Every year analysts offer the outlook for the economy in general and it is updated every day and every quarter to does the company meet expectations. It is a challenge to do consistently because of change in the world, there is always something to react to. If expectations are not met then the stock price will fall and people will decide if the management is doing the right thing or not. The stock market being large means if the stock price falls, various hedge funds will become large buyers to enhance values. If the company meets and exceeds expectations, more individuals will be buyers because they see hope for the future.

In an article by Caroline Valetkevitch of Reuters, the big expectation for 2024 is the federal reserve will cut interest rates as inflation has slowed. However analysts worry about slowing economic growth.

S&P 500 earnings are expected to rise 11.1% after a slow rise of 3.1% in 2023. However analysts believe earnings have to rise because according to LSEG Datastream data the market at the end of December was trading at 19.8 times forward 12-month earnings versus the normal 15.6 times.

The markets ended December with a rally and within striking distance of its all-time high finish. The S&P 500 rose 24.2% for the year. (if you owned energy and big tech, you did well).

Sameer Samana, senior global strategist at Wells Fargo Investment Institute noted the market trading at its current levels demands earnings to show strong growth in 2024.

Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas noted besides the consumer seems to be healthy, inflation getting better, employment is still strong, interest rates going down, many companies have streamlined their businesses and margins are decent. (in other words companies cut costs and kept good margins).

Linking to dividend paying stocks, in general when interest rates fall, companies which pay dividends are more competitive with other companies for the dividend either stays the same or ideally grows. In addition, possible capital gains are expected because they are able to keep their margins through the cycles to earn profits to pay dividends. It should be a good year.

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

We are all aware the economy is changing or slowly changing from an oil-based economy to one that runs more on renewables. In some places the desire to change is ahead of the reality, and that includes the country of United Kingdom or Britain.

In an article by Eshe Nelson of the New York Times News Service, a startup company has done research and wants to expand by manufacturing their product, a classic hopeful success story. The company called Paragraf, makes chips using graphene and can check for defects in electric vehicle batteries to prevent fires and other uses. The company identified a need and decided to ramp up production from thousands to millions. That is the good news.

The bad news for the company to uses its existing facilities, the cost to bring electricity to the site was going to be $1.5 million. Why, because Britain’s electrical grid is behind the times as a result of years of underinvestment.

The politics said they will need relatively low-cost electricity to move off the use of oil, as a general statement people can buy into it. Companies investing in solar power and wind farms have done a good job, but the reality is the low-cost electricity has to brought to urban areas and that is the problem. The planning and grid up grades needed are block by a system which gives considerable power to local planning authorities and who wants to look at a tower system in the country?

In Britain they have the National Infrastructure Commission which advises the government, offered greater incentives to local planning authorities which can approve the infrastructure upgrades. Will it work? no one knows, but it is a start.

Jeremy Hunt, the chancellor of the Exchequer (Budget Chief) said planning and grid reforms are 2 of the most critical changes in the budget to revive growth.

The opposition Labour Party’s Leader, Keir Starmer, the party will bulldoze through Britain’s restrictive planning system to get the grid moving. (note most of Labour support is in the urban areas).

The company, Paragraf, decided rather than wait for an upgrade by local council paid the $1.5 million to a grid operator to upgrade the building. The company based in Cambridge, England wanted to stay and grow in England as opposed to moving to the US with the help of the CHIPS Act.

Linking to dividend paying stocks, in all countries around the world there usually is a difference between what the politicians talk about and the reality of the situation, fortunately profitable companies tend to have the choice of waiting for the government or moving without them. All companies work with governments of all stripes and sizes, but sometimes all they want to do is carry on with their work. For your investments, what is the difference between government speak and reality on the business world?

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

In every sector there are lists and some of the lists people are more interested than others. Once you have accumulated savings, hopefully it generates income, dividends and capital gains and you can decide what you want to do with the money. Some you will reinvest, some you may live off and some you may give to a charity or charities of your choice. Recently one of those lists was in the press.

in an article by Maria Di Mento of the Associated Press, one of the lists connected to giving away money is the Chronicle of Philanthropy, it totaled more than $3.5 billion given away.

