If you think back to the invention of the telephone, the Bell system evolved, and AT&T became the monopoly for Americans using the phone. That system was changed in 1984 when the government of the day broke up the company to what was known as baby bells and over the past number of years the phone giants which we have today exist. As technology evolved many people moved from landlines to cell phones and today that is the dominate way of using the phone. All companies compete for business, but sometimes have a long record of being in business counts for customers.

In an article by Michelle Chapman of the Associated Press, AT&T reported that in April data of nearly all the customers of AT&T cellphone service was downloaded from a 3rd party platform in a security breach. The data mostly involved data from 2022. AT&T is a large company which means more than 109 million customers were affected. The timeframe affected is May 1, 2022 and October 31, 2022 of more calls and texts. The data was held in the cloud by Snowflake Inc.

Snowflake and AT&T have been working with the FBI and Department of Justice. The DOJ noted the breach met the security standard for a delayed filing aby AT&T with the US Securities and Exchange Commission. The filing made the report public. The US Federal Communications Commission which regulates the phone industry has an ongoing investigation.

Linking to dividend paying stocks, while it is important in this case AT&T is working with all the agencies and boards of the government, the question for all the customers is what is AT&T doing for them? In the past we have seen companies offer free monitoring of your credit report because generally people that steal what money from the individual or company. We will see what happens, but what would your company do if there was a breach in security?

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

When prices increase more than normal, all politicians talk about the disastrous effects of inflation and on an individual basis it can be. If you work for someone else, you want to increase your income at least what inflation is. However, what is good for the individual is not great for the economy because if the majority do it, inflation continues to rise. The government’s role is to try to find methods to decrease inflation and what is good for the majority is good for the individual.

In an article by Brendan O’Boyle of Reuters, one country which has been wrestling with inflation is Argentina. The country elected President Javier Milel partly on the basis on fighting inflation to the mat and it appears he is on his way. President Milel made a number of cuts to government and government programs which did not help his popularity but inflation has fallen from 25% in December to presently 4.2% in June. For the economy in general that is a very good thing.

In countries such as Argentina, they have their own currency the peso, but in reality the American dollar is the still the currency of choice or comparison. The government is always concerned about currency rates between the two. The Economy Minister Luis Caputo announced a strategy to continue to fight inflation.

Argentina’s central bank started to sell US dollars in the country’s parallel foreign exchange market in an effort to fight inflation and freeze the country’s money supply. The bank issues pesos to buy US dollars on the formal exchange market, then the bank will selling an equivalent amount on the parallel CCL exchange market. The Economy Minister believes this process will be a knockout to inflation.

In the middle of July, the official exchange rate traded at pesos per dollar was 919.5, the so called CCL rate was 1.416.2 which the widely used black market was 1.500.

Linking to dividend paying stocks, all governments do not like inflation because other markets develop and become normal as people deal with inflation. In all industries there are always alternatives but most of the time the alternatives are the normal, however people quickly learn and use them. For your investments do you know about the alternative markets? what keeps your senior executives from getting a good sleep?

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

When a CEO is appointed, for some companies due to market share or a seemingly monopoly it is often considered the person has won the lottery because they will be well compensated and for the most part the company can run by itself. In a normal decade the CEO will be changed, and little has happened. This could be very good because the company remained profitable and paid dividends. Sometimes the opposite is the case, the CEO makes decisions which dramatically affects the company for the better.

In an article by Karen Weise and Cde Metz of the New York Times News Service, one of these cases is Satya Nadella of Microsoft. In the past 2 years, Microsoft has spent billions on AI and the stock is up 70% and the company is worth more than $3.3 trillion.

Mr. Nadella sees the AI boom as an all-in moment for his company and the rest of the tech industry. Mr. Nadella aims to ensure Microsoft which was slow to the dot-com boom (even though they used a Rolling Stone’s song in one of their advertisements) and missed the smartphones (Apple and Android dominate), Microsoft wants to dominate this new technology using AI.

Mr. Nadella has made billion-dollar acquisitions before including $69 billion to acquire video game publisher Activision Blizzard to add to Xbox. (people spend more money on gaming than they do to watch movies or entertainment).

