In all industries there are conferences which the major players gather, and people discuss the future and hopefully some deals are made. In addition, if you are in the industry and want a job or examine the future the conferences are a great place to start. The conferences typically happen during the spring because in the northern half of the country, there was snow and ice. The spring is when the snow and ice melt, the weather gets warmer and outdoor activities resume in full. Every industry has multiple conventions but there tends to be a higher profile one.

In an article by Jeffery Jones of Reuters, the high profile convention for the oil and gas industry is called the CERAWeek by S&P Global in Houston, Texas. Legions of oil, gas and electricity executives are in the meeting halls of the convention. This year’s convention was seen as more important because of President Trump’s motto of Drill Baby Drill. To many of the industry it means, the lack of government regulations should mean greater freedom for the industry. What will they do with it?

In the AI data center boom, the demand for electricity is a good thing for the oil and gas industry because many of the data centers demand will be met with natural gas powering the power plants.

In addition, the LNG or liquefied natural gas plants to sell natural gas outside the US is in full operation mode.

US Energy Secretary Chris Wright was in the meetings and said he was honored to play a role in reversing what I believe has been very poor direction in energy policy. Secretary Wright was a former fracking executive, said that there was no way wind, solar and battery power could replace the many uses of natural gas which fuels 43% of US electricity. (one might notice in Trump 2.0 few are talking about increasing coal to make electricity, mainly because of the price differences).

Rystad Energy issued a report that highlights natural gas as immediate critical fuel for data centers which need almost 100% up-time. The inventory of planned US gas-generation projects has ballooned from 6 gigawatts to 17.4 gigawatts.

Longer term, the desire is to examine nuclear power, but the timelines to have functional nuclear power plants is much longer than natural gas plants.

Jeff Currie, chief strategy officer of energy pathways at Caryle and former commodities chief at Goldman Sachs, believes energy is in transition. In the 1970’s it was energy security, then climate became a driver. The security-driven energy transition moves faster than the climate one. The balance of energy is security over affordability over the environment. If they become out of balance you end up similar to Germany. The German shift has 59% renewable but the cost has been higher energy prices for consumers and businesses.

Linking to dividend paying stocks, the basic in all commodities is the balance over security -affordability – the environment. What do you want to pay and what are you willing to give up? There are fewer simple answers, in the past it was growth or not to grow and generally society picked growth. It is expected, society is more complex with many more voices to be heard and essentially every group does similar actions. Governments play a role in the short term to allow for a decision to be made but sales need to be made at a profit and those supply and demand curves you learnt in high school do not really change.

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

In every market there are ebbs and flows of normal market conditions, but once prices rise all producers need to produce more because there is more money to be made, then there is a surplus and prices fall. In every market as long as it is reasonably healthy, there is expected demand that should be needed, then there is government incentives to do more. For example, the previous Biden government passed the Infrastructure Act to repair and replace bridges and roads and other things needed for cement, steels and asphalt. This would tend to push up demand for the products as the ability to do the work comes forth. The Infrastructure Act has helped steel prices rise, which is good for the industry.

President Trump has imposed tariffs on steel and aluminum, which he said he would and thinks it would be a good idea. With all ideas, there are some positives and negatives.

One side effect is what should the non-domestic exporters do? In an article by Heekyong Yang and Byron Kaye of Reuters, two South Korean steelmakers are considering investment options in the US, while Europe’s steel mills warn of a flood of surplus metals.

The 2 companies are POSCO and Hyundai Steel. A steel maker needs a base of customers to support it operations, however Hyundai Steel is considering a plant in southeast US. POSCO is looking at both India and the US for upstream steel processes.

In Europe, the expectation is if the US market is closed off, steel that would be sent to the US would go to Europe. The biggest steel maker in Europe is Thyssenkrupp Steel, and they said it would not be good for Europe in the long term. Another Germany steel maker, Salzgitter said protective measures in Europe would be needed immediately.

Luxembourg-based Aperam called for talks because neither the company nor its US customers would benefit from a prolonged trade conflict.

Austria’s Voestalpine said its revenues would fall and it is having discussions about price increases.

ArcelorMittal, the world’s second largest steelmaker, has operations in the US and plans to ramp up production.

Australia’s BlueScope produces 3 million tonnes of steel a year at its plant in Delta, Ohio says with higher steel prices, it will be good. In 2022, it spent $700 million to increase production with the help of the State of Ohio and local economic development agencies.

Late last year, Japan’s Nippon Steel wanted to buy US Steel, but was only allowed an investment.

