In every country, who runs the biggest banks and who is on the Board of Directors of those banks are important part of the how the system works. The banks lend money and it not surprising some of the bigger clients are on the Board, although with most companies they always deal with more than one bank. Often times the relationships of the economy can be seen through the Boards.

In an article from Reuters, the relationship between the government and the banks is clearly seen through the policies of the government. In China, because of the economic slowdown and lower property prices, the economy is suffering and one method is to blame corruption.

Former Bank of China Chairman Liu Liange stepped down in March 2023 and was placed under investigation by the anti-graft watchdog accused of accepted bribes of $22.9 million.

Bank of Chain Vice-Chair and President Liu Jin resigned for personal reasons. The state-owned lender said its Board approved Chairman Ge Haijiao to serve as acting President.

Mr. Jin had been President since April 2021 and was previously President of China Everbright Bank from January 2020 to March 2021, and VP of China Development Bank September 2018 to November 2019. Mr. Jin had also worked for state-owned Industrial and Commercial Bank, the world’s largest lender by assets, as head of investment banking.

Linking to dividend paying stocks, clearly Mr. Jin was a rising star in China’s banking world and you can read what you want into why he left, except he left quickly. It is also important to note the Board selected a successor in a quick time. One of the prime functions of the Board is to look at succession plans and access talent in the organization to take over from current management. As you do your homework, you may be attracted to or like the stories of people in the company. As they move through the ranks and you believe they are doing a good job for investors, you own stock. Understand everyone in the company can be replaced and it a crisis they often are.

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

In the theory of business, particularly with a public company, the saying of you can fire the President if they underperform. People say it, they half believe it, as the reality is unless the company is also losing money, it is rare for a CEO to be fired for underperformance, but it does happen.

In an article by John Revill and Richa Naidu of Reuters, the world’s largest food-maker Nestle SA CEO Mark Schneider was ousted in a sudden decision relating to the underperformance of the company. Mr. Schneider was the CEO for 8 years and is being replaced by Laurent Freixe.

Chair of the Board of Directors, Paul Bulcke said the Board had assessed the current environment and together agreed to make the change.

Berstein analyst Bruno Monteyne said the suddenness of the move means it was not a planned transition and was clearly not Mr. Schneider’s choice. Mr. Monteyne suggested that he probably would have managed a smoother transition.

Nestle shares hit a record in January 2022 but since then have decreased. There has been a series of mishaps, earnings misses and guidance downgrades.

Sales volumes increased by 0.1% in the first half of 2024. There were worries about product development with new products taking longer to be devised and rolled out. The virtuous cycle of introducing new products, which generated cash for new products was slowing down.

Freddie Lait, managing director of Latitude Investment Management believes, Nr. Schneider loved to make deals to chase growth, but few worked out or were expensive acquisitions.

The new CEO has pledged to grow organically rather than through acquisitions. Mr. Freixe has worked for Nestle for 40 years is from the sales and marketing side of the firm.

Linking to dividend paying stocks, when a company makes a quick change at the top, it is not unusual for analysts or outsiders looking in to suggest all the things that have gone wrong and need to be fixed. Some of them are true, it is also true at the executive level of compensation, executives negotiate their contracts which means to let someone go early will involve potentially millions of dollars. Is it worth it, maybe or were there other issues?

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

For most of us in the developed world, as long as people have options or reasonable choices, how they make the choices is not really something we spend time thinking about. If people have very few options, then we might be concerned, some will be outraged, and most will think who benefits and is that good? In many parts of the world, the population depends on subsistent wages and hopefully they are doing ok relative to those around them.

If you think about the sugar industry, it has been a very labor-intensive industry since people found they like the final product. Most people likely eat too much sugar, but we like it and when we eat it we do not really think about where the raw ingredients came from.

In an article by Megha Rajagopalan of the New York Times News Service, it seems the sugar industry in Maharashtra, India has not changed a great deal over the decades it has been growing sugar. An investigation by the New York Times and The Fuller Project revealed a wide range of labor abuses. At the heart of the manner is how people are paid. Instead of wages, migrant workers receive an advance each season. They function as loans are repaid through work. The documentation is thin and workers are often in debt which means they need to come back the following year to return to pay off their debts. Workers say they make about $5.00 a day.

Mill owners said the workers have always been paid that way and changing the practice would hurt the business as workers would find it easier to leave and not do the work.

Sugar producers and buyers have known about the practice for years but have not little to change it. One mill profited off the abuses received a seal of approval from Bonsucro. Major brands such as Coke, Pepsi, Unilever and General Mills have used Bonsucro endorsements to bolster the images of their supply chain,

Bonsucro CEO Danielle Morley had been aware of some of the concerns of the workers but no one told inspectors to look for it. Pepsi said relative to its overall sugar buying levels, the amount which comes from Maharashtra is a small amount.

