Oil prices during the pandemic dropped because governments around the world asked people not to drive and commuting helps drive up oil demand. People are beginning to commute which drives up demand and with all the other normal activities becoming normal, energy demand is up. However, governments around the world want to lessen their demand of oil and gas by concentrating on renewables.

In an article by Stanley Reed of the New York Times News Service, OPEC decided not flood the market with oil and gas, but only do a modest increase of 400,000 barrels a day or 0.5% increase.

Richard Bronze, head of geopolitics at Energy Aspects, a research firm, said, it is going to take oil prices sustaining above $80 a barrel for a period of time or pushing sharply higher.

Oil prices climbed on the news to $78 a barrel, the highest since late 2014. Oil prices have doubled in the past year (in addition many oil stocks have doubled).

OPEC will meet monthly to decide whether to increase the limit, the next meeting is scheduled for November 4.

Linking to dividend paying stocks, some of the best paying dividend stocks for the past 50 years has been the oil companies. It is hard not to have some in a dividend portfolio even if you want renewables to play a significant role in the generation of electricity. With every industry revolution there is a transition to the new one but when you examine how people heat their homes and drive vehicles, the transition will be in years not months. When the average person buys an electric car, we will be on the back end of the oil transition.

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

For the last 40 years or so, one constant in the economic world was China’s economy was going to grow as it became the manufacturing hub to the world. China consumed more raw materials than other country and its growth affected prices. If you went into Walmart to shop, many of the items are from China and in a country of a billion plus people many people moved up the economic ladder into the middle income. That outcome is a good thing. A negative affect is China is the world’s biggest consumer and source of climate-warming greenhouse gas. China was to change that to peak in 2030 and by 2060 be net zero.

In an article by Shivani Singh and Min Zhang of Reuters with every climate change goal there are roadblocks along the way. China wants to cut its greenhouse gas emissions and in November there is a big Conference sponsored by the UN in Glasgow, Scotland and China wants to say it is doing better.

One method to doing better is cutting down on emissions from coal, however China is world’s largest user of coal to generate electricity and recent cutbacks in the the amount of coal being used to help both manufacturers, consumers and pushed up coal prices and causing power shortages. The power shortages are affecting manufacturing companies who had to slow down production. The companies facing slowing down include Apple and Tesla.

Steel, aluminum and cement industries have been hit hard and according to Morgan Stanley analysts production capacity is down 7% in aluminum and 29% in cement.

Nomura Securities cut its 3rd and 4th quarter GDP growth forecasts to 4.7% and 3% from 5.3% and 4.4%. The global supply of textiles, toys and machine parts could be affected.

Linking to dividend paying stocks, all companies have to a role to play in lowering green house gases, however there will be a time lag between how they and their supplier companies use energy to how they use energy in the future. For your investments, how are they managing to use less and still make generate profits to pay dividends?

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

China is different than most countries and we all tend to forget what is considered normal in China. In China facial recognition and keeping control of the population is very important and China is extending control to what people do on their computers or smartphones. On one hand the facial recognition is very interesting, there was a news story about the Chinese using facial recognition at a football game and found people of interest to the police in the crowd. The person or people were caught, from a societal point of view it could be good for the rest of society that person was caught. However, we all think we have a certain level of privacy, however in China rules are changing. The Party has said kids under 18 can no longer do gaming.

In an article by Paul Mozur and Elsie Chen of the New York Times News Service, video game industry is under going massive changes. The market for gaming is very high in China and with over a billion people even if millions play, that is still a strong market. The government has decided that children under 18 will be limited to gaming for 3 hours a week and during prescribed times during the weekend. For someone under 18, to game they must show their identification card as proof of age.

Chinese leader Xi Jinping has decided young people are spending too many hours on screens and should be doing something else. But it is a complex because of the one child policy that was on changed last year and parents expecting to work long hours, gaming was a good outlook for many young people. In addition, the most popular games are made for smartphones (China is the number one user of smartphones) and are free to play. The gaming businesses make the games live and make their money by attracting large number of users and the extras which gamers have to pay for to advance to higher levels. Given the business model, the gaming companies have become experts in hooking players to play their games.

