In the world there are slogans for power – the ying and yang; who is up, who is down; and the list goes on. The point is if there is a win-lose, somebody needs to be on the winning side and the other side is the loser. If you are involved in sports, you will see it weekly, if you are involved with people sometimes you need to learn. Often times at a workplace it is who is moving up and who is not moving up? The same dynamics happen in politics and in world politics.

In an article by Antoni Slodkowski of Reuters, every year there is a gather of many leaders of companies and countries in Davos, Switzerland. You could say it is the United Nations of the business world, if corporate leaders are talking to each other, then although there are competitive pressures, companies are not going to the extreme.

An important person who has regularly attended Davos is Chinese Premier Li Quing and this year the message was different that in the past. In the past, China was growing and using its clout around the world and offering its currency as an alternative to the US dollar. This year, the reality of the Chinese economy is it is sluggish recovery from the pandemic, a real estate slump and long-term growth prospects are slow, China is opening its door to foreign investment.

Premier Li said the economy was meeting expectations, but the expectations are lower than in the past. The world needs healthy competition to enhance co-operation and innovation, the removal of barriers to competition and co-operate on environmental strategies.

Choosing investment in the Chinese market is not a risk, but an opportunity.

At Davos, 2,800 leaders from 120 countries including 60 heads of state were due to participate at the annual meeting. (Bloomberg TV covered many interviews and they can be seen on YouTube)

Linking to dividend paying stocks, when a company consistently makes a profit and can pay dividends it starts at a higher confidence level and many companies would like to partner with or do joint ventures with the company. The profitable company is the top dog, when a company does not make profits, they stress the need for co-operation and being open to new business.

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

All industries change over the years to different markets and companies must shift to meet the demands of the customers. In the world of oil and gas, particularly gas has changed from heating homes and making electricity (less expensive than coal) to liquefied natural gas (LNG). The shift generally involves heavy infrastructure spending which limits the number of players involved due to the cost of the refinery plants. The refineries can easily cost into the billions of dollars, so when politicians say they want more, who is paying for them?

In an article by Arunima Kumar and Arathy Somasekhar of Reuters two large gas companies have decided to merge to create the largest independent US natural gas producer. The 2 companies are Chesapeake Energy and Southwestern Energy. The larger output from the combined company will improve the company’s position as it relates to unlocking and securing additional LNG opportunities according to Matt Portillo, an equity analyst at Tudor Pickering & Holt.

Thanks to shale production, US gas production has jumped well above domestic demand, pushing up inventories and reducing profits at gas producers. Most of Southwestern production is in Appalachia’s shale formations in the US East and in the Haynesville shale basin close to US LNG export plants in East Texas and Western Louisiana.

New to the industry are gas plants being built on the coast in Mexico. About an hour’s drive south of San Diego, California is Ensenda, Mexico and the Energia Costa Azul a $2 billion liquid natural gas refinery is being built which will connect to gas pipelines to send the LNG to India, China and wherever else there is a demand. With this refinery and others in the planning stage, Mexico would become the world’s 4th largest exporter of gas, although most of the gas will come from the US. Each terminal is expected to be in operation for decades.

If the deal goes through, shareholders in Chesapeake will own 60% of the company and its likely the company will be changing its name.

Linking to dividend paying stocks, companies change to reflect changes in markets. In a commodity-based business, supply and demand are the key to the reason for changes. When supply for domestic markets, prices fall and companies look to export or in this case LNG to stabilize and grow their revenues. Similar to many industries, it is easier said than done because of infrastructure concerns. In this case where the refinery plants are and where the commodity is found. It is often less expensive to merge.

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

If you work in the hospitality sector, you were seeing good things because people were travelling and seeing the world. Flights were booked solid and the earnings for the airlines were bullish and even the airline makers had large back orders to satisfy the future demand. Things were going good and then a cabin panel door blew up a plane.

In an article by David Shepardson of Reuters, the Federal Aviation Administration (FAA) launched a formal investigation into the Boeing 737 Max 9 after a panel door came off from an Alaskan Airlines plane. The plane was leaving Portland, Oregan when the door came off, the door was found in suburbs and the plane went back to Portland to make an emergency landing.

Boeing has delivered 171 planes to Alaska Airlines and United Airlines and the planes were grounded, pending safety inspections.

Boeing said in a statement We will cooperate fully and transparently with the FAA and NTSB investigations.

Similar to automakers, Boeing does not make most of the parts but assembles them. The supplier of the door is Spirit AeroSystems Holdings Ltd. Boeing was treating the issue as a quality control item. Alaskan Airlines and United Airlines will need revised inspections and maintenance instructions from Boeing that must be approved by the FAA before the planes can fly again.