Topping the list is Warren Buffett, he moved 1.5 million shares of Berkshire Hathaway Class B valued at $541.5 million to the Susan Thompson Buffett Foundation. The foundation which includes 2 of his children and a son-in-law on the Board. The foundation provides scholarships in Nebraska and backs women’s reproductive health.

James Simon besides being a mathematician founded Renaissance Technologies hedge fund which has done very well every year. He and his wife through their foundation gave $500 million to the State University of New York at Stony Brook to boost scholarships, professorships, research and clinical care. Mr. Simons taught at the University and Mrs. Simon has earned 2 degrees.

Ross Brown, the founder of Cryogenic Industries pledged $400 million to the California Institute of Technology. The money will launch the Brown Institute for Basic Sciences.

Nike co-founder Phil Knight and his wife, Penny, pledged $400 million to the 1803 Fund. The fund will help redevelop the area of Albina which is in the Portland, Oregan area. The area was previously a thriving black neighborhood and has fallen in economic viability. The money is coming from the Knight Foundation.

Dan Gilbert and his wife, Jennifer, gave $375 million through their Gilbert Foundation to Henry Ford Health to build 2 medical centers. Dan Gilbert founded Rocket Mortgage and is Chairman of the Cleveland Cavaliers basketball team. One of the centers will focus on rehabilitation particularly those with little or no health insurance coverage. The other center will focus on research including neurofibromatosis which inflected one of their children.

Kenneth Griffin of hedge fund company Citadel LLC, gave $300 million to Harvard’s Faculty of Arts and Sciences for financial aid to undergraduates.

Mr. Griffin partnered with David Geffen to give $400 million to Sloan Kettering Cancer Center.

The Chronicle’s annual rankings are based on publicly announced gifts. In March, the list will include total gifts in 2023.

Linking to dividend paying stocks, when you have surplus income and can donate it you can donate whichever way you wish. It is noted most of the money donated is because the donor has a personal reason to help. All of us are interesting people, but it is often some organization has helped somebody we know over the years, for example when my father was in a long-term care in a hospital, a group gave PJs to the residents as a one-time gesture. My parents appreciated the gesture and a few years later when my surplus was able to cover it, I teamed up with a local organization to continue the giving. The local organization gets the publicity. There are many great causes to give, ideally the investments you make allow you to consider giving.

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

If you think about the country with the greatest number of people, often times you would think about China, but a new country has arisen – India. The country of India is complex, it is also one of the fastest growing economies in the world, with growth rates expected to increase 6%.

In an article by Alex Travelli of the New York Times News Service, India’s economy is booming, the stock markets is one of the best performing exchanges and similar to China, its infrastructure is changing fast. There is a hitch, investments by the private sector or companies is stagnant.

The goal of Prime Minister Modi is to catch up to China by 2047 and there is a shift in manufacturing from China to India. In addition, if you listen to politicians around the globe, they want to be dependent on China which allows India to step into a big gap.

The World Bank has applauded India’s commitment to infrastructure spending, but it is important after the port is made new, a new industrial park lures companies into building plants and hiring workers.

The stock market In Mumbai are worth nearly $4 trillion up from $3 trillion in 2022.

Foreign investment which averaged $40 billion has shrunk to $13 billion in the past year. One of the reasons is businesses are waiting and seeing what the government will do. Prime Minister Modi’s government is interventionist and sometimes he is correct and sometimes not so good. For example in August, the government announced sudden restrictions on laptop computers. That sent businesses which depend on them in a tailspin and the measure was withdrawn.

If the business is close to the Prime Minister, then regulatory measures seem to help them more often and the 2 biggest examples are the Reliance Industries and the Adani Group.