Linking to dividend paying stocks, the companies listed above are some of the most profitable companies on the planet and the margins in the product made from sugar are and still remain high. Even Warren Buffett owns as a core holding Coke. If you owned shares in Pepsi, you would have enjoyed healthy returns as well. Every company which is profitable likely has some element which is not great for everyone, but they are profitable and people in society use their products and services. As an investor you can ask if the company should do more to mitigate the negative, but most investors are concerned with profitability which leads to paying dividends.

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

When a company makes a profit on a consistent basis they have many options of what to do with the money including paying dividends and buying back stock. One of the options which investors like to see is investing in other companies to understand them as they are doing something the company is not doing. This is called vertical integration or having a say from the raw materials to the finished product to the sales floor. All countries evolved a little bit different which means as a company moves beyond its borders on the founding country, it needs to understand and buy the best in the breed companies to increase its presence in the new country.

If you think about the US and China, after World War II, in the US suburbs developed with shopping malls as a center piece of the development. This led to stores developing into the model first it was Sears who took a leadership position. Later the shopping experience is led by Walmart. In China, which is the second largest economy of the world, the internet and mobile phone apps led to the normal pattern which people shop.

In an article by Kane Wu and Summer Zhen of Reuters, Walmart recently sold a $3.7 billion dollar stake in JD.com of China. Walmart had bought the stake 8 years ago and since then has changed the manner in which they operate and will focus on its own operations in China.

Walmart invested in JD.com in 2016 by selling its Chinese online grocery story Yihaodian to JD.com for a 5% stake in the company. Later Walmart increased its holding to 10%.

According to Thomas Hayes, Chairman at Great Hill Capital, Walmart wanted to get exposure in China in 2016 and learn the retail business. They now have their own exposure through Walmart and Sam’s Club stores and no longer need a minority interest in JD.com when they have a great business themselves.

In terms of Sam’s Clubs business grew 26% and there are now 48 Clubs in China.

Linking to dividend paying stocks, while the emphasis on the stock is what their core business is, most dividend producing stocks have investments in other companies as options for the future. The key is the future, due to the profits they can have a long-term outlook, and it is possible those companies will grow in value. In similar fashion, many companies own real estate which if all sold would lead to shareholder gains, but the real estate is not being sold at the moment. When you are doing your homework, those other holdings help protect your investments which is good thing.

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

If you were in the marketing world and wished to appeal to young adult males in turns of the myth of marketing, you would like to pick James Bond and some of the movie roles played by Cary Grant. Both of the people easily moved in society parties; each were well dressed and carried themselves well. The women were attracted to the characters and each had a dark side which the audience typically cheered for. In the case of James Bond, he was working for the British government or a spy to stop bad guys. In the case of Cary Grant one of the roles in the movie To Catch a Thief was he stole jewels, but nobody was injured. The owners might be alarmed and ordered more security and made insurance claims but Cary Grant did not kill anyone.

In a book called The King of Diamonds by Rena Pederson published by Pegasus Crime, New York, 2024, the author investigates the mysterious case of a jewel thief stealing diamonds in Dallas, Texas.

Dallas, Texas is the banking center of Texas founded on cotton farms and cattle ranches. The cattle ranches are some of the biggest in the US because everything is big in Texas. When oil was discovered, the center of financing of oil cemented Dallas over Houston where outside the city the refining of the oil is done. The huge deposits of oil in Texas made many millionaires and eventually they bought large homes and enjoyed social gatherings. Often times there was a gala season for money to be raised for arts and culture and men wear tuxedo and women were gowns and jewelry. If you are wealthy, the jewels were worth thousands in the 1960’s and would be worth millions today.

In Dallas, someone was going to the most expensive homes in the city, breaking into the homes, and stealing some jewelry but not everything. The person(s) was very particular about what they stole and many times left expensive jewelry. Often times, the thefts occurred after a gala event where the owners would come home take off their jewels and leave them on the table to put them in safekeeping the next day. This led to many questions of information needed to do the heists.

The author of the book, Rena Pederson was a former journalist, and she looked back at the events and tried to piece together what were the circumstances that led to nobody being convicted on the heists? If you think about oil and gas industry, for those looking to drill it is a process to determine where the best place to drill is to find oil that pumps out in commercial amounts. In some ways it is gambling. hopefully with more information, but nevertheless it is gambling. In Dallas as well as every large city there has always been the lawful side of the city (where most of us live) and the unlawful part and prior to the legalization of gambling – there were plenty of places to gamble. They were often referred to as clubs. Who ran the gambling joints, it tended to be the mafia or those connected to crime. If you live in Dallas, legalized gambling was a 3-hour flight away to Las Vegas or a day’s drive.

