In the summer, more drinks including beer are consumer than during the winter and everyone knows that fact. The reasons include heat but also in normal times there are many more events where people gather and enjoy a beer or two. If you think images about Germany, you likely think about Germans drinking beer. The breweries in which they are many, brew beer to meet the demand and there are roughly 1,500 breweries and they have 4 billion returnable glass bottles in circulation – about 48 for every man, woman and child.

In an article by Melissa Eddy of the New York Times News Service, there are many problems operating a German brewery at the moment and one of them having enough glass bottles for the beer. German is facing a severe shortage of beer bottles.

The good news is most of German beer bottles are recycled glass and that is good, but people are not returning their empties. It is a big of hassle for people to bring back the empties so many people store them in their homes until they need the space or want the spare cash.

The article focused on Germany’s Klosterbrauerei Neuzelle, a small brewery where 80% of the beer sold is using glass bottles. The company has seen natural gas prices increase 400%, electricity bill up 300%, the barley bill is up and the war between Russia and Ukraine is not helping prices fall. The business was founded in 1589, which means it has survived many difficult times and the present owners from 1993 believe it will continue to survive.

Solutions for the bottle shortage including ads in newspapers, considering increasing the deposit, and increasing prices. Similar to many industries, the supply system has seen prices increase from the wooden pallet to salaries to fuel costs. The largest brewery in Germany – Radeberger Group which makes Radeberger and Schofferhofer beer has increased prices, but it more difficult for the smaller breweries.

One of the creative measures by the Klosterbrauerei Neuzelle was to have its most popular beer – Schwarzer Abt or Black Abott bottle blessed by the Pope and then dip the bottle in every batch made.

Linking to dividend paying stocks, in every country there are some stable companies who have made profits for generations. There will always be challenges, but it is possible to make profits and pay dividends for generations. When you are investing, look to have some of these companies in your portfolio to ensure the stock prices are maintain and go higher every year and you receive a dividend for you good decision.

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

When the stock market is rising in value, people want to be involved and one motivating method was to be involved with wallstreetbets which helped encouraged individuals or retail clients to be involved. One Wall Street, the dominant players are institutional, but to help drive markets up the market needs individuals. Although everyone invests for the same reason – to make more money, the reasons for investing are different for institutional and retail investors. Often times there are more restrictions on what institutions can and should not or can not be doing or flexibility is a hallmark of retail investors. Often retail investors start out as momentum investors but hopefully learn along the way because what goes up does come down.

In an article by David Randall and John McCrank of Reuters, the bears are shorting meme stocks GameStop and AMC Entertainment Holdings. According to data from S3 Partners, the percentage of company’s float that is short was 24% for GameStop and 22% for AMC.

You may remember there were short squeezes on these stock and the price soared into the hundreds from the teens or less. Retail investors caught the bug, some made money but many bought when the stock was rising, held on and the stock dropped below their buy in position and now if they still hold the stock there are losing money.

The S&P 500 is down 13.5% while GameStop is down 13.7% and AMC down 56%. According to Peng Cheng, head of big data and AI strategies at JPMorgan, retail investors have been net sellers of single stocks for the past 8 weeks.

Many institutional investors examine GameStop and AMC and see the companies operating on smaller footprints in the future or the business will not be growing. While retail investors see something else?

Linking to dividend paying stocks, it is wonderful when you make an investment and the stock rises in the near future, however if your buy stocks for dividends you are expecting the stock price to maintain or rise in the long term which translates into a total return from stock price increases plus dividends to rise. The market brings many people together looking for reasons why a stock price should increase, but buying profitable stocks which pay dividends helps ensure you are correct many more times than you are not correct.

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

All consumer products go through a multiple of changes as they become the standard for consumers. For those who are older, you might remember VHS and Betamax tapes for the VCR, although no one makes them anymore we have all gone to discs, however 2 companies were investing in each technology expecting their technology to dominate. This is natural element in consumer goods, what will become the industry standard?

Most people in the world will never own a non mobile phone so they are interested in the phone clarity, the minutes you can talk and text, the videos and pictures you can take, etc. The least concern is to charge the phone. This is why although it takes time, standardization is coming to the mobile devices.

In an article from Reuters, the European Union is the third largest consumer market after the US and China, the European Commission has been dealing with complaints about charging Apple and Android phones – they use different chargers. It looks the safe but the connector is different. The EU wanted the standardization to happen and pass a law by 2024, all mobiles have to have the same connector. Apple will have to make changes to the charging.

iPhones are charged from a Lightning cable while Android based devices use a USB-C connectors, by 2024 all connectors sold in Europe will be USB Type C.

Linking to dividend paying stocks, all consumer goods eventually move to a standardization for the ease of use for the consumer. Picking the correct technology or lobbying the government to ensure the company picked the correct technology is a function for the company. Companies lobby for a number of reasons, trying to ensure the company is the standard can help the company save money in the future.