A factor in holding back the Indian economy is wealth distribution. In a population of 1.4 billion, 20 million are doing very well and consume products, buy homes and autos. Most of the rest of the sector is struggling with food and fuel prices or the lack of robust middle-income group.

The biggest wildcard is whether India can grab a significant share of global business from China. For example Apple is producing iPhone has a 5% market share. Apple builds about 7% of the world’s iPhone’s in India but want to increase that to 25% by 2025.

Linking to dividend paying stocks, companies and countries around the world have tried to gain growth over the expectations for generations. Sometimes it succeeds and sometimes it does not and only government spending is left. It is important as an investor to ensure the fundamentals are in your favor.

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

If you want to buy a new or used vehicle, you will likely be looking at GM, Ford, Chrysler, Tesla, Toyota and Honda, they dominate the market and most of us have one or more of their vehicles. However, the second biggest world’s economy is China and all those automakers are in China, but a different name leads the sales number.

In an article by Claire Fu and Rich Barbieri of the New York Times News Service. Chinese corporate giant BYD sold 3 million battery-powered cars. The total was made up of 1.6 million fully electric and another 1.4 million hybrids. BYD made $1.5 billion in the first half of last year.

According to the Chinese Association of Automobile Manufacturers, Chinese automakers sold 9.4 million electric vehicles and hybrids up from 6.9 million in 2022. In 2024, the expectation is 11.5 million.

China rules the supply chain for battery powered cars – from the mining and processing of cobalt and other materials used in batteries, to the deployment of robots that make the vehicles. In total 1.5 million people are employed in the manufacturing process.

One of the reasons China is in the lead for adoption of electric vehicles is government support.

Tesla has a large presence in China and is expected to sell 1.8 million cars worldwide. During the year. Tesla lost some market share to rivals as they introduced new electric vehicles.

BYD is large in the US, but rarely sells in the US because of high protection tariffs. To sell more cars, they are targeting Europe by building a factory in Hungary.

BMW is investing $1.4 billion in a battery plant in Shenyang.

VW which counts China as its biggest sales market, is moving more of its supply chain and manufacturing to China.

Linking to dividend paying stocks, most of us buy branded items and we think they are better. Sometimes the answer is not that simple. it could be high tariffs help direct us to lower tariff items. Government policies can help and hurt companies you invest in, do you know what the tariffs are for the companies you invest in?

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

If you had the job as a central banker to manage your country’s currency, you would love to have moderate markets. The economy has growth in it and while there are small fluctuations, the world sees your economy as good. However, the world and countries go in cycles and sometimes there are downturns, what should the central bankers do?

In an article from Reuters, it used to easy to be a central banker in China, growth was a given and the perception was China’s economy was the 2nd largest in the world and could offer an alternative to the world’s largest the US. Then COVID happened which included shutdowns, governments around the world wanted changes to manufacturing basis, the economy slowed and housing prices did not rise and began to fall. The prices of housing continue to fall and while the government has improved infrastructure greatly, most of it does not bring in revenues. What can Central Bank do?

Central Bankers only want the currency to float to markets when there is growth, when there is limited growth or no growth, the first idea is to use reserves to shore up the currency. In 2015, the bankers used that strategy to spend $1 trillion in reserves. In 2023, a different strategy was used. The central bank or People’s Bank of China (PBOC) defended the currency by signaling to markets what kind of selling it would and would not tolerate.

As the currency for the world’s 2nd largest economy and biggest exporter, the yuan’s value determines the price of goods around the world and trillions of dollars in capital flows. it also serves as a barometer of China’s challenges.

10 traders interviewed by Reuters said key warnings first emerged in June when the PBOC daily yuan guidance that determines the trading range, known as the midpoint, started to diverge from market expectations. In theory, the midpoint is based on contributions from 14 banks and referenced to the previous day’s trade and overnight moves, it should be easy for markets to predict the future.

In August, what traders saw the PBOC was signaling that it did not want the currency to go where the markets were pushing it. The PBOC encouraged state banks to be buyers of the yuan. This has worked and volatility has been contained.

