Often times when there is a strike or disruption in a company’s normal course of operations, the financial press will outlay some details as a general public you may not know. This helps you enhance your knowledge of the industry and what to focus on if you decide you want to be an investor. An example this year is the UAW or United Auto Workers contract was up with the 3 largest American car manufacturers – GM, Ford and Stellantis or Chrysler. Vehicles still play an important part of the average working family and that makes it newsworthy. Ford and Stellantis have settled and GM is the last one to settle. In the meantime, the union increased its strikes at GM facilities.

In an article by Joseph White of Reuters, the UAW went on strike at GM’s Arlington, Texas factory which builds highly profitable Cadillac Escalades, Chevrolet Suburbans and other large SUVs.

The move to shut down one of GM’s most profitable plants will push the weekly cost of the union’s strike well above the $200 million a week rate GM executives outlined for investors.

GM’s 3rd quarter net income fell 7.3% to $3.06 billion while revenue rose 5.4% to $44.1 billion. The adjusted earnings per share was $2.28 which beat Wall Street expectations and up from $2.25 a year earlier. The buyback of shares helped the earnings per share number.

GM is reworking its EV strategy pulling back a strategy to challenge Tesla’s lead. The Chevrolet Bolt EV will be launched with a lower cost lithium-iron battery. The goal to build 400,000 EVs from 2022 to mid 2024 is cancelled because of lack of buyers. While the company agrees EVs are the solution in the future, it is lobbying Washinton to change the ambitious emissions and fuel economy aimed at pushing EVs to 2/3’s of the US vehicle market by 2032.

Linking to dividend paying stocks, all investors depend on the financial press, although most of the time the financial news in not on the front page. When the news is on the front page, everyone can see and talk about the event, but most do not know the details of the issue. Most of the time in the business side you will be given some details and then you can make some decisions. For example in the above article, the highly profitable Arlington Texas plant. The implication is if that strike goes on for a longer period of time and those SUVs are not sold, GM makes less money. In all likelihood, GM makes money it just makes less money. Ass investor you can wait till the share price falls, and when the strike is over, buy the shares to allow GM to meet the demand for its vehicles and profitability is restored. Patience is needed.

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

For every commodity, there are downsides to extracting the commodity from the earth. A little bit does not matter, but to earn profits a large amount must be done. If we are discussing minerals, earth has to be moved and sorted, fortunately there are huge machines which can do the job. The downside is when the mineral is no longer profitable to be mined, the site is never the same. If the commodity is grown in the earth, additional fertilizers are added to enhance the yield but there will be some runoff into the water collection. Just about everything we do there is some negative effect, sometimes we learn that they can be mitigated. For profitable companies, there is some lawsuit around the corner, some group not liking their operations, and sometimes governments impose sanctions on other governments.

In an article by Mark Trevelyan of Reuters, when Russia invaded Ukraine and still has not left, the western governments imposed sanctions on Russia’s oil and gas industry. At the time, Russian was supplying up to 40% of Europe’s needs. The western governments were hoping the sanctions would mean less revenues for the Russian Treasury and Russian would change their strategy in the war to finding a way to stop it. Russian has not done that, the sanctions remain and Russian had to find other markets for their oil and gas.

Gazprom will supply more gas to Hungary for the winter months and send an additional 600 million cubic meters this year according to TASS news agency quoting Alexei Miller the head of Gazprom.

Russian President Vladimir Putin for the first time in 2023 left Russia and went to China to help negotiate the deal.

Hungary is the only member of the European Union and NATO who has kept friendly ties with Russia.

Mr. Miller said in a TV interview the additional gas supplies to Hungary amounted to 1.3 billion cubic meters of gas.

Linking to dividend paying stocks, in life we all want to have alternatives and sometimes they are forced upon us. For a profitable company as an investor, you want it to have more than one revenue stream to ensure profits remain at a near constant level as the economic cycles go through the economy. Every once in a while stuff happens to people and companies, while one hopes the individuals will find an way to deal with it, the expectations are people in the company will deal with the stuff quicker and more efficiently, if that does not happen, perhaps you should look for alternative companies that deal with stuff better.