In Dallas and every other city, when the wealthy become wealthy, they have a different relationship to the police and most of the time it means having all the protection but no publicity about their affairs. In politics, all politicians are dependent on raising funds and when the wealthy give it is not only to influence potential laws, but to run interference to stay out of the limelight. Sometimes it works, sometimes the activities become public. In the book, the author comes to the conclusion that the thief was likely someone that came from a wealthy family or wealthy neighborhood and they were not really stealing to raise money by selling all the jewels, it is likely they were keeping it, perhaps to admire the jewels or the thief was one of their own.

Linking to dividend paying stocks, most of us own stocks to become wealthier and have the income on a consistent basis. For some the money can be spent on a lavish lifestyle because the quarterly dividends come up to pay money that is spent to maintain a lifestyle. It is one of those individual choices people can make, knowing the dividends are coming quarterly. Having the option from a financial point of view is the most important element of the financial plan. After you have the option, you can debate how the world works or should work for the better?

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

If you watch the Super Bowl in NFL football, after the MVP is chosen, he often says his is taking his family to Disney World in Orlando. It is a paid message, and Disney has given free passes even though with the salary of an NFL player, they could buy the tickets without the freebee. That message has reached to thousands of others who go to Walt Disney World. If you never gone, you may consider going at least once.

In an article by Jessica Fu of The New York Times News Service, a couple from New Haven, Conn, have gone to Walt Disney World every year since 2015. In 2020, they had a son and in 2022, he went. Everyone that goes on a Disney trip also notices fees quickly add up – the after-hours party for Mickey’s Very Merry Christmas Party; the theme’s parks photo service to download photos of the family that photographers took during the visit. The cost was about $6,000.

In June, Lending Tree, a financial firm, published a survey of more than 2,000 people that 45% of the parents with children under 18 went into debt to finance their Disney trip.

For a family of 4, a one-week trip can cost between $6,463 and $15,559 not including flights or souvenirs, according to an analysis by Nerd-Wallet, a personal finance site.

At those prices, it is not surprising that Disney reported softening demand at the theme parks.

Disney parks are the top drawing theme parks with Disney World drawing 17.1million visitors in 2022 according to a report by AECOM. The second busiest theme park is Disneyland in California drawing 16.8 million visitors.

While 99.99999% of the people enjoy it, they do come back with sticker shock. Sometimes it is the extra fees which seem reasonable at the time – $15 a person a day to use FastPass.

A spokesperson at Disney says there are many options in pricing.

Rachel Cruze, who hosts a personal finance podcast with her dad, Dave Ramsey, advises not going into debt for vacations. There is great beauty in the natural parks. If you go into debt for the vacation it will follow you for a month or more.

Linking to dividend paying stocks, the great aspect of people going into debt to visit Disney is the powerful branding it has and will continue to have. People may not go multiple times a year unless they live in the Orlando area, but going at least once is a right of passage or check off the bucket list. There are wonderful moments at the parks and every year they get better as Disney the Master of Marketing and cross over benefits ties those together. If you see Disney is not doing a great job in tying their entertainment juggernaut to the theme park it is time to find alternatives.

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

In every country around the world, there is a division of male and females in the workforce. There could be practical reasons, but in reality, males typically go to work and make more money than women, while women look after the households. There are traditional reasons for this, if you consider the time of hunters and gathers, men went out to find and kill an animal for food (although just because they went out, does not mean they always came back with game).
It was the gathers or women looking after the children who found berries and whatever to eat that kept the families from starving. Later, men looked after domestic animals and did the bulk of the farming because it was heavy physical labor. Times have changed and technology makes it easier for both sexes to look after animals and do the planting or work on a computer.

In an article by Constant Meheut of the New York Times News Service, a country that has had a very tradition breakdown of men working and women and home is changing. The country of Ukraine is a war with Russia, which means many of the men have been drafted and sent to the front lines. For the rest of the economy, it still needs to function, and the country has been looking towards women as a solution.

In the article, DTEK, Ukraine’s largest private energy company has seen 1,000 male workers drafted into the military or about a 1/5 of the workforce. It has hired 330 women.

Ukraine is a country where women were not encouraged to work outside the home, however the pay is good and the pension is generous. Women who did not imagine working, have changed their minds and are doing the work. For women, the biases are long held and include women are second class and less reliable workers, women cannot do physical work; the roles are considered too complicated for them such as driving a trolley bus.

For women in Britain and the US – many of them remember or heard about the iconic posters of Rosie the Riveter during male shortage of WWI and WW II.

In the Ukraine, 3/4’s of Ukrainian employers have experienced labor shortages. Before the war, 47% of women worked according to the World Bank. Since the war, about 13% or 1.5 females have left the country. For the ones that have stayed in the country, more opportunities have opened up, but the country still has a labor shortage.