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

When former President Trump was in power, he would often say we should manufacture things in America and one method to encourage that was to impose tariffs on goods made outside of America. Countries around the world have been trying to ensure tariffs are balanced enough to encourage some manufacturing in their home country and importing from lower wage countries every since countries were formed.

There is no perfect solution and you can think about the industrial revolution was inexpensive cotton from America going to the UK to run the textile factories which sent cloth back to the US. That was replaced by India and now the great textile factories are in China. It takes time for the movement to take place but tariffs played a factor in the investment decisions.

In an article from Reuters, the US government is trying to fight inflation and one of the solutions is to to lift some of the tariffs on China that were place by former President Trump. The tariffs include household goods, bicycles. If the tariffs are lowered, the prices in the store should be less and consumers dollars will stretch a little more. One has to believe the tariffs imposed by Trump did not lead to greater manufacturing in the US or few would object to the lowering of the tariffs.

Linking to dividend paying stocks, every country in the world worries about their manufacturing base and would like things made in the country, some make it very easy others harder. Then the government changes and rules and regulations change, it is one of the concerns with non domestic sales of goods and services. If the company you have investments in, how does it handle changes in governments?

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

If you think about Venezuela, you may think about a country which should be a wealthy country similar to many Middle Eastern countries, however the country was mismanaged and has suffered greatly over the years. The country had a President who was very popular and ensured everyone in the country received an income but it was only sustainable on high oil prices. The country spent money, people in government spent money and soon the country was importing most of their goods and services. Then oil prices went down and the country was in debt, it tried to give oil for its debts. In the meantime, the US government backed the opposition and put sanctions on its oil industry. Now the US government main enemy is Russia, Venezuela is important again.

Europe needs and uses Russian oil, to diversify away from Russia, the US is looking to Venezuela to supply Europe.

In an article by Marianna Parraga and Matt Spetalnick of Reuters, the US State Department which had sanctions on Venezuelan oil and gas, gave approval for Italian oil company Eni SpA and Spanish company Repsol SA to ship oil to Europe or resuming oil for debt swaps.

Venezuela’s biggest customer is China which also receives oil and gas from Russia.

In Venezuela, the state oil company is called PDVSA and they have unpaid debts and late dividends to oil companies around the world. Other oil companies lobbying to be included are Chevron, India’s Oil and Natural Gas Corp and France’s Maurel & Prom SA. Former President Trump halted swaping oil for debt in a campaign to influence the Venezuelan election.

Linking to dividend paying stocks, governments have their own agenda and sometimes that is good for corporations and sometimes it is not. Commodities are located in countries around the world not worrying about the politics of the people of the land. Government agendas change with new governments and what was bad is good and what was good is bad. Ideally a company has holdings in reasonably stable countries where governments can come and go and companies have a long healthy profitable relationship with its people.

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

When Russia decided to invade Ukraine, the western world decided to push back on the economy of Russia and many western companies were told by the government to not be involved in the Russian economy. For some it was relatively easy to implement, painful for the employees (who did nothing wrong, but they live in Russia) for other companies they had indirect holdings. In many countries, the American company wants partners and technically the partners are the company, the American company is just the face. Many people have read or watched a movie about the founding of McDonald’s and in their restaurants they have to maintain Quality, Quick and Cleanliness. In order to do that, McDonald’s often owns most of the locations (which technically makes it a real estate investment) as well as restaurant. However there are other models and Burger King’s parent Restaurants Brands International (RBI) followed the licensing route. The partners own the real estate, in this case RBI sells them the supplies and the manuals to ensure a Burger King is the same in Moscow as it is in New York.

In an article by Hilary Russ of Reuters, the formula for the joint venture partnership, including a master franchisee is harder to close the store. In March, RBI said it was trying to sell its stake in the joint venture. However in June the restaurants are still open with long line ups. Partly because McDonald’s which owned the real estate of all 80 stores could close down all the locations. The stores will open with a new name, and was sold to its local franchisee, but McDonald’s has the option to buy the business back with 15 years.

Burger King does not own its outlets, RBI owns 15% stake in Burger King Russia Ltd. The other partners are Russia’s state owned bank VTB , a private equity firm in Kyiv, Ukraine called Investment Capital Ukraine (ICU), and 30% owned by the master franchisee Alexander Kolobov.

The war in the Ukraine is not fought by the franchisees or the customers, it is the government and the Russian army, there is an argument made by lawyers it would be unfair to shut the restaurants down. Will Russian courts force the franchisee to stop operating? If RBI sells will it get fair market value or be a distressed sale? will the war be over sooner than later and then the sanctions will not apply?

Linking to dividend paying stocks, all companies at some time in their ventures consider diversification and there are many good reasons to doing so. There are different models to sell your goods and services to the world and when you do the world benefits from the company’s goods and services. If the company goes outside its borders and makes money, contributes to the profits of the company, analysts will write that is very good thing to be doing. Few will worry about exit strategies until the company loses money or wars happen, let us hope for peace.

