally Ho of the Associated Press, likely tree and roof damage are normally covered. The big issue is water damage. Water damage is typically not covered by home insurance and many insurance do not carry flood insurance. At the moment, the primary company is the government through the National Flood Insurance Program run by the Federal Emergency Managment Agency or FEMA. Congress created the program 50 years ago when private insurance companies stopped covering flood damage.

North Carolina has 129,933 policies in place, but likely that is on the coast and in Florida, there are 1.7 million flood policies.

Charlotte Hicks, a flood-insurance expert in North Carolina who has led flood risk training and educational outreach for the state’s Department of Insurance said the reality is that many Helene survivors will never be made whole. Most people will be left to fend for themselves or starting over. Some will go into foreclosure or bankruptcies. Entire neighborhoods will not be rebuilt.

For private insurance companies, although the numbers are large, they are manageable, according to Mark Friedlander, spokesman for the Insurance Information Institute, an industry group. The losses are expected to be in the $5 to $8 billion range. (Hurricane Ian, a category 4 hurricane caused about $50 billion in damages).

Only 6% of homeowners carry flood insurance and most live on the coast.

Even if a homeowner does have flood insurance, the maximum FEMA pays out is $250,000 per house and $100,000 for contents.

Linking to dividend paying stocks, every industry has manageable costs, those which are high but not too high to keep the company selling products and services to make a profit to pay dividends. In the private sector, it is good business not to do something or cut unprofitable areas of customers. The insurance companies do this very well to keep their investors holding their stock and bonds. While often we think insurance companies are here for you, there are many exceptions, and the less you need them, the better they like it. For your investments, what is a manageable costs and what is the risks it will go over that number?

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

Every place in the world has value and some are much easier than others. In the developed world, most of those places of value have been tapped, which means there is value somewhere else. In many countries there is natural value, but to unleash the value infrastructure is needed to be built. At some point in time, prices rise for the product and even with the infrastructure costs, value is found.

In an article by Oliver Griffin, Lucinda Elliott, and Fabio Teixeira of Reuters, Latin America’s wealth of hydroelectricity and other renewable energy resources could make the region a major producer of clean hydrogen as the world seeks alternatives to fossil fuels.

Similar to the Mountains that are found on the west coast of the US, the mountain range runs all the way to the tip of South America. Mountain ranges means there are potential rivers to be tapped to generate hydro electricity or relatively low costing energy. Low cost energy means other manufacturing needs can be built. If they are built, less migrants to the US.

Government leaders expect a major boon for the region from clean hydrogen, also known as green hydrogen, produced using electricity from renewable sources that do not emit carbon.

Billons of dollars are on offer from multilateral lenders.

The problem is pricing. Clean hydrogen is currently about $10 kilogram. Gray hydrogen generated from fossil fuels is between $1 and $3 a kilogram.

A World Economic Forum report published in August recorded $6.1 billion as earmarked for renewable investments including hydrogen by multilateral lenders and funds. In addition, Uruguay is examining a feasible study for a $4 billion clean hydrogen plant.

The Inter-America Development Bank (IAB) believes the investments should be $100 billion to $300 billion by 2030.

Linking to dividend paying stocks, similar to most things in life, costs of raw materials is a driver of investments. Some investments are for now, some need government backings as the needs are recognized but it is in the future. When costs rise for the existing methods, alternatives are quickly found and pushed. When investing, it is wonderful to think about a perfect future, however research the actual costs before making large commitments.

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

Around October 1st. Hurricane Helene surprised everyone by making landfall as expected and then shifting the eye to the East Tennesse area. As expected, it dropped a month’s rain plus in many places across the Southeast of the US causing flooding, trees down, loss of cell service and a host of other concerns. Some of them could be fixed within a few days, in East Tennesse areas the water that flows downhill increased in size by 20 feet causing the rivers to widen and take whatever was in their way. In most areas of the country, the roads follow the rivers, and when rivers become large the roads are no match for the river and roads need to be replaced. While the first concern for any disaster is the people, after they have a sense of stability, there are other concerns.

In an article from the Associated Press, 2 North Carolina facilities that manufacture the high-purity quartz used for making semi-conductors, solar panels and fiber-optic cables have been shut down and there is no reopening in sight.

Sibelco and Quartz Corp both have operations in Spruce Pine. The town is located in North Carolina across from the border of East Tennesse. The town is located northeast of Asheville and used I 26 for transportation.

Outside of Spruce Pine are some of the world’s highest quality quartz. Last year, Sibelco announced it was investing $200 million to double capacity at Spruce Pine. Both Sibelco and Quartz said they were concerned with the people first and operations a distant second.

Vince Beiser, author of the World in a Grain, described the process as to make silicon chips, you need to first melt down a highly purified material called polysilicon. That can only be done in crucibles that are themselves made of a material it will not react chemically with the polysilicon and is able to withstand enormous heat. The best material for those crucibles is ultrapure quartz. Spruce Pine is the source of the purest natural quartz ever found on Earth.