In the mining industry, there were no women because the law banned women from working in mines. Since the war, the law has been changed and there are women miners. One of the women working says for now she is staying because the schools are open and where would she go? In every job, people need supports and as long as they exist or made stronger, the longer the person stays.

Linking to dividend paying stocks, we all have biases. Sometimes it easier to see them in a different country, but things can change, and it can be for the better for everyone. In your investing, you will have and see bias and it is good to know what it is. Sometimes it is regional companies, sometimes it is not the competition in the industry you worked for, but we have biases. Over time and earning profits in an industry and you will slowly overcome some of the biases.

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

In the world of energy production, we know that utilities will tend to use the lowest cost production, which is why when coal prices increased, many utilities switched to gas plants. There were other reasons, if you produce electricity with coal, the burning of the coal emits excessive carbon dioxide, and one hopes the wind continually blows the air to disperse the carbon to a wider area. However, there will be excessive carbon produced. If a city is a bowl-shaped environment similar to LA and Beijing, on good days there are many wonderful reasons to live there, on days when the wind does not disperse the air, smog grows. If you think about the novels on Sherlock Holmes concerning London, there was smog in the air (people were burning coal in their homes). Change of heating source, changed the air.

In an article by Ken Moritsugu of the Associated Press, approvals for new coal-fired power plants in China has dropped according to analysis by Greenpeace East Asia. 14 new coal plants were approved between January and June with a total capacity of 10.3 gigawatts down 80% from 50.4 gigawatts in the same time last year.

In 2022, authorities approved 90.7 gigawatts and in 2023 106.4 gigawatts.

At the same time, China leads the world in solar and wind power installations.

In turns of extreme weather events, the Ministry of Water Resources said there were 23 significant floods this year. As well as China had landslides which can about because of flash flooding.

Seasonal flooding is common in southern China, the historically drier northeast and areas bordering on North Korea are beginning to get heavier amounts of rain. This causes floods and cut power and communications in Jianchang.

The National Energy Administration has unveiled a 3-year program to retrofit existing coal power units and equip newly built ones with low-carbon technologies. Coal provides 60% of China’s of the country’s electricity.

Linking to dividend paying stocks, there are always tradeoffs in the production process and ideally for citizens they would like to have the less mitigating circumstances as possible. Sometimes it is possible but expensive, sometimes it is overlooked and hoped the environment can absorb and clean up the process and sometimes it is costly after the lawsuits. It is a balancing act for margins and government actions or inactions.

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

Every country will wrestle with energy costs particularly for large manufacturing industries. The large manufacturing companies likely grew over the years and one of the factors was relatively low-cost energy prices. However, along the way was productivity improvements, new technologies and the continual update of the processes. All of that takes input from the company and supplier companies and how much does the company do internally and how much can it or does it want to outsource the process? At the present time, there is political pressure to ensure the energy comes from renewables as much as possible, but the reality is oil, gas and coal are still needed. How does a country such as Germany cope?

In an article by Irene Galea of Reuters, major German manufacturers say the country’s high energy prices and lack of reliable energy sources are forcing them to consider restricting domestic production or moving their operations aboard.

For context, before Russia invaded Ukraine, Germany was dependent on relatively inexpensive Russian oil and gas. That came to a stop when the European Community backed Ukraine and the pipeline blew up. Germany had to scramble and build new facilities to allow the oil and gas from Norway and the US and elsewhere to make up the shortfall, however prices rose and fell, but are still twice as expensive as a few years ago.

51% of large companies in Germany with over 500 employees and 45% of firms with high electricity costs are considering relocating facilities and cutting domestic production or already doing so. This is according to the 2024 Energy Transition Barometer survey by the German Chamber of Commerce and Industry. These figures are up 8% and 7% respectively from last year. The chamber’s survey was conducted between June 10 and 30 and included responses from 3,283 companies.

Germany aims to reach net greenhouse neutral by 2045 and legally mandate coal phase out by 2038. The government has committed billions of dollars to the transition including a $6 billion subsidy for companies in energy intensive industries (steel, glass, chemicals and paper production).

Companies such as BASF and Speira GmbH (an aluminum supplier) have cut back production.

In Germany, manufacturing accounts for 20% of the country’s economy as of 2021, according to the German federal statistics office.

Linking to dividend paying stocks, all companies have inputs to production and when gross margins fall because of unexpected increases in basic production, something has to be done to cut costs to ensure margins are met or can be increased in the near future. Companies are started for various reasons, originally, they were on a river or lake because transportation was by water. Then we moved to railroads and finally to highways and airplanes to move goods and services. There are advantages to all of the methods of transportation and ideally business loves a stable pricing system. Productivity improvements including technical improvements can be a great help but still the costs creep into the equation. Companies will move to where they benefit the most or have the greatest options, notwithstanding their connection to the place they started.

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