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

If you are a normal person, you are interested in real estate, some of it will be residential because you need to live somewhere; some of it will be big commercial buildings because they are big and newsworthy in your community. Real estate development is based on credit and one of the critics best movies, one that comes out every Christmas season is Its a Wonderful Life. The story is George’s works for a Savings and Loan Company and his brother misses a payment. Mr. Potter tries to foreclose. George does not have the money and sinks into despair and thinks the insurance money on his death would solve the problem. He tries to kill himself (but no insurance company would pay on it), is saved by an Angel and sees the good he has done so far in his life. The community rallies around George and the payment is made and the ending is happy. The story about not making a payment and trying to find money to make it is not an unusual story. In real estate, there are multiple stories, it is usually the very large ones make the news.

In an article by Scott Murdoch, Xie Yu and Clare Jim of Reuters, the second largest developer in China is Country Garden. Similar to the largest developer, the second largest company is having problems making payments on its debts including bonds. The difference is when payments are missed for bondholders, they can and do sue to be paid something on the dollar.

Two bondholders have emerged seeking discussions about a potential debt restructuring package with either Moelis or PJT as financial advisors. The group holds about $2 billion of the debt-laden Chinese property developer’s offshore bonds.

Rating agency Moody’s said they would downgrade Country Garden’s corporate family rating if things get worse. The senior unsecured debt is at the lowest end of the scale or C.

The one thing good about developers, particularly large ones is somewhere they have assets such as land to be developed in the future. County Garden’s Australian subsidiary is selling an undeveloped housing plot of land in Melbourne to Singapore’s Fraser Property for $250 million.

Country Garden has $11 billion of outstanding offshore bonds and could trigger one of China’s biggest corporate restructuring.

Country Garden has appointed Houlihan Lokey, China International Capital Corp and law firm Sidley Austin as advisors to examine its capital structure and liquidity position to formulate a solution.

According to Duration Finance. Country Garden’s bonds were selling between 4.39 or 5.33 cents on the dollar.

Linking to dividend paying stocks, access to credit and been able to repay bonds is a fundamental part of your homework to investing in a company. If the company can repay its loans, then the bonds holders will buy more bonds. In the event of bankruptcy, bondholders get paid first, equity is last. It is wonderful to look at big flashing developments, but ask do they bring in rents or revenue to pay back the debts? If yes, then you need to do very little with your investments.

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

Many years ago, the economic texts were simple supply and demand lines using guns or butter as an example. Do you want to produce from guns and less butter or less guns and more butter. Fortunately, since WW II, most people in developed countries have not really have to make that decision, but Russia is increasingly doing so.

In an article by Patrician Cohen of the New York Times News Service, nearly 1/3 of the country’s spending next year or $109 billion will go to the war with Ukraine or in Russian speak the special military operation. If Russia spend money on the war effort, spending for health care, education and infrastructure will go down.

19 months into the war, the Russian economy has proved to be more resilient than most Western governments assumed after imposing heavy sanctions on the Russian economy.

The Russian ruble is now 100 to the US dollar, and inflation is increasing for Russian citizens. The spike in government spending and borrowing has stressed an overheated economy. Interest rates are 13% and food basics are at higher price than a year ago.

Lower standards of living can be uncomfortable even for an authoritarian government, noted Charles Lichfield, deputy director of the Atlantic Council’s Geoeconomics Center.

Linking to dividend paying stocks, with every organization examining the budget will tell you what the priorities are for the organization. What the person says is important and what the budget actually finances can be different. There is an expectation with large profitable companies that what executives say is important is actually funded the way they say. As an investor part of your homework is to confirm this and if you agree, there is little you have to do.

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

One of the reasons to invest in large profitable companies is they either have a moat (barrier to entry) or a near monopoly which allows them to raise prices on a regular basis. The increase in prices translates to increased revenues and protection of the profit margin which benefits the shareholder. When a large company does a merger, often times a government agency will be examining it to ensure the competition still exists. In the mind of the executives there is always direct and indirect competition because the public does have choices.

In an article by Diane Bartz and David French of Reuters, Exxon the biggest oil company in the US announced a merger with Pioneer Natural Resources of $60 billion for an all stock deal. The President and founder of Pioneer Natural Resources would be working for Exxon. On the political scene, the White House including the President want lower gas prices for consumers to help keep inflation down. What will gas prices do? The reporters talked to 5 antitrust lawyers and they believe the deal will go through.

The Federal Trade Commission (FTC) is likely to face an uphill battle to challenge the acquisition. The reason the oil and gas companies argue that they do set the price of the commodity (in this case oil and gas) but the price is set by supply and demand forces in a vast global market.

Andre Barlow, an antitrust attorney with Doyle, Barlow and Mazard PLLC, said the deal with Exxon and Pioneer is related to production and exploration and will be easier to defend. Exxon was to increase its production in the Permian basin, not decrease.