Mr. Nadella pushed Microsoft to embrace cloud computing and open-source software that Microsoft that customers could freely adapt. Every company has a tradition of either doing it themselves or with the help of others. Microsoft was a company that want most of the work done in house. Open source means any software developer can add on ideas. That decision helped Microsoft become the number 2 market share behind Amazon or AWS in cloud computing.

In 2018, Mr. Nadella made a final decision after a 20 minutes meeting with other senior leaders at an annual executive retreat at the Suncadia Resort in the Cascade Mountains to buy GitHub. After spending years debating whether to link with GitHub, a decision was made to go forward and within weeks, Microsoft bought GitHub for $7.5 billion.

To make Microsoft’s cloud more sophisticated, Mr. Nadella made a $1 billion investment in OpenAI. The investment allowed for rights to OpenAI’s products and the innovative cloud customers. The main reason for the investment was Mr. Nadella believed OpenAI was doing something fundamentally different and better than Microsoft. (doing your homework never stops). After acquiring the rights, Microsoft went into the metaverse products but they did not sell well. The next product was GitHub Copilot, a tool for software developers to automate code writing. It was very well received and Mr. Nadella was all in for AI products.

Linking to dividend paying stocks, sometimes who is the CEO is extremely important for they can change the company for the better in the eyes of shareholders. Companies spend a great deal of time and effort, particularly at the Board level of who will lead the company. At the Board level there is a committee to examine the senior management and their performances and decide on their futures. You will often hear the President talk about the quality of the people and the bench strength. For your investments, do you have confidence in the next level of senior management? Is there someone who you expect to make changes to the company?

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

If you think back to the moving of the supply system from the US to China and other countries around the world, there were many reasons given. The people worked hard, but accepted lower pay rates. The supply system transportation had greatly improved, and it is always amazing to walk around stores such as Walmart, the items made in China, put in a container, placed on a ship, go across the seas to a port then either put on rail or a truck and eventually to go to a store at a very low price. How does the company make money? From a consumer point of view, it does not matter. One of the reasons why the system worked, was the low union rate in China and other countries. But every once in a while, unions actually exist in other countries.

In an article by Jin Yu Young and John Liu of the New York Times News Service, some workers at Samsung electronics went on 3 day strike. The Nationwide Samsung Electronics Union represents more than 31,000 workers or a quarter of the work force at Samsung Electronics.

Samsung is South Korea’s biggest private employer and has been one of the world’s largest maker of memory chips, which helps computers and other electronics equipment store information. The company is also a leading manufacturer of logic chips, which makes computers run. The number manufacturer is Taiwan Semiconductor Manufacturing Co.

For decades, Samsung was known for its aversion to organized labor and unions. Only in the past few years has Samsung allowed unions.

Linking to dividend paying stocks, most companies do not have unions for reasons. When they were founded the founder did not want unions and often when companies are small and medium sized everyone tends to know everyone one. As the companies expand, the linkages fall away and people want a larger share of the pie, assuming the company is profitable or the if the founders are living a lifestyle different than the workers. There are many reasons, however once a union is in place it is up to management to work with the union. For your investments how are labor relations?

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

If you happen to go for a drive this summer, you will still see many smaller towns with cinemas because after the movies were invented, they needed a place to be seen. All over America, cinemas were built and for generations they were part of the fabric of the community. People went to the movies, had dates, socialized before and after. Then came the internet and changes slowly happened and then fast internet came along and streaming and the whole industry changed.

In an article by Brooks Barnes of the New York Times News Service, one of the premier names of the movie industry recently changed hands. The Studio was founded in 1910 and the owner was consider a Hollywood mogul. For many years, the value of the company increased and the last time Paramount was sold it went for $10 billion in 1994 or about $22 billion in today’s dollars. The company was recently sold to Skydance for $8 billion. The owner of Skydance is David Ellison and Redbird Capital. Mr. Ellison is a movie producer and the son of Oracle founder Larry Ellison who invested $6 billion of the $8 billion. One can expect Paramount to be a client of Oracle.

The assets of Paramount include: Paramount Studios, TV company CBS, 2 streaming services including Paramount Plus, cable networks such as MTV, Nickelodeon, BET, and Comedy Central.