Linking to dividend paying stocks, what is great for companies to make profits such as in this case young people spending lots of time, energy and money on games is not always the best thing for society at large. Although for people above 18, it is entirely possible to work in game development, e-sports or make a good living from games. Gaming companies similar to tobacco companies it is good to get the people when they are young and allow them to age gracefully with the company products. With every product there are good aspects to the products and sometimes there are some negative, as investors you need to focus on the good.

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

Climate change is something every company and government is trying to slow down, however the solutions mean that once in a while there will be conflicts which sends prices up. A case in point is natural gas prices in Europe have increased both because COVID had reduced demand and as every country is coming out of COVID, demand is increasing. However due to regular maintenance schedules of natural gas plants, supply is limited also because of climate change storms are bigger which means actual supply is down. When those elements are combined, those charts from economics 101 of supply and demand happen.

In an article by Daanica Kirka of the Associated Press, gas prices have risen in the UK which means the UK’s Business Secretary Kwasi Kwarteng is trying to ensure the public there will be gas to heat homes and keep the lights on, without costing an arm and a leg.

The UK does have diversified sources half is domestic production (North Sea), 30% from Norway (North Sea) and the rest from European pipelines including from Russia.

Regulators have approved a 12% increase in prices beginning in October.

Linking to dividend paying stocks, utility stocks are part of many investors core holdings because regulators tend to raise prices which ensures the company can maintain its profitability. That is good for the investor, not so wonderful if you are a consumer because there are very few options. All utility companies are moving to ensure part of their supply is renewable from the sun and wind, but with changes in society there are lag times and it will seem if we only used more ….

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

Every once in a while, there will be a large company that has overextended itself, often times the company seems to have the backing of the government, till it does not. The latest example is the Chinese company Evergrande Group.

In an article by James Griffiths of Reuters, Evergrande Group has about $300 billion in liabilities is China’s 2nd largest property developer. ($300 billion is roughly 2% of China’s GDP) In mid-September it owed $83 million payment on a $2 billion bond that was trading for 30 cents on the dollar.

The backstory is ever since China legalized private home ownership in 1998, real estate has been one of the country’s most successful sectors – with roughly 90% of households owning a home and the world’s biggest asset bubble. Chinese real estate is rife with speculation owing to easy credit and a massive oversupply. In 2018, a nationwide study found nearly 50 million apartments, about 22% of the country’s total housing stock sitting empty. Since 2010, housing prices are up 600%.

Evergrande is emblematic of the problem, the company owns more than 1,300 real estate projects in over 280 cities and creates about 3.8 million jobs a year. It has operations in many other fields including a football team and building a stadium for it, theme parks and many other ventures.

The company had backing and has backing from the Chinese government although the government was trying to slow down the real estate sector by introducing 3 red lines for developers. The lines were limits on debt to asset ratios, debt to equity ratios and cash to short term debt ratios. However Evergrande was above what the Chinese planners set out and nothing really happened.

In all likelihood, many believe the Chinese government will ensure Evergrande Group is restructured and life continues on.

Linking to dividend paying stocks, the more successful a company is the more goodwill it has with the government. The issue is always if the market change rapidly and the company lost money would the government set it to help? The answer is never a black or white one, for in politics the grey comes to light. As an investor, one hopes you have found alternatives (particularly when the company lowers its dividend payments) and watch what happens from the outside looking in.

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

Many companies in order to grow sell outside their country borders and it can be a very good thing to do. Sales increase, revenues increase, and profits grow those are good things. Since there are negative aspects such as currency risks, and sometimes government risks.

One company with government risks is Mastercard however this New York headquartered company has some aces in its sleeve with the US government.

In an article by Aditya Kalra of Reuters in India, for multiple reasons, the government of India has banned Mastercard from issuing new cards. The government of India also banned American Express and Diners Club. The Reserve Bank of India says the companies broke the rules regarding local data-storage. It is important to note, the ban does not affect existing customers.

Brendan A Lynch, the deputy assistant US trade representative for South and Central Asia has emailed the Reserve Bank of India to express displeasure and find methods to resolve the problem.