The FTC has not challenged a major merger of oil and gas producers since BP $27 billion acquisition of Atlantic Richfield in 2000. The FTC agree to drop its objections after BP offered to divest oil production acreage in Alaska.

The Permian basin spans west Texas and eastern New Mexico, Pioneer has 9% of gross production, while Exxon is number 5 with 6%, according to RBC Capital Markets.

The FTC allowed Chevron to complete an acquisition of PDC Energy and now Chevron has 40% of the Denver-Julesburg basin.

David Kass, a finance professor at the University of Maryland and former FTC antitrust economist said regulators have to show they have conducted a thorough analysis of Exxon’s deal for Pioneer.

Linking to dividend paying stocks, when large companies do mergers and acquisitions they have to fact in both the economics of the deal and the political reality. In some governments, the administration encouraged or did not stop mergers, in other administrations there was going to be a review by the government. Large companies and the association play a role in financing of politicians, but that does not mean they automatically approve what the large companies want to do. In politics, people want to be re-elected and sometimes political considerations can vary. With any merger, the why does the company want to do it is the issue.

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

In the world of politics it is up to the politicians to make the agenda and to implement their agenda. The agenda will help some companies, it will be neutral for some and others will see as hurting their interests or ability to make money. After the agenda is set, it is up to the politicians and Secretary of Departments to sell the agenda to the people of the country. If more think it is the right approach, they will be reelected and have another agenda. If people do not like the agenda, it is time to change governments. In Washinton, President Biden has a less than positive approach to China. Maybe that is good, maybe not so good, but Biden has a policy.

In an article by Tripp Mickle, David McCabe and Ana Swanson of the New York Times News Service, a year after the Biden administration took its first major step toward restricting the sale of semi-conductors to China, it has begun drafting additional limits denying Beijing the technology critical to modern day weapons.

Since July, the big chip makers Nvidia, Intel and Qualcomm have pressed their case that cracking down on China would have unintended consequences. The lobbyists have talked to Secretary of State Blinken, Commerce Secretary Raimondo, done the rounds with think tanks in Washington, and urged leaders to reconsider additional chip controls.

One of the topics has been: at the moment, chips are dominated by American-designed; by isolating China, you will force them to come up with Chinese-designed chips.

Lawmakers are confused because Washington committed $50 billion to the industry through the Chips and Science Act. The money helps pay for more manufacturing chips in the US and the 3 companies have announced plans to build in Arizona, Ohio and New York.

China accounts for 1/3 of the global semi-conductor market and more than $50 billion in combined revenue for Nvidia, Intel and Qualcomm. The chip makers suggested that too many controls on China will mean less revenue for them and the need to cut costs – either people, research and development or the plants in swing states.

Linking to dividend paying stocks, most dividend paying companies like to have it both ways and there is a benefit to them either way. The companies are large enough to dangle carrots in front of the politicians and allow them to say whatever they want but not do whatever they want to. With legislation there is always the unintended consequences of their actions.

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

In every economy, there will be lottery sales because people like winning money. However if the economy is not as good as it was, lottery sales increase because winning a lottery gives people hope. The odds of winning did not change, but the need for hope increases.

In an article from Reuters, China’s lottery sales in August soared to their highest level for any month this year amid mostly gloomy data about the economy.

Nationwide lottery tickets jumped 53.6% in August to 52.96 billion yuan (roughly $10 billion), the official Xinhua News Agency reported, citing data from the finance ministry.

Youth unemployment has increased to a level China’s statistics bureau abruptly stopped reporting the number. The reason given the agency sought to optimize its data collection methodology.

One commentator on Weibo said the worse the economy is, the more lottery tickets will be sold.

Linking to dividend paying stocks, rather than buy the lottery ticket, the opportunity is to buy stock in the company that prints the lottery tickets. The demand increases more lottery tickets are sold and the company receives increasing revenues. In all cycles of the economy there will be companies that benefit, it is the investors job to find the companies that continue to do well no mater what the cycle is.

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

One of the advantages of owning a large profitable company is when face with competition which seems to be challenging their lead, the company has the ability to use its cash and credit to buy a company or companies to shore up their leadership.

In an article by Jeffery Dastin of Reuters, Amazon said it will invest up to $4 billion in the startup company named Anthropic in its effort to compete with growing cloud rivals on AI.

Amazon’s employees and cloud customers will gain early access to technology from Anthropic as part of the deal, which they can infuse into their business. Anthropic will rely primarily on Amazon’s cloud services, including its future AI models on large quantities of proprietary chips.