Mr. Ellison and Redbird Capital founder Gerry Cardinale believe they can turn Paramount around using technology, cost efficiencies and synergies. They believe the can use the assets, plus storytelling in movies to increase the value of the company. Paramount has a wonderful library of films and a long history of making films the public would pay to see.

Linking to dividend paying stocks, all great companies have wonderful assets and those assets are constantly leveraged to keep customers and increase the customer base. Just because a company has wonderful assets it does not mean they can be complacent. When you examine the companies you own, what assets do they have and why are they still valuable? and will increase in value?

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

The first storm of the season, Beryl went through the Caribbean hit Mexico and moved north to Houston and across North America. In Houston, 2 million people lost electricity which in a city known for humidity means no air conditioning for a few days. Companies had warnings and the good folks who restore electricity came from the surrounding areas to get Houston back using electricity. To be sure there were many people who suffer from the hurricane.

In an article by Desmond Tiro of the Associated Press, in another part of the world, the rains have been falling. All plants need water to grow but too much will kill the crop or dramatically reduce the yields. In Keyna the rains have been falling for weeks and small farmers crops are being destroyed.

The rains in Kenya have increased the levels of water behind dams, and led the government to order residents to evacuate flood prone areas and bulldoze the homes to those who do not want to leave.

The government of Kenya has estimated that flooding has destroyed crops on less than 1% of the land, however on much of the land of over 100,000 acres it was small farmers doing the work. The farms provide a livelihood to the families and some extra cash to buy things. The excess rains means greater reliance on the government, if it exists.

Similar to every other country in the world, parts of the country receive too much rain, other parts are not receiving enough and when there is too much rain, the water causes erosion and eventually flows to the oceans. If the soil has not used water conservation methods to allow the water to be absorbed by plants into the soil, the problem tends to get bigger.

Linking to dividend paying stocks, weather patterns change and are changing and governments are slow to react. Many years ago, soil conservation was practiced until the desire for greater efficiency using machines was the answer. The greater efficiency meant greater use of fertilizer to allow the plants to grow and it is seemingly a never-ending cycle. With the land, there is some sort of balance which needs to be done or it will get out of whack. Sometimes efficiencies are great things, sometimes they tend to be short term solutions.

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

There are always exceptions but a general rule is the more wealth you have the more conservative you tend to be in politics. That does not means as your wealth increases you automatically vote for the more right wing parties, it just means the center right parties tend to understand and address your issues more closely. You have accumulated some wealth or likely own property including stocks and bonds so have a vested interest to maintain and grow asset values. A political party that tends to happen, you tend to like.

In the UK, the Labour Party tends to represent those who work for someone else and want to accumulate assets but feel they need government help to do so. In a polarized elections, the Labour Party tends to say tax the wealthy (what is defined as wealthy tends to be lower than people in the tax bracket, who say they are just getting by). The Labour Party in the UK says some elements should be rights and if it is a right, the government should be doing something about it. If housing is a right, that means the government should be a developer for people. The party running against Labour tends to believe more in individual abilities to rise to the occasion.

In an article by Sinead Cruise and Huw Jones of Reuters, the Labour Party in the UK defeated the Conservative Party and business is okay with it. Part of the reason is the new Finance Minister is slated to be Rachel Reeves formerly an economist at the Bank of England and has backed policies that will help the financial community be protected or will do no harm in the city’s global competitiveness.

Before Brexit, the financial community in England was the number one financial services to both Europe and the global. After Brexit, firms have moved outside England and Amsterdam in Holland has over London to become Europe’s top share trading venue. This dominance by the Amsterdam Stock Exchange started in 2020.

A study by PwC for the City of London and TheCityUK published in May estimated the total tax contribution of the financial and related professional services was $192.5 billion or 12.3% of the total UK tax receipts.

It is pretty simple really, business wants certainty, said Naresh Aggarwal, associate policy and technical director of the Association of Corporate Treasurers.

Linking to dividend paying stocks, often politicians have a view at least during the elections which says about things in the past but does not always reflect reality. It is reasonably easy for opposition parties to pick on the high growth areas of the economy, at one time it was the financial services where incomes and living were above normal. There will always be some of that, but things tend to move in cycles and reality does not always reflect myth. When politicians get into power, they have to face reality and often they moderate and then business can deal with them. It is good when parties send signals to business that certainty will be the dominate feature.