The China FX Market Self-Regulatory Framework which is overseen by the PBOC told major state-owned banks to cut the dollar deposit rates, which would encourage deposit holders to switch from dollars to high deposit rates in the yuan. In addition, all state banks have customers which export and often times there is a need for dollars to pay the bills. In the past, the surveys had been done monthly, recently the needs of the large dollar exporter is monitored weekly.

For now the price of the yuan is stabilized, but the largest exporters pay attention to dollar payments.

Linking to dividend paying stocks, companies which have operations in multi countries have the benefit of diversification, but they also have currency risks. Most of the time, it is a low risk and is easily managed. Once in while currencies are a risk, do you know what the risk is for your investments?

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

There is a sports theme Tom Cruise movie with Cuba Gooding, and the Tom Cruise character is trying to secure the Cuba Gooding’s character representation as a sports agent. Cuba says say Show Me the Money, and Tom Cruise says it. Cuba says louder and eventually Tom shouts it in the office. Show me the money and people will follow the path.

Every year highly capable people who have served in the armed forces retire and the retire with a number of skill sets. The military has an age limit to retire which means people still want to do something. In the past, if you examined the Vice Presidents at a company which supplies services and goods to the military, the resume of the Vice Presidents often included past military service. This was the accepted route and many followed it. but lately there was been a new path to follow.

In an article by Eric Lipton of New York Times News Service, the new path to follow is venture capital firms. The pay could be twice as much, if the pentagon buys the equipment being offered the company could go public and you would have low-cost stock or carried interest and the job includes mingling with the decision makers on a regular basis.

The difference is similar to most industries in the world, the military suppliers are changing, yes there is still the large equipment makers such as Lockheed Martin and Boeing, but drones are playing a larger role in wars around the globe. Drones are dependent on software or technology or often smaller companies. With drones there are both offensive and defensive strategies and both are needed.

In the past 4 years, at least $125 billion of venture capital has flooded into startups that build defence technology, according to data assembled for the Times by PitchBook which tracks these investments. The prior 4 years $43 billion flowed into startups with defence technology.

One of the many forms the new lobbyists were found was the Annual Reagan National Defence Forum at the Ronald Regan Presidential Library. Similar to every other type of convention, people were mingling and talking about potential deals to be made.

The difference between moving into venture capital and moving into large military companies is speed for the deal to close. The Defence Department typically moves slowly. A venture capitalist places money in a startup expecting to see revenues moving to $50 million or $100 million a year. It does not happen often. The venture capitalists are talking to members of Congress, members of the military to help move along solutions to problems facing the military. Sometimes it works.

Linking to dividend paying stocks, in every industry there are attempts to bring technology to disrupt the processes or to make it better, in the eyes of those promoting technology. Large organizations take their time to pick which one works best for them. New is wonderful, but does it create higher margins? Whatever industry you invest in, they all have a similar structure, they all have conferences which the decision makers go to and conferences which information is shared. It is not surprising people move back and forth between government and industry, it is a long accepted practice and good for many careers.

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

In the world of individual investing, the goal is to achieve an income, live off less than you make, accumulate savings, invest it and then through the magic of compound interest it accumulates over time to achieve another stream of income. The good news is the process happens on a regular basis, what there tends to be is once you have accumulated an amount how do you protect the number one rule – try not to lose money.

In an article by Claire Fu and Daisuke Wakabayashi of The New York Times News Service, one of China’s largest investment firms, Citic Trust, had a very clear message to investors, when it was aiming to raise $1.7 billion to fund property development in 2020; there is no safer Chinese investment than real estate.

Citic Trust is the investment arm of the state-owned financial conglomerate Citic, called housing China’s economic ballast and an indispensable value investment. Citic Trust was partnering with Sunac China Holdings, a large developer.

3 years later, investors have recouped only a small fraction of their investments. 3 out of the 4 fund’s construction projects are on hold or delayed because of financing problems or poor sales or both. Sunac has defaulted and is trying to restructure its debts.

