When the world was in COVID shut down, very few people travelled. When the restrictions were lifted, the travelling public has regained its pre COVID numbers. For anyone who has travelled, this is good. When you were travelling, you needed oil or gasoline to move about. During COVID, all the share prices for oil and gas companies fell and have since regain their previous positions and when the commodity price of oil goes up, share prices go up. The world still needs oil and gas. The biggest oil and gas company in the world is Saudi Arabia’s Aramco.

The easiest place to drill oil and gas in the world is still Saudi Arabia because of the very rich oil pools that cost less than $5 to drill. This has made Aramco – long a cash cow for the Saudi state.

In an article by Yousef Saba, Hadeel Al Sayegh and Maha El Dahan of Reuters, Saudi Arabia’s sale of shares in oil giant Aramco drew more demand that the stock on offer raising up to $13.1 billion. Aramco is selling 0.7% of its shares. The Saudi government directly holds just more than 82%, PIF (Public Investment Fund) owns 16%.

The world’s top investment banks are helping to manage the sale – Citi, Goldman Sachs, HSBC, JPMorgan, Bank of America and Morgan Stanley. In addition, local dealers in Saudi including Saudi National Bank, Al Rajhi Capital, Riyad Capital and Saudi Fransi are involved. Besides the big investment banks, Credit Suisse Saudi Arabia, BNP Paribas, Bank of China International and China International Capital Corp are seeking buyers for the shares. 90% of the shares were allocated to institutional investors and 10% to retail investors.

Saudi Arabia is producing about 9 million barrels a day of crude or 75% of its maximum capacity.

Linking to dividend paying stocks, as long as people have a desire to see the world or at least travel from their home location, there will be a need for oil and gas. With all commodities, supply and demand play a keep role, but if you can a low-cost producer which allows that even when prices fluctuate the company still makes money, it is definitely worth examining and investing in. Those are the type of companies you can buy and hold for a long time while you enjoy the dividends/

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

Every large city develops a reputation for particular services and for a while they are a hub for that service, but it is never guaranteed. The clearest example is London, England before Brexit, London was the center for the financial industry, but the voters of England voted, and then alternatives seemed better.

In an article by Eshe Nelson and Michael J De La Merced of the New York Times News Service, London used to be recognized as the center of the finance world, but things have changed. By many measures, London is still a crucial financial hub, where prices are fixed every day for precious metals, trillions of dollars of foreign currency are traded and global insurance contracts are written. But, the global competition among cities such as New York, Hong Kong, Dubai, and Singapore is intense.

Amsterdam overtook London as Europe’s largest share-trading center according to Cboe Capital Markets.

In 2023, in New York 16 companies went public down 84% from 2022, in comparison to London 10 companies went public down 88%. In New York companies that went public raised $9.5 billion while those that went public in London raised $442.7 million according to London Stock Exchange Group data.

In New York, the magnificent 7 have led the markets, the mag 7 are tech companies. In London, the vast majority of companies are banking, mining and oil and gas with few tech companies. The British government has introduced reforms to make it easier for tech companies to list.

One tech company that is looking to go public in London is Shein, an online retail giant founded in China. It was going to go to New York, but geopolitical actions between the US and China made Shein look for alternatives such as London.

Linking to dividend paying stocks, companies are forever looking for the best place to list their shares to take advantage when stock prices go up and it makes sense to issue new shares. Just like every other industry, the companies which own the stock market have to adjust to the changing economic landscape of companies. All companies need access to capital to grow and all industries have companies known by their reputations. Are the companies that you own, reputation continue to be valid?

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

If you think about China, you may think about the manufacturing center for the world and that means both taking raw materials from around the world processing them to basic materials such as chemicals and steel and then transforming the materials to products that business and consumers can buy and use. This growth in infrastructure in China needs the steel and chemicals, while the export of finished goods allows the cycle continue. Similar to most countries around the world, the basic materials or commodities will go up and down and when they are down for a number of years, they are used in production. Then the price goes up and suddenly alternatives are needed.

In an article by Patricia Cohen, Keith Bradsher and Jim Tankersley of the New York Times News Service, in the alternative energy production, in 2022 according to International Energy Agency, China accounted for 85% of all clean-energy manufacturing investment in the world. While other countries want to increase manufacturing, they face barriers.

China’s lead is built on earlier cultivation of the chemical, steel, battery and electronics industries, as well as large investments in rail lines, ports and highways.