An estimated 70-90% of the crucibles used worldwide are made from Spruce Pine quartz.

Wayne Peight who is a member of Spruce Pine’s town council said around 75% of the people in the Spruce Pine has a direct connection to the mine.

Linking to dividend paying stocks, every downside has the opportunity to learn something and it is possible to take a position in the companies when they are out of favor. In the above case, the companies have a market share of 70-90%, with that number you can do research about who owns the company and what happened to the price. How resilient is the company, after the unexpected events. When should operations start again to retain their market share? Answering a few questions, can lead to new investments.

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

Most of us are bias towards the industry that supplies our income, for many it may not start that way because people look for a job to use their skills. An opportunity arises or someone wants to hire you is the industry and you find there are many opportunities and challenges with it. In a few years you begin to think and believe you can make a career in the industry, maybe not where you started but somewhere in the industry. If you look for a job your first area is the industry where you were employed with. It is normal, most of us have done it. One method to learn about other industries are labor strikes, what is the impact of the industry on the economy?

In an article by Doyinsola Oladipo and David Shepardson of Reuters, in October, the US dockworkers went on strike. On YouTube there are videos of Chinese docks and much of its mechanized, if you were the owner of the dock, you would look to China for the future. If you are a dockworker, you would want to negotiate long term employment contracts and what to do with you if and when the company replicates China’s ports.

The International Longshoremen’s Association union represents about 45,000 port works and their opposite side is the US Maritime Alliance representing the owners of the ports. The union wanted a 6 year deal and hourly rates to raise from $39 a hour to $60 a hour.

As this is Presidential election season, both candidates said they were in favor of the unions, although President Biden is likely more committed.

The walkout affected 36 ports on the east coast and JP Morgan Chase estimated the walkout would cost the US economy $5 billion a day.

Retailers accounting for about half of all container shipping volumes had expected a strike and were busy implementing plans to minimize the impact of a strike. Many of the big players rushed in Halloween and Christmas merchandise early to avoid disruptions but had to pay extra costs to ship and store the goods.

Both Walmart and Costco say they are doing everything they can to mitigate any impact.

French shipping group CMA CGM, the world’s 3rd largest container shipper, said it may charge additional shipping fees for delayed vessels.

The National Retail Federation called on the President to use its federal authority to halt the strike saying the walkout will have devastating consequences for the economy.

Linking to dividend paying stocks, all large profitable companies should have plans A.B, and C when something goes wrong. Whether it is strikes or weather-related events or another scenario, how well they react and adjust tells you whether you wish to continue to hold the investment. It is not the good times, it is the possible negative times that tell you the most about the industry and your possible investment.

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

If you have read Charles Dickens’ A Christmas Story then you would have heard the phrase of getting a lump of coal for Christmas. If you have read Sherlock Holmes, some of the words were about the air because all homes were heated by coal and coal produces smog. If you thought about England for the past 200 years, using coal was part of the fabric of the country.

In an article by Paul Waldie of the Globe and Mail, England’s last coal-fired power station shut down for good at the end of September. This means no coal is used to generate electricity in England. The last coal plant was Ratcliff-on-the-Soar Power Station which has been open since 1967. Its coal-boilers could produce 2,000 megawatts of electricity or enough electricity for 2 million homes. At its peak 3,000 workers worked there, the last days 170 remained.

Coal has been a critical part of the British life since the 1700’s and helped drive the Industrial Revolution. In 1882, the Edison Electric Light Company opened the world’s first coal-fired power station in London.

Up until the 1960’s nearly all of Britain’s energy production relied on coal sourced by hundreds of mines across the country. These mines led to construction of canals and ports to ship the coal from the north to the south of the country.

Last year coal’s share of overall production was 1% of total needs. Wind was producing 30%. Nuclear power was 15% and natural gas at 3%.

Carbon Brief, a Britain-based climate research organization, estimated that from 1882 to the present time, 4.6 billion tonnes of coal were burned, and more than 10.4 billion tonnes of carbon dioxide was released.

Coal had been declining in usage and former Prime Minister Margaret Thatcher shut down hundreds of mines causing widespread hardship for thousands of miners, which the economic impact still exists today, but it was the right thing to do for the country.

Linking to dividend paying stocks, when a company or service is operated for a long time, people expect it to continue to operate for a long time. However, for many industries things change and once profitable companies are no longer profitable. For your investments, while the stocks remain profitable there is limited work to be done except to collect the dividends, but twice a year you should ask how does the company make profits and what needs to change for the company not to make a profit?

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

In the old economic texts, students are taught the choice of producing guns or butter. It seem to be one or the other, not both could be produced at the same time. That line of thinking – either black or white; one or another; my way or the highway; and the list goes on. Sometimes it possible to consider both.