The back story is over 25% of China’s economy was based on property investments or the rising housing price. What started as a housing slump has escalated through a full-blown crisis. The budgets of local governments, which depended on revenue from higher real estate prices have been destabilized. All the ties that once ejected growth are now deepening the downturn as problems spread across the economy.

3 years ago no one would have dreamed of the degree of defaulting, now more than 50 companies have defaulted on their debts and are in the process of restructuring.

Trust firms such as Citic are arms of China’s so called shadow banking system that sells investments to companies and wealthy individuals. They face few regulations and manage over $3 trillion in assets.

Property developers relied on trust firms to extend loans and invest in businesses that regulators considered too risky for traditional banks. The banks turned the loans into investment projects that were sold to Chinese companies and wealthy individuals promising lucrative returns.

The market was booming when Citic Trust established the Junkun Equity Fund and the idea was Sunac would develop the projects and then sell then. Investors would get their money back as well as a portion of the profit after 3 years. The expected return was double digits.

One investor in the article, invested her life savings of $420,000, because Citic is a big brand with a good reputation. The manager all but assured her she would receive her principal back plus interest of a minimum 7.5%. Since then, she has received $80,000 in payouts, the rest is unknown. Citic says the entire market is now good now.

Linking to dividend paying stocks, once you have accumulated money, you will look at a variety of options. There will be companies offering you higher returns than normal and you will be tempted. In the case above, because it was a big brand, likely the lady received more than if it was not a big brand, but in reality, she has lost money or the money will be tied up for years. There are and will be multiple offerings once an investor has accumulating money, learning to say no is a key and not doing something often saves you money. One of the reasons to invest in dividend paying companies that over the years they have raised their dividends through various economic cycles, the stock price goes up and down but the dividend remains.

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

There will always be debate about global warming, but on one issue there is less rain than normal in many parts of the world. The world is drier than normal, what caused it, but we can see the results around the world. While individually we may like the drier weather, the reality is for plants and the food supply around the world, there is a limited time for the plant to germinate and grow and when the weather patterns change, the plant is stressed and crop yields fall.

If you are similar to most people living in the urban areas, you are a few generations from the farm. A generation or two ago, some of your relatives likely lived and worked in the rural area on a farm which means we all have a tie to farming. If a farm is large enough, it grows a commodity-based crop which prices move up and down. If one crop is more popular, farmers switch to another to bring in more revenues. With farming there is a lot of waiting and seeing about the weather.

In an article by Naveen Thukral of Reuters, if you examine the world agriculture picture, in general global wheat, corn and soybeans prices are likely to fall after several years of gains.

According to Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Syndey, Australia, Brazil is likely to produce less corn, China is buying larger volumes of wheat and corn on the international markets. The dryness which brought large parts of Asia in 2023 is forecast to remain in 2024 putting at risk supplies of rice, wheat, palm oil.

In India, the dry weather cut production and India’s government restricted export of some rice varieties. Lack of supply, increased prices 40-40%.

India’s wheat crop is expected to shrink; however India is the world’s 2nd largest wheat consumer of wheat and domestic inventories have shrunk. It is expected India will need to buy imports of wheat.

Australia has experienced dry weather which ended a 3-year dream run of record harvest of wheat.

On the bright side, production is expected to rise in both Brazil and Argentina with abundant rail fall over the farming areas. In Argentina. the Pampas region good rains in October and 95% of corn and 75% of soybeans were in excellent conditions.

Linking to dividend paying stocks, everyday we wake up and at some point will need to eat. Most of eat wheat, corn, rice, soybeans indirectly through the foods we consume. If the weather is normal and rains fall when they should and the crops grow, then life while having its up and down is generally good. In investing, if you receive a moderate return, understanding some years will be better than others, your risk reward equation will be in balance and that is a good thing. We may not the reason for the weather being drier than normal, but you can see it how the food manufacturers try to find alternatives to maintain margins.

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