From 2017-19, China spent 1.7% of its gross domestic product on industrial support, more than twice the percentage of any other country, according to an analysis from the Center for Strategic and International Studies. The spending included low-cost loans from stat-controlled banks and cheap land from provincial governments, with little expectation that companies they were aiding would turn immediate profits.

China has been charged with a willingness to skirt international trade agreements, engage in intellectual property theft and use forced labor.

All the above, China is a position today to flood rival countries with low-cost electric cars, solar cells and lithium batteries. For China controls 80% of the worldwide production of every step of solar panel manufacturing.

Gregory Nemet, a professor of public policy at University of Wisconsin, says there are enormous economies of scale by going big as China did. When the investments resulted in overcapacity. suppressing the profitability of China’s companies, Beijing was willing to ride out the losses.

China also benefited from the West’s lack of industrial policy – the west believed in open markets and minimal government intervention that the US has championed. The view is that an unfettered market always knows best.

Recently under former President Trump tariffs were imposed on goods valued at more than $350 billion a year. President Biden kept the tariffs and increased some of the tariffs.

Linking to dividend paying stocks, in many industries in the world once the dominant players are established it takes a long time before they are not dominate. As an investor, you have to accept what is and watch for signs of why that would change, if it is not changing investing in the dominate players is a very good strategy for long term wealth building. If you review the Fortune 500 of Forbes 400 over the decades companies change which means you need to review your portfolio at least every 6 months.

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

In the world of real estate, there are always conflicting pressures on the market. If you buy in a reasonably good neighborhood and the price goes up over time, it is possible to sell the house and live off the capital gains. In many instances, the house can be inherited by one of the children of the family and it continues to be lived in and price is not that important till the person moves. In 2008 when the mortgage-backed securities market crashed, we saw house prices fall below their mortgages and people walk away from their homes. It took a few years till investors started buying up the homes and renting them out to stabilize home prices in the area. As a society, we believe home ownership is important, but most politicians do not believe housing is a right, but there should not be too many homeless. The housing market has many contradictions running it.

In an article by Alexandra Stevenson of the New York Times News Service, China has a complicated relationship to real estate. Technically the state or government owns all the property as it is a communist country, however apartments are bought and sold for profit. In China, 30 years ago, the bulk of the population lived in the country, however with the transformation of the economy and jobs in the cities, there was a great migration towards cities and they need a place to live.

This happened for decades and real estate became 1/3 of China’s economic growth. In 2020, the central government cut off easy money that fueled the expansion and this has set off a chain of bankruptcies that shocked a country of homebuyers. At the present time China has 4 million apartments no one wants to buy. There is also 10 million apartments that are in the stage of constructions that may or may not be finished. Billions are owed to builders, painters, real estate agents, small companies and banks around the country.

The biggest developer to go bankrupt was Evergrande, but it was managed carefully and quietly to allow Evergrande to finish many buildings. The issue is China has tens of thousands of smaller developers around the country that are in similar situation.

Dan Wang, chief economist of Hang Seng Bank believes the only way forward is for the state to bail out some mid-size developers in cities where the crisis is more acute.

China’s top leaders are encouraging state-owned companies to buy the apartments and rent them at lower rents or social housing. The senior level government has committed $41.5 billion to help fund the loans. The 4 million apartments is about 4 billion sq ft according to the National Bureau of Statistics.

According to Caixin, a Chinese economic news outlet, the government has tried out more than 300 measures to increase sales and bolster real estate companies. The measures include: cuts to mortgage rates, trade in old apartments and buy new ones, cheap loans to states to buy unsold apartments.

The central bank has committed $14 billion to buy apartments in 8 hard-hit cities, however only $280 million has been used. The states are not using the money for the same reason consumers are not buying, the apartments tend to be in smaller cities and no demand.

Linking to dividend paying stocks, investing in stocks includes investing in the property of the company and the expectation it will go up over the years. Some companies will hold on to property for generations and some of it could be sold off for capital gains. In every profitable company there are short term, medium- and long-term pressures, how it balances them is something worth considering? if not, likely a hedge fund will increase the short term pressures.

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

At the start of 2024, one company you might have expected to do better was Boeing. The company has a duopoly with Airbus in commercial airlines. If you fly, then the chances are very high you are in an Airbus or a Boeing plane. The company had introduced the Max series, regulations had gone through to make it an even better plane and the order book was building to over 3 years. People were flying again and the large airliners were ordering new planes to replace the old ones. Boeing also has a robust military aircraft and defense budgets are not being cut. Then things changed, a door blew out in an Alaskan Airliner and the battery for cockpit voice recorders needed to be fixed.