Amazon will not gain board seats or will own a minority of shares of Anthropic.

In addition, Anthropic agreed to work on developing technology for Amazon’s inhouse Trainium and Inferentia chips.

Adam Selipsky, Amazon’s Web Services CEO said the pact will help make Anthropic’s models beter, will help make our chip technology and our AI infrastructure better.

Dario Amodei, Anthropic’s CEO said his company has obtained the money in a way that allows it to prioritize safety and allows us to scale up our models.

One of AWS’s service is called Amazon Bedrock, a service that has attracted thousands of users to start building AI applications.

Anthropic, founded by former OpenAI executives including Mr. Amodei, is one of a series of companies building generative AI systems that can draft content as if a human created it. Anthropic has aimed to distinguish its work by training AI to adhere to moral values.

Anthropic clients include: LexisNexis (legal data analytics company), Bridgewater Associates (investments) and Lonely Planet.

Linking to dividend paying stocks, when you buy one of these companies you are buying a profitable company and they have the ability to remain in leadership in their business because they can do mergers and joint ventures to continue to make money. The companies rarely invent the next best thing, but they capitalize on the next best thing to maintain and increase sales. As a dividend investor you can watch what they are doing and determine if you believe they are doing the right thing.

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

If you recall the past summer, one of the images that you may have thought about was the wildfires. Perhaps you read about them; perhaps you were in an area where smoke was in the air; perhaps you saw the fires on a news feed or perhaps you or someone you know was in the area affected by wildfires. If you own stock in an insurance company, you are wondering what the losses are? The wildfires are seemingly become larger and they seem to be more of them. What is the solution?

In an article by Kelvin Chan of the Associated Press, there maybe some good news on the horizon which includes some form of early detection and sending resources to find small fires.

Firefighters and startups are using AI-enabled cameras to scan the horizon for signs of smoke. A German company is building a constellation of satellites to detect fire from space. And Microsoft is using AI models to predict where the next blaze could be sparked.

California’s main fireighting agency this summer started testing an AI system that looks for smoke from more than 1,000 mountaintop camera feeds and is now expanding it statewide. The system is designed to find abnormalities and alert emergency command centers, where staffers will confirm whether its indeed smoke or something else in the air.

The cameras provide billions of bytes of data for the AI system to digest. While humans will need to confirm any smoke sightings, the system will reduce fatigue among staffers typically monitoring multiple screens and cameras, alerting them only when there is possible smoke or fire, according to Phillip SeLegue, staff chief of intelligence for the California Department of Forestry and Fire Protection.

It has worked, a battalion chief received a smoke alert in the middle of the night, confirmed it on his cellphone and called a command centre to scramble first responders to the remote area. The small fire was put out and it did not become a large fire.

San Francisco startup Pano AI takes a similar approach, mounting cameras on cell towers that scan for smoke and alert customers including fire departments, utility companies and ski resorts. The cameras use computer vision machine learning, a type of AI. The images are combined with feeds from government weather satellites that scan for hot spots and other data sources such as social media posts.

For fighting forest fires, technology is becoming essential said Larry Bekkedahl, senior vice president of energy delivery of Portland General Electric, Oregon’s largest utility and a Pano AI customer. PGE has 26 Pano AI cameras.

Using AI to detect smoke from fires is relatively easy said Juan Lavista Ferres, chief data scientist at Microsoft. The hard part is having enough cameras in remote places. Microsoft is developing AI models to predict where fires are likely to start. They fed the models with areas that have burned previously along with climate and geospatial data.

German startup OroraTech analyzes satellite images with AI. The company has launched mini-satellites about the size of a shoebox into low orbit, about 1,000 miles about the Earth’s surface. It hopes to send up 8 more next year and have 100 satellites in space.

CEO Thomas Grubler said because we know exactly where the fires are, we can see how the fires will propagate. What fire will become larger and which ones should stop on their own.

Linking to dividend paying stocks, over the past few years fire have caused billions of dollars in damages and when they approach towns and cities, insurance companies have to pay claims. Using AI will limit those claims which is why there is a ready market for the data the companies are collecting and projecting. In the insurance world, there is a need to pay claims, the less they pay the more money the companies make giving the risks they insure. As a dividend investor some of the most consistent companies are utility companies, one question you might ask them is what AI systems they are using to limit their losses due to fires. If you remember PG & E in California and possibly Hawaiian Electric might have to pay fines for fires.

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