Transportation Secretary Pete Buttigieg said the only consideration on timeline is safety.

It is noted in an article by Liz Alderman of the New York Times News Service, Airbus delivered more aircraft and cemented more deals than Boeing in 2023 for the 5th straight year.

Linking to dividend paying stocks, in 2023 Airbus and Boeing had record orders for planes to be delivered in the future. In 2019 all Max aircraft were grounded for 20 months. Just when the sky seemed to be sunny for the airlines and airline makers, an incident happened. The stocks went down and should bounce up again.

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

As a general rule, no one really wins in a war. Every war has fallout both for the people fighting the war and those that try to keep the economy going or not on the front lines. There may be very good reasons to go to war, but unless the war is short, no one really wins.

In an article by Roni Rabin of the New York Times, Israel and Hamas are at war and Hamas is in the middle of the Palestine people. People have died on both sides, people have been displaced on both sides and normal life has been disrupted, more on the Palestine side, however this article focused on Israel.

Israel’ ‘s economy depends on tourism and it has come to a virtual standstill.

In a war, government spending jumps.

Israel’s technology sector has been the engine for Israel’s growth and accounts for almost half of the exports and 1/5 of the economic output according to the Israeli Innovation Authority. In Israel all men and women have to do military duties and then they are in the reserve. 350,000 reservists have been called up for duty.

Many customer orders were put on hold or cancelled outright. While the war is on, foreign investment or investors are waiting till the war is over. The Israeli Innovation Center has $100 million to support technology companies particularly startups that have lost funding.

The Bank of Israel has cut interest rates by a quarter point to 4.5% and the Governor of the Central Bank Amir Yaron expected more cuts in the future. The war will cause higher deficits and more public debt.

The government is planning to increase the number of foreign workers from 50,000 to 70,000 because of worker shortages. Workers from West Palestine have been banned from working in Israel.

Linking to dividend paying stocks, if your investments are located outside of the US, sometimes that is wonderful and sometimes it is not good. There are some companies than benefit from products to wars but for most peace is better for in war there is always a toll to be paid and it takes time afterwards to become normal again. What are the contiguity plans for your company?

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

In 2023 if you owned big tech or some or all of the magnificent 7 companies the assets under administration in your portfolio went up. In 2024, big tech is likely to go up again, but will it go up at the same percentage levels? no one knows, which means there might be other sectors that could go up or which sectors offer value?

In an article from Reuters, one area that underperformed in 2023 was healthcare. In the S&P 500 index healthcare has about 13%.

Why might the index go up? The exciting news of the weight loss drugs from Novo Nordisk and Eli Lilly. If the drugs work well as hoped people will be healthier and there may be fewer obese patients. The amazing surgeries doctors can do to treat people will make an even better difference.

Health care was trading at the middle of January at 17.9 times earnings versus the index of 19.7 times or a discount of 9%. Historically the difference is a 4% premium according to data from LSEG Datastream. If things are normal, at least a 10% rise is possible.

Will the rally that boosted tech and growth stocks broaden to include more sectors including healthcare?

Healthcare stocks tend to struggle in an election year, because politicians started pointing to health care as a big expense, they say they will lower the costs. However, this year some investors believe there is less risk because no one is proposing big policy items and no party is expecting big gains in Congress, diminishing the chances of any legislation to overhaul the industry.

Healthcare deals in big data, will AI help to lower costs and help make better companies?

Linking to dividend paying stocks, during election years some sectors are painted with a broad brush because politicians have to appeal to a broad number of people to win and often health care and insurance is added because we all need them, they all tend to raise prices. However, since we all need them, it makes the companies profitable to pay dividends and that you can enjoy. One method to investing is examine the companies you pay bills to see if they are worth investing in. If yes, as long as you are a purchaser, you can keep your eye on the company to ensure they give value.

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

In the movie The Graduate starring Dustin Hoffman and Anne Bancroft has memorial lines and scenes which are often repeated. One of the lines is Mrs. Robinson are you trying to seduce me? the another line is Mr. Bancroft tells the Dustin Hoffman – the future is plastics. The plastics comes from the chemical industry world and in many ways the line was true. To use less weight, plastics were invented and are used in many manufacturing industries, that is the good part. The non so good part is for chemical companies what did they do with the wastes from plastics and other chemicals used in our present lives?