The largest steel maker in the world is China Baowu Group with made 13,284 million tonnes of steel, then ArcelorMittal with 6,889 followed by China’s Ansteel Group with 5,565, Nippon Steel of 4,437 and Shagang Group of China 4.4145 and HBIS of China 4,100. The US companies are Nucor Corp with 2,060, Cleveland-Cliffs 1,680 and US Steel 1,449.

Linking to dividend paying stocks, with all government policies there are advantages and disadvantages and some unintended consequences. Tariffs may sound good, but all industries have their complexities which is why companies like stability.

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

In all businesses, it is desirable to have the goodwill of senior members of the government. The reason is government controls many levers of influence and budgets that can ensure the government helps the company both directly and indirectly. The downside of being too close to one side of the government is all those who do not support the government may not be customers.

In an article by Chris Megerian of the Associated Press, there was something a little different than normal. President Trump had 4 Tesla vehicles on the front lawn of the White House and bought 2 cars from Elon Musk. In the past, companies have shown their products at the White House, but the President never directly bought anything.

The reason for the show of support for Tesla was the owner Elon Musk has been running DOGE, either directly or highly indirectly, to try to find waste, abuse and fraud in government spending. For political parties it is easy to find waste – both parties have things they favor over the other party, so one party’s good is another party’s waste. Abuse is close to the waste, but fraud means to convict someone in court, or the burden is much higher. However, most people believe in government there is some waste, abuse and fraud in the files as people like the government for some things and not others.

Linking to dividend paying stocks, all profitable companies will have interactions with the government, mostly to ensure the government’s regulations do not hurt them and hopefully protects them from competition or make it harder for the competition. If the company has the goodwill of the politicians, then the multiple agencies that interact with the company will tend to work together and not target the company. Working with the government is a good thing.

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

When Joe Biden was President, he was able to navigate the House and Congress to have a number of large bills passed. The bills included the Infrastructure Act and CHIPS Act.

In an article by Tripp Mickle and Ana Swanson of the New York Times News Service, the CHIPS Act was to give money to semiconductor companies to make chips in the US. The bill offered $50 billion in federal subsidies to the industry, and $36 billion has been approved to Samsung Electronics, Intel, Micron Technology, TSMC (Taiwan Semiconductor Manufacturing Company). The plants are going up in Arizonia, New York and Ohio.

All politicians say they want semiconductor chips to be made in the US as the majority are made in Taiwan, Korea, Singapore, and Japan. There are multiple reasons why this is the case, but it started in the 1980’s. The politicians began pushing for more chips to be made in the US during COVID which because of high demand caused a shortage of chips.

At the joint address to Congress, President Trump attacked the CHIPS Act as bad and he said to Speaker Johnson he should get rid of it. What does that mean?

Chip company executives are worried that funding could be clawed back, are calling lawyers to ask what wiggle room the administration has to terminate signed contracts.

Senator Todd Young, who championed CHIPS, said he reached out to the White House to seek clarity.

In March, President Trump met with the CEO of TMSC C.C, Wei to announced plans for a $100 billion expansion of their Phoenix site as Apple and Nvidia committed to buying more American made chips, part of the expansion was based on the CHIPs Act which the President wants to stop.

Linking to dividend paying stocks, all companies have the ability to take advantage of grants and low interest loans or subsidies for business. They are offered because businesses have choices and they do not automatically have to invest in their present location. As an investor you want to have choices, what to do with your dividends – buy more, buy something else, build up cash and the list goes on.

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

At the moment, one of the biggest demands is data centers. The big tech companies of Amazon, Alphabet, Microsoft all have announced they will continue to spend billions of dollars on chips and data centers to bring AI to everyday items. While the capital expenditures or capex spending is very good, one of the requirements for data centers is relatively low cost electricity and lots of it.

In an article by Marc Levy of the Associated Press, there are many actors in the demand sphere including big tech arranging its own power projects.

Todd Snitchler, President and CEO of Electric Power Supply Association, which represents independent power plant owners, agrees there is big spike in demand.

President Trump has passed legislation that makes it easier to use fossil fuels in power plants either oil, gas or LNG. The other side is the states.

The people that greenlight power plants are largely state regulators and regional grid operators. Governors are doing their bit by seeking action to make it easier and faster to build power plants.

States including Pennsylvania want to fast track the approval process and dangle hundreds of millions of dollars in tax breaks for projects providing electricity to the grid.

Indiana, Michigan and Louisiana are exploring ideas to attract nuclear power.