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

In every town and city, there are economic development offices and the most important aspect is to examine the assets of the area and try to enhance them to provide greater opportunities for the community. Often times, there are a wonderful assets built in a different era, the company evolved and left the assets. In today’s world of greater jobs in services what could they become if money was available to do it. Sometimes we think that most of the opportunities are taken, but there are still many if you are willing to dream and have access to capital.

In an article by Eric Reguly of the Globe and Mail, a new Canadian aviation company, Centerline Airport Partners has bought a airport in northern Italy and has plans to invest in other underused airports around the world.

Centerline bought 51% of Parma International Airport which is halfway between Bologna and Milan in Italy’s wealthy industrial heartland. Pharm is home to Parmigiano-Reggiano Cheese (many people use it in pasta dishes).

Centerline agreed to pay $19 million over 3 years for its stake with the Emilia-Romagna regional government. It also plans to upgrade the airport by 500 feet to allow Boeing 757s to land. This would be along the plans to boost passenger traffic from 125,000 a year to 700,000 a year. In comparison Rome’s airport handled 4.5 million in May. The expectation of the plans is if you build it they will come. The other airlines will move flights from Bologna and Milan or use the airport as a catchment area and easily move people around Italy. Presently Ryan air has 2 or 3 flights a day.

Centerline was formed 2 years ago by Andrew O’Brian who was most recently the CEO of Reach Airports, a joint venture between Munich Airport International and Caryle Group and others. Centerline is raising $50 million to $100 million in its first financing round. Other airports the company is looking at are Aarhus Airport in Denmark and the Jacqueline Cochran Regional Airport in Southern California formerly Thermal Army Airfield which is in the LA area.

Linking to dividend paying stocks, in every industry people see potential assets to be expanded to grow to take move to the next level. The risk of course is the need of capital, and many upgrades for others to see their vision. This is the stuff of great entrepreneurial stories and losing money, because there is reason why no one upgraded in the past. Just because an airport is upgraded will the airlines move flights to it? how are connections to the other cities? Dreams and visions of underused assets are wonderful. It could work or not, but it seems the owners have institutional connections to private equity money and that helps. For a dividend investor, the story is a big risk because just because you build it, will they come? is not a great answer. It could be a wonderful story, and in a few years’ worth looking at, but sometimes there is great value in underused assets.

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

Governments around the world have agendas and over the course of years some countries will be in favor and some will not be. In the case of Russia, a couple years ago, Russia invaded Ukraine and the war is still going on, and the European Community and others including the US placed sanctions on Russia. Many businesses sold their operations to Russian companies, some with the expectation in a couple of years we will once again be partners. Russia has a population base to sell to and in many instances the country can be profitable. The war has continued and the sanctions have not stopped the Russian government actions. What should happen?

In an article by Valentina Za and John O’Donnell of Reuters, the Italian bank UniCredit has ongoing business in Russia and is challenging the terms set by the European Central Bank for the bank to cut its exposure to Russia. UniCredit is going to the EU’s General Court to get a ruling.

UniCredit runs a retail bank in Russia, said it was seeking clarity and certainty on the actions it needed to take. Similar to most courts, the application should take a few months before the ruling.

Italian Foreign Minister Antonio Tajani welcomed the complaint, saying he shared the need for clarity. The ECB must take into account the situation in which Italian companies operate in Russia in compliance with EU sanctions. Hasty decisions merely risk damaging Italian and EU companies.

After Austria’s Raiffeisen, UniCredit has the biggest exposure to Russia where it runs a top 15 bank among European lenders. UniCredit’s bank is profitable, and it has cut its exposure from 91% ownership to 65% with further reductions planned.

The difficulties in selling its shares are there is a lack of potential buyers and Moscow imposed their restrictions. An exit has to be signed off by President Putin and Russia’s Central Bank has to give approval. Another Italian bank Intesa Sanpaolo did receive the authorizations is still trying to finalize its exit.

Linking to dividend paying stocks, often these companies operate in many countries which is good for diversification of buyers. While each country maybe similar in the sale of goods and services, each country makes their own decisions which businesses have to adjust to. Ideally in the company’s biggest market, the strategic direction of the company and government tends to compatible and as long as they are, you have few worries.

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