A book called Paradise Falls by Keith O’Brien published by Pantheon Books, New York, 2022 shows chemical companies often dumped the wastes into the waters around the planet or put the wastes in drums and buried them. Out of sight out of mind was an accepted solution. The problem was not right away but over the months and years, the drums or containers broke down and then whatever was in the barrel flowed the same way water flows underground. The difference when water flows underground it may cause flooding, but that be mopped up or protective measures around homes to prevent the flooding. When chemicals flow the way water does – the chemicals will eventually get into the body and caused multiple reactions and 99% plus are not good. Children and pregnant mother’s are affected first, then anyone with lower immune systems and eventually men and older women. The chemicals take time to develop in the body and often are diagnosis as something else because we all think we are living reasonably normal lives. Then within a few years multiple people within the area are having medical problems higher than normal or clusters and people investigate to the why?

In the book, the area that is focused on is Love Canal in Niagara Falls, New York. If you ever been, the town was a working-class town because the companies that made products from chemicals and the biggest city nearby is Buffalo. To make chemicals relatively low cost energy or hydro electric power is needed, Niagara Falls has the falls for electricity. A working-class town tends to mean that people have income but not high savings which limits their ability to move or they accepted the employers not being environmentally correct and go about their regular working lives.

In this case, the company buried drums of chemicals in a partially build canal system, which years later was filled with dirt to stabilize the land, eventually a school and a neighborhood were developed on top of it. From the surface the area looked like a good neighborhood to raise a family. Under the surface, the chemicals leaked from the drums and flowed underground similar to water patterns. If your home was above the canal or one of the old stream beds, your health was going to be worse than a neighbor a few houses over.

In the book, most of the data was being organized and collected by women, the decision makers were men. In all worlds, there is a bias, women have to better data than men, otherwise men will ask for more studies done by what they feel are organizations will a long history of studying the problems. The issue in Niagara Falls what should governments do and who should pay? The easy answer and the reality of the answer was to move everyone to other neighborhoods and ensure no one uses the land, till it is cleaned up. The harder answer is time frames, the book starts in the mid 1970’s people are living in single family dwellings and children going to school, by 1983 the school was taken down and people had left both where the canal was and where the old streams flowed. Getting to the end was a very long process to both recognize the issue and to have decision makers allocate enough money to find solutions, both easy and hard. In Washington, the rise of Superfund Act to clean up environmental dumps rose from President Carter’s administration in 1980, because in many places in the US chemicals were buried, just most did not become subdivisions.

Linking to dividend paying stocks, some chemical companies are some of the long-term payers of dividends and without their products the world would be different. However, with their products, what happens to the waste is a good thing to know. Sometimes new industries can be formed to find solutions to the wastes, but usually they are not as profitable as the maker of the chemical because of the barrier to entry cost. As a dividend buyer your big interest is the profitability of the company and hope with all the engineering talent in the company solutions are possible.

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

In investing there is always the hype of future great things or the next great thing to bring in easy dollars. As today is Valentine’s Day, there is also much hype in romance, but it is hoped you find and keep the long-term lasting relationship variety. One of the reasons there is hype is society changes and as society changes some of the things that were not allowed, or honest decent people did not do in public are now okay to do. It does make society better or worse, just changed and with change becomes a potential opportunity to cash in. In the last few years, we have seen changes in marijuana or cannabis laws and the startup of new companies. The same thing happened with betting on the internet. Previously, you needed to go to Las Vegas or have a bookie at a bar or something of that nature, now governments are encouraging gaming for potential tax revenues.

In an article by David Parkinson writing an opinion in the Globe and Mail, Pennsylvania based Penn Entertainment Inc has long run casinos and horseracing tracks, but during COVID when people had extra time and money to gamble, pushed into online sports betting as governments legalized the activity. Penn Entertainment bought Score Media and Gaming and Barstool Sports.

The shares have fallen 82% from their highs which means a hedge fund is on the prowl to increase share prices. In this case, in a securities filing HG Vora Capital which owns 9.6% of the shares wants management to do something to increase the share price. One suggestion is to change some of the Board of Directors of Penn with people affiliated with HG Vora Capital.

Initially Penn Entertainment bought minority stakes in Score Media and Barstool Sports to test the waters, then they bought the rest of the companies, but they do not show good results.

Penn paid $163 million for 38% of Barstool, later it paid $550 for the remaining part. In August 2022, Penn decided to partner with ESPN and sold the company back to the original owner for $1 plus 50% of any proceeds from a future sale of Barstool. The agreement with ESPN is $1.5 billion for marketing and media rights.

For theScore, Penn paid $2 billion for the app, half in cash and half in shares. The intention was to expand theScore across the US, but it was decided to shut down the US business to go with Barstool Sportsbook which no longer exists.