With every increase in demand, comes many projects out of the woodwork, some which are beneficial to the consumer, some which need taxpayer dollars to justify and others that would have been built to satisfy demand anyways and receive additional tax breaks.

Linking to dividend paying stocks, in many dividend stock portfolios are utility companies because they are regulated which tends to ensure projects get built to meet demand; every year prices rise at or above inflation and given everyone needs electricity, the companies make a profit and continue to pay dividends.

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

A number of years ago, one of my aunts said we should boycott Nestle because of their dumping practices in Africa in regard to children’s baby formula. With all retail companies, there is likely one division or another that someone does not like their policies. However, with a conglomerate, there are plenty of other people that do like the company. Every company which has a retail presence at one time or other will have people that do not like it for some reason or another. Many times, the reasons are valid, but there are enough other customers, so boycotts are difficult.

In the last 15 years, most of the world has heard about Elon Musk with his brands of Tesla, X formerly Twitter and Space X. The companies have been leaders in design and innovation and many people around the world have a good rating for Mr. Musk. Then Elon became involved with President Trump’s administration. From the outside looking at the methods Mr. Musk has used it seems chaotic at best and producing few results. It is noted Mr. Musk has successfully navigated US government grants for his companies, however, how the apparatus of government works he seems to have overlooked that part.

In an article by Eric Reguly of Reuters, the fact that Mr. Musk has associated himself with President Trump’s policies and many seem chaotic, particularly across the board tariffs on the US’s neighbors. The rationale is that President Trump is using tariffs for over purposes, although it is very hard to figure what those purposes are and if the purposes could be done in a different manner. The public does seems not to like Tesla at the moment.

The critical aspect for Telsa is do the people who can afford to buy and actually buy the cars, are they mad at Mr. Musk? If they are, sales drop.

According to analysts such as Dan Ives of Wedbush Securities, the reason why you want to own Tesla stock is the future of the driver less cars. If you believe that soon all taxi or uber services will be driver less, then Telsa is one of the world’s leaders and growth will be coming very soon. If you think driver less cars are still into the future, then the company has problems.

In terms of sales, China is the world’s largest car market and Tesla used to be a leader. According to the China’s Passenger Car Association, Telsa’s sales in February fell 49% from a year earlier to 30,688 vehicles. It tells you the luxury market in China is beginning to be dominated by Chinese carmakers such as BYD. If Chinese luxury EV cars come into the US, Telsa’s sales are likely to fall.

In Europe, sales are down by 45% and the company’s share of the car market dropped from 1.8% to 1%. In Germany, where Tesla has a plant to make cars, the German Association of Automotive Industry said sales are down 76%. In France they are down 26% and in Norway where the highest EV penetration is located, sales fell 50%.

Linking to dividend paying stocks, some of these companies have a global reach to the public and there are reasons why active members of the senior levels take low profiles in the media. They take a high profile behind the scenes, but the focus is on the brand and selling it. There are many reasons why people may not like a brand, it is important to keep those to a minimum or they will affect sales which affects profits which affects dividends.

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

If you listen to President Trump and as President of the world’s most powerful country, you should listen to him. One of the things he wants to do is shift the US from being the policeman of the world. Ever since WW II, the US took the role of policeman of the world and benefited from it so it kept doing it. After WW II, both Germany and Japan ability to have a defense industry was limited and the US took positions in Germany and located military basis. It encouraged Japan to shift to consumer products and for a while Japanese companies were world leaders, some still are. You may recall, the Japanese introduced relatively inexpensive cars with limited quality, but over the decades the quality improved and soon the biggest sellers of cars in the US were the Japanese. It is not hard to see Japanese cars on the roadways.

In many ways, the US has dominated the world economy for decades, President Trump talks about other countries paying their fair share and doing more, that means the US doing less. In the last month, the EU has stepped up, if the US wants to do less, Europe will do more.

In an article from Eric Reguly from the Globe and Mail, Italy’s Leonardo and Turkey’s Baykar have formed a giant venture to develop drones. Leonardo is one of Europe’s largest defence companies and Baykar is a drone giant.

The tragic part of the Ukraine and Russia war is a change from traditional weapons on the ground to a drone extensive warfare. Both sides need drones and the ability to shoot down drones.

Leonardo CEO Roberto Cingolani said the European drone market will be worth $100 billion over the next decade and will see the launch of sensor- and weapons-laden machine that will essentially evolve into unmanned fighter jets.

EU leaders met in Brussels to discuss way ways to boost their militaries and support Ukraine, as the US suspended, or put on a pause, weapon deliveries and sharing US intelligence.