In an article by Virginia Furness and Marc Jones of Reuter, at least 5 African countries are working on what could be the world’s first joint debt for nature swap to protect a coral-rich swath of the Indian Ocean.

Debt for nature deals is becoming popular for poorer countries to pay for conservation. Bonds or loans are bought and replaced with cheaper debt, with savings used for environmental protection. The African initiative would be the first to involve multiple countries sharing a distinct eco-system.

The countries involved are Kenya, Madagascar, Mauritius, Mozambique, Seychelles, Somalia, South Africa, Tanzania and the Comoros. The US and British governments aim to protect and restore 2 million hectares of ocean ecosystem by 2030, benefiting some 70 million people in coastal communities.

Key details such as how much of each country’s debt is bought up and who decides and monitors how and when the conservation money is spent, will require lengthy negotiations.

The International Union for Conservation of Nature (IUCN) is hoping for $2 billion with $500 million of concessional funding and $1.5 billion of bond swap money.

Linking to dividend paying stocks, in most of our lives we often live in the grey area – for example do you drive exactly the speed limit or do you go beyond it? Often times we are given a choice of one or the other and they should not meet in the middle. It is good that there are choices in financing.

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

In every industry, there are seemingly simple solutions and they are tossed out as the way forward. Then reality and regulations work their way into the solutions and the solution becomes complex. A wonderful example is data centers and nuclear power.

In an article by Laila Kearney and Timothy Gardner of Reuters, two large companies Microsoft and Constellation Energy have announced a plan to restate the nuclear plant known as 3 Mile Island in Pennsylvania. The energy produced would be used by Microsoft to power data centers as they need a great deal of power to operate.

The simple solution is once nuclear plants are operational the cost to generate electricity falls as the output rises. The downside of nuclear is what to do with the wastes.

US data center power use is expected to triple between 2023 and 2030 and will require about 47 gigawatts of new generation capacity, according to Goldman Sachs estimates. While wind, solar and natural gas are very helpful, nuclear would be a good option.

The 3 Mile Island plant made global headlines in 1979 with a partial meltdown in 1979, at the time the worst nuclear incident in US history. The reopening would cost $1.6 billion to offset Microsoft’s data-center consumption in the region.

Key permits to reopen the facility have not been filed yet.

Edwin Lyman, a nuclear safety expert at the Union of Concerned Scientists noted resuming the use of equipment and infrastructure that has been dormant for 5 years, could be tricky. Constellation Energy should expect to encounter problems that will be costly and time-consuming to fix.

Linking to dividend paying stocks, there are many ideas in the world – some are simple, some complex but most follow somewhere in the middle and execution is very important. It is easier to do if there are larger credit facilities to draw upon, but money is not everything, the ideas are. For profit making companies, they have a reasonable idea of what works and what does not and having the ability to say no is a good thing. What ideas have the companies you invested in said no to?

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

Every company in the marketplace loves to reduce its costs and maintain high margins to make profits. There generally is a balance and a generally accepted method in the management of the supply chain. In some industries, it is easier to see conflicting values.

In an article by Keith Bradsher of the New York Times News Service, PVH Corp is a fashion retailer that owns the Calvin Klein and Tommy Hilfiger brands. Not surprisingly in the fashion industry, much of the clothing is made in Southeast Asia with a base in China.

China is a large country and in the west are Muslims which the Chinese would like to replace with non Muslims. The Chinese have done many things in the western part of the country, which consumers in the developed countries would prefer not to be done. One method to raise awareness of the actions is through economic means or boycott items made in western China. However, in China and elsewhere the supply chains often gravitate in some areas to the lowest cost and event though the garment maybe made in eastern China, the cotton production comes from eastern China. 90% of the cotton grown in China comes from Xinjiang Province.

The country of China similar to many countries around the world would prefer that others take care of their backyards first. One of the things that China is doing is taken discriminatory measures against companies that focus on the consumer rather than the producer.

PVH, which is based in New York, called its public relations firms and release a statement saying that it was in communication with Chinese officials in the China Ministry of Commerce. PVH maintains strict compliance with all relevant laws and regulations in all countries it operates in,

China is not only a large consumer market but also the world’s largest manufacturer. Many companies depend on factories in China and could be vulnerable if Bejing decided to impose sanctions on their subsidiaries or suppliers.

The US the Ughur Forced labor Prevention Act bans the import of any goods from Xinjaing unless the importer can prove to US customs officials that the products were made without forced labor. The law took affect in 2022.

China has passed its own laws that ban laws, sanctions or boycotts in other countries. The Ministry of Commerce has authority to deem commercial decisions as a threat to China’s national security.

Linking to dividend paying stocks, in many decisions there are more than one competing interests and senior management makes the decisions they make. There are always competing interests and companies have to weigh what is more important, because some group will not be happy with the outcome. The company has to weigh does it have other supply chain options or it can begin to work on a diversified supply chain? There is never a perfect answer because of the pressures to keep costs low, margins high and profits to pay dividends keep coming in.

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