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

If you are near a railroad, evenly a train goes by and you can see many railcars carrying containers. Companies embraced containers and ships and ports were built to move goods from one country to another seemingly less expensive than to build the products in the home country. The system worked till it did not and then container prices jumped.

In an article by Irene Galea and Brent Jang, since March prices to ship containers have dropped 19% but retailers can not celebrate yet. There are still congestions in the global supply chain and changes in consumer spending.

The change in consumer spending is consumers are now spending more of their disposable income on services rather than household items.

The pictures of ships needed to be upload has decreased which is good news, however according to Drewry Shipping Consultants Ltd, a typical 40 foot container costs $7, 635, although compared to pre pandemic levels of $1,200 to $2,000 the cost is high but lower than March levels.

The war in Ukraine and the lockdown by the Chinese government of China resulted in fewer products being shipped which reduced pressure on container supply and brought prices down. That might change because the Chinese government opened up cities on June 1.

Annual trends in the industry are at play: May and June are typically the least expensive months of the year, before retailers start ordering stock for end of summer and Christmas season.

China COSCO Shipping Corp Ltd doubled its 2020 revenue to $51 billion, although costs rose to $30 billion.

Linking to dividend paying stocks, for retailers bringing in goods by containers has consider normal and many because used to using the supply system. Then it broke down and costs not expected to increase did increase which was out of control of the company. It has taken a while to adjust because it was impossible just to raise prices. When a normal everyday cost increases for a company it is important to see how it adjusts? how flexible is the company? how secure are the profits?

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

In the world of risk management, there is usually an insurance to be bought to ensure if the worse happens, some money comes back to the company. It would not be surprising that premiums to war torn countries go up.

In an article from Reuters, insurance premiums are doubling or more for some aviation and marine businesses exposed to Ukraine.

Global commercial insurance premium rose 11% on average, according to insurance broker Marsh.

War is typically excluded from mainstream insurance policies. Customers have to buy extra war coverage on top of the normal insurance.

Garrett Hanrahan, global head of aviation at Marsh, said aviation war insurance was no longer available for Ukraine, Russia and Belarus.

S&P Global estimates insurance losses of $16 billion to $35 billion in so called specialty insurance classes such as aviation, marine, trade credit, political risk and cyber. Aviation insurance claims could reach $15 billion with hundreds of leased planes stranded in Russia.

In ship insurance, policyholders pay an additional breach premium when a ship enters particularly dangerous waters, locations are updated by the Lloyd’s market.

Linking to dividend paying stocks, when you buy a profitable company you expect a high quality of risk management department – who they will and will not deal with and what terms. Ideally the risk of not paying is low. For many global companies, war is a normal risk, because there are many wars which mean insurance companies have policies on how the situation moves forward. One of your homework is how does the risk management department work in your investments? and do they pass on costs to customers?

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

In every capitalist society, the economy runs on credit. If businesses and individuals have access to credit they will spend on something, if banks limit their credit they will spend less. It is relatively easy method to see how the economy is doing, do business and people have access to credit?

Sometimes, banks have slightly more complicated relations to who gets credit and why?

In an article by Stephen Gandel of the New York Times News Service, after the Parkland Florida shooting of school children, one of the many pressure points on government and business was to reduce the credit or loans to gun manufacturers. In some states, this caused the gun manufacturers to move to more “friendly” states. One of the more friendly states is Texas and they have been passing laws to ensure gun manufacturers have access to credit. One of the laws is if the bank discriminates against gun manufacturers they can not do business with Texas government agencies.

According to Dealogic, JPMorgan since 2020 has raised $708 million for companies in the gun industry.

Texas is one of the largest states in the US and its municipal bond market is also one of the largest in the US. Wall Street investment banks have long made lucrative and relatively risk free fees underwriting municipal bonds. Texas’s municipalities borrow about $50 billion a year which translates into $315 million in fees, according to data from Bloomberg.

In Texas the investment banks have to send a letter to the State Attorney General to say they comply with the law. Then the investment bank can bid on state agencies – from utilities to municipal bonds. From 2015 to 2020 JPMorgan Chase underwrote 138 Texas bond deals raising $19 billion for the state generating $80 million in fees. In June, JPMorgan submitted a bid to underwrite a $3.4 billion for the utilities, the largest in state history.

Linking to dividend paying stocks, we often think there is government and there is business and sometimes the interests overlap and sometimes they are not aligned, but most of the time the interests are favorable to each other. Once in while a state will draw a line in the sand and it is up to the company to determine how much is the business worth in the state? What stance should a company draw a line in the stand? should shareholders approve it? What appears to be simple issues may be complicated because someone believes it is a line where they can be elected on and is that good?

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