For theScore, the app had 3.6 million users when Penn Entertainment bought it. Penn had thought that as an owner of casinos some of the people would use their products but that did not happen and 73% of users were already in the ecosystem – checking scores and reading sports news.

Across the US, Barstool had a 1.9% share as of last spring. Essentially the company has spent $4 billion on sports betting with little to show for it. David Katz, an analyst at Jefferies wonders How are you going to show a return on that?

The competition is not doing much better, Wynn Resorts has pulled out of 8 states because of the money to acquire and retain customers or outsized marketing spend. (some of the money is seen if you go to or watch professional sports on TV, you will notice the advertising). Two other rivals FanDuel and DraftKings have lost a lot of money, DraftKings has lost $4.8 billion since 2020. The good news for them is their names has brand recognition and they are losing less money.

Linking to dividend paying companies, there is money to be lost on hype and a little to be gained. For the most part if something is hyped, watch it from a distance because what goes up will come down and then when companies actually make money, they may go up again. If you spend on the hype, ensure you have a very good idea when you to sell or it will be a long-term holding to try to get you money back. The good news with dividend paying stocks is you are expecting it to be a long-term holding so having patience is a wonderful thing.

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

S

In financial planning myth there is a level of money which if people had they would not go to work and many people strive towards the number. What number in the bank and investments would you need to retire? There is no perfect number, but it generally depends on the cost of the lifestyle you presently enjoy. In reality people live on the lowest levels of government assistance as their prime income. Often in the financial papers you will see formerly very well-paid people – moving to another position. What is their motivation? for at the income they received they should be able to retire.

In an article by Michael M Grynbaum of the New York Times News Service, Jeff Zucker the former CNN president and one time executive producer of the Today Show is investing in Media Res through RedBird IMI. Mr. Zucker founded a private equity firm called RedBird Capital. The company teamed up with Sheikh Mansour bin Zayed aal Nahyan, an Emirati royal to form RedBird IMI. The company Media Res was founded by Michael Ellenberg who is also the CEO.

RedBird IMI has invested in a sports news platform, a documentary studio, a children’s entertainment company and is making a bid to buy The Daily Telegraph in London, UK.

Mr. Ellenberg said Mr. Zucker’s investment will allow him to hire more people and expand the studio’s domestic and international production slate. Media Res biggest TV show is the Morning Show on Apple TV.

Linking to dividend paying stocks, people buy dividend paying stocks for all types of reasons and having regular income is the key. Ideally in your life you will have options – whether to work, have projects around the home, take longer time off, and enjoy life with the income you receive. Although in every area of the world there are stunning things to see for free thanks to the beauty of nature, it is always nice to have extra money in the account.

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

In the world of CO2 emissions, the easiest way to drop emissions was for an economy to go into recession. If you compare the emissions during the yeas of COVID, emissions were down but it was a heavy price to pay with many people needing government assistance to live their lives. For most people going through a recession is not a good way to cut emissions and ideally should be avoided and there should be a better alternative.

In article by Geir Moulson of the Associated Press, the largest economy in Europe is Germany and carbon-dioxide emissions fell to its lowest levels in 7 decades. Germany aims to go closer to 0 by 2045, but it has a long way to go.

The Agora Energiewende think tank showed Germany emitted 673 million tonnes of CO2 last year a decline of 73 million tonnes. The figure was 40% lower than one in 1990.

Renewables of solar and wind accounted for half of the country’s energy production up to 56% of energy production up from 47.2% in 2022. Electricity made from coal dropped to 8.9% from 12.8%. Nuclear power was 1.5% down from 6.7% as 3 nuclear plants were shut down.

Germany is home to many energy intensive companies including chemical and metal industries. Germany’s economy also has done well because of high energy prices, global economic weaknesses and interest rate hikes to fight inflation.

Agora calculated that only 15% of last year’s emissions savings constitute permanent emissions reduction resulting from additional renewable energy capacity, efficiency gains and the switch to fuels that produce less CO2 or other climate friendly alternatives.

Economy and Climate Minister Robert Habeck, a member of the environmental Green Party who is also Vice Chairman, said Germany has laid the foundation for future growth in renewable energy by moving to expand solar and wind generation. We are making visible progress on the road to climate neutral electricity supply.

Linking to dividend paying stocks, governments can and will make policy changes for what they believe is best for their countries, often times there are delays between the actual and ideals the governments want to achieve. It is possible to agree with the ideal, but the importance is how the government wants to get there and what incentives they allow for people and companies to adjust. It is never a straightforward line, but many dividend paying companies have adjusted in the past and as an investor you need to believe they can adjust in the future.

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