In an article by Allison Lampert and David Shepardson of Reuters, Boeing will burn rather than generate cash in 2024. CFO Brain West told the Wolfe Research Global Transportation and Industrials Conference he expects Boeing’s free cash flow to be negative compared with March’s outlook for positive cash generation in the low single digit billions.

Mr. West said due to regulatory issues commercial jet deliveries will not step up in 2nd quarter compared with the first 3 months. We have frustrated and disappointed customers owing to the supply chain and production issues. We see progress, but everyone wishes it was faster.

Boeing was aiming for 38 jets a month at its assembly plant outside of Seattle, but that fell to low as single digits in April.

Linking to dividend paying stocks, execution of the business plan is a refrain you often hear. Even companies that have all the advantages in the world, need to execute on their business plans. While Boeing is fortunate there are few alternatives, once it does execute on its business plan it will be a stock which you can buy and hold and watch the planes go by.

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

In the world of global supply chains, what tends to happen is overtime various parts of the world specialize in one aspect of the supply. There are very good reasons for this including after the first company is successful, other entrepreneurs begin to use the ecosystem that is built up. For example, the companies need a certain skill set, the universities and colleges respond to ensure the students have that skill set. The people who use the skills see it is easier to start and grow their business in the area and more companies are set up to cater to successful ones and the pattern continues. Then the other services build up including banking, accounting, legal firms which know and understand the business cycle that has specialized in the area.

All of the above is good till something in nature happens and we may not know the why the weather is doing what it is doing, but it is doing it. An example was a picture of an airport in Porto Alegre, Brazil, the tarmac is flooded. If you consider an airport which you have flown from and consider the tarmac or where the plane loads and unloads, having 3 feet of water across it, it takes a lot of water to have that result. The reason the airport and the city are flooded is the region has had over 2 weeks of heavy rain and the water has nowhere to go. If the airport is flooded, you can imagine what is happening to the people in the area and millions are affected.

Porto Alegre is in the south of Brazil in the state of Rio Grande do Sul. It is the 12th largest city in Brazil with a population of 4.4 million people. Similar to large cities, this one is a capital of the state and is blessed with a natural harbor which has translated into one of the chief industrial and commercial centers in Brazil. The surrounding areas have rich agricultural soils to grow crops such as soybeans and livestock including cattle and pigs. The region accounts for nearly 25% of Brazil’s pork exports.

Linking to dividend paying stocks, supply chains are important to all industries and generally for a variety of reasons they tend to be concentrated. While economic planners discuss diversification, in reality a concentration tends to happen. While we spend billions on predicting the weather, we can control the weather, but we do know something is happening. When that does supply chains are not as flexible as people think they are. Alternatives can be found but there tends to be a delay, and they tend to go back to where they were because of economics and it seems easier to rebuild. For your investments, do you have an understanding of supply chains?

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

Every profitable company eventually specializes in some field, but they use research and development to try different things to hopefully make the core products better. An example of this is the tire company Michelin. The Michelin Group is a leader in composite engineering and manufacturing with its headquarters in Clermont-Ferrand, France, which is 4 hour drive south of Paris. The Michelin has 69 factories around the world making tires and its tires are rated as some of the top in the world.

In an advertisement, Michelin introduced a new technology called WISAMO, it is an automated, fully retractable and inflatable wingsail system. If you ever seen pictures of Clipper Ships with large sails to move ships around the world, the wingsail system is a sail system for cargo ships.

Sails on cargo ships have been proposed over the years, but it was difficult to implement. The WISAMO system is designed to be inflatable which means it can easily come down when not it use and allow ships to go under bridges located in many ports around the world.

Fortunately, for Michelin, the system can be slowly implemented and tested because they specialize in tires. However, the engineers are using sustainable materials and can transfer the knowledge to the making better tires.

Linking to dividend paying stocks, all companies need to do research and development in areas where they do not make money but can learn. One example is the automotive industry is involved in the racing industry. The continuing study of aerodynamics for race cars to go faster can be translated into designs of cars to commute in with a smoother ride. Another example, after aluminum was invented, it needed markets to be sold to, as cars needed to be lighter, some of the steel was replace by aluminum. Companies seemingly need to be involved in pursuits to study and test materials to make their core business better, what is your company involved with?

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