If the US will not spend, and most of the money went to military contractor companies, then the European companies will spend money on defense.

Leonardo, which is 30% owned by the Italian government, makes military and civil helicopters, aircraft, defense electronics, satellites and drones. It is also a supplier to both Boeing and Airbus. In 2023, sales were $23.5 billion. Share prices are up this year.

Baykar is co-owned by Chairman Selcuk Bayraktar, the son-in-law of President Recep Tayyip Erdogan. The company is a leader in AI-enabled drones and is the world’s largest exporter of military drones. One model, the Akinci, can carry about 3,000 pounds of bombs, rockets or missiles and stay in the air for over 24 hours.

The new drones to be built in Turkey will contain the latest technology from Leonardo.

Linking to dividend paying stocks, for consumers they have options to buy from whoever they want to. As prices go up, the number of options fall because there are limited number of suppliers that would stay in business. In the military, all the major players are known to each other, but the bulk of the spending was in the US. If the President wants to cut spending to Europe, then European players will make up the difference. The big question is will the government cut $800 billion dollar budget of the pentagon? Which defense companies will lose funding? For investors, perhaps if you have defense contractors in your portfolio, you might start looking at foreign companies.

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

When you think about the US economy you have to remember 66% is related to consumer spending. How is the consumer doing and what the large retailers are doing in relationship to ensuring the consumer spends at their stores?

In an article by Siddharth Cavale and Juveria Tabassum of Reuters, the second largest retailer after Walmart is Target. CFO Jim Lee said the company was moving away from giving quarterly forecast figures for sales and profit because it expected more volatility in its business.

Consumer spending trends are yet back to normal today.

Sticky inflation and tariffs on imports is expected to temper demand for non-essential categories such as home furnishings and electronics that make up more than 2/3’s of Target’s sales.

Prices were expected to increase for groceries because the supply lines are short for seasonal produce and much of the produce comes from Mexico. A 25% tariff across the board means higher prices.

Target said it would invest about $5 billion in stores and technology this year.

Beauty, apparel, toys and sporting goods were the top performers during the holiday quarter while home decor and finishing sales were negative.

Target was aggressive with its marketing and merchandising strategies as consumers spent selectively on popular projects during the holidays. One bright spot was the Target partnered exclusively with pop star Taylor Swift and sales increased.

For the holiday sales, sales were up 1.5% but were offset by heavy discounts and promotions. Earnings fell to $2.41 a share, but it still beat estimates of $2.27.

Linking to dividend paying stocks, for large companies they have access to a great many options and abilities to maintain and drive market share. Most of the time they do not use all the options, but they are there. One of the reasons you want to buy larger profitable stocks is they have options to use.

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

Sometimes global politics works in favor of companies, sometimes it works against and all companies have to adjust or learn to live with the tea leaves and hopefully not leave money on the table. An example is President Trump and the Panama Canal.

The history of the Canal was it was necessary because going around the tip of Chile is very dangerous and long, a short cut was needed for global shipping. In the early 1900’s, the French government tried but failed. The US using many engineering innovations built the canal and then decided to keep the lands within the canal as a “US lands”. It was not until December 31, 1999, the US officially gave the lands back to Panama.

In an article by Didi Tang and Alex Veiga of the Associated Press, the Hong Kong conglomerate has agreed to sell its stake in a subsidiary that operates ports near the Panama Canal. The consortium includes BlackRock Inc., BlackRock’s subsidiary Global Infrastructure Partners and Terminal Investment Ltd. BlackRock is the world’s largest asset manager having $11.6 trillion assets under administration.

CK Hutchison Holding said it will sell all shares in Hutchison Port Holdings to the group for $23 billions including $5 billion in debt. The consortium will have control over 43 ports in 23 countries including Panama, Mexico, Netherlands, Egypt, Australia, Pakistan and elsewhere.

The transaction does not include the ports in China and Hong Kong.

70% of the sea traffic that crosses the Panama Canal goes to and from US ports.

Frank Sixt, co-managing director of CK Hutchison said the transaction was the result of a rapid, discrete but competitive process which numerous bids and expression of interests were received. It was purely commercial in nature and unrelated to political events.

Given that CK Hutchison recently received a 25 year extension to run the ports, you can judge whether you believe the above statement or not.

Linking to dividend paying stocks, global politics plays a role in business, Whether the government wants companies to be involved or not involved in companies in the world. Business plans are adjusted for action or delay. It is the nature of the beast.

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