Mastercard counts India as key growth market and 2019 wrote it was bullish on India. Banks which partner with India are finding other companies to issue cards for because credit card fees are important revenue source for banks.

Linking to dividend paying stocks, when a company sells outside its borders and has reasonably significant revenues, one of its new partners is the government in Washington. The government wants trade and revenues to continue to flow to the US and more often than not are willing to help with the company’s concerns. For likely some companies in the country are doing business in the US and they do not want to be shut out of the US market. Governments can do what they want if they are willing to pay a price both domestically and foreign. When you look at your investments and revenue is outside the headquarters of the country, in this case a New York based company getting along with Washington?

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

When COVID hit the world and people for public health were told not to travel and shut within their home countries, the restrictions placed great pressure on the airlines and hospitality sectors. Some governments gave bailouts, bought bonds and some governments told equity positions.

In an article by Christopher Steitz , in Germany, the airline company Lufthansa announced it was doing a capital increase to raise $3.2 billion to pay back part of a state bailout. The airline received a $12 billion bailout from the Economic Stabilization Fund (ESF) because airline companies are an important aspect of every countries economic performance.

Chief Executive Carsten Spohr said we have always made it clear we will only retain the stabilization package for as long as necessary. People have begun to fly again and based on Lufthansa operating performance in July and August, the company is expected to post positive adjusted earnings before interest and taxes in the third quarter.

A number of funds under the management of Blackrock have entered into a sub-underwriting agreement for a total of $300 million as part of the capital increase and have committed to fully exercising their subscription rights. Currently the ESF has 15.6% of the shares and will try to sell them within 2 years of the completion of the share sale.

Linking to dividend paying companies, some of these companies are the backbone of their countries economies and even if the CEO does not like government involvement, they accept it to stay in business and have a future. When COVID happened and the government imposed measures to protect the health of its citizens, it also offered to help companies affected or they would have gone bankrupt. Government help is not always the answer, but it does help.

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

Recently the writer was watching a podcast and the personal finance advisor was talking about how people spend money on the latest fashion trend when the old styles work just fine. The person said he did not understand why people needed to buy the new. If you think about the fashion industry, it sells the latest trend, similarly on Wall Street they sell the latest trend until there is very little traction left in the product and then something new comes up for sale.

In an article by Anirban Sen and Krystal Hu of Reuters, the latest trend on Wall Street was for wealthy individuals to raise capital into a special purpose acquisition company or SPAC and then buy another company with the money, some investments would be taken public similar to venture capital money. The SPACs lower the cost of a more regulated IPO. According to Dealogic 91 companies in January went public through SPACs versus 27 companies doing IPOs.

When Wall Street likes a trend it goes all in, with 438 SPACs have raised over $130 billion looking for mergers. If they do not find them, money has to be returned to the investors. This has meant some companies which SPACs listed on the exchange are trading for less than the $10 a share which they came out as. University of Florida professor Jay Ritter says 94 SPACs of the 131 that have announced mergers since October, 2020 are trading below their $10 IPO price.

The average redemption ratio for deals completed in July-August stood at 50% up from 24% for the mergers completed in April-June. It is now common for a SPAC IPO that raised $200 million to have only $40 million left in trust after most shareholders redeemed before the merger was complete.

Linking to dividend paying stocks, in the fashion industry some clothes never go out of style and some go out of style in a year. In the stock market there is always the next and best thing because both industries have a sales culture and that means selling merchandise. As a dividend investor more often than not, as long as the company makes a profit and can pay dividends, you do not have to buy anything, just hold for the dividends. What you do with the dividends is up to you but if the stocks can earn profits through whatever cycle there happens to be, you do not have to follow every trend.

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

Governments around the world have discretionary power over many elements of their economies, if they do nothing they allow the companies to try to make their revenues. Sometimes governments will exert their power to show the companies who is boss.

If you think about China, for years gambling is allowed but just off the coast of China and a boat ride from Hong Kong is the former Portuguese colony of Macau where the economy relies on gambling for its revenues. If you have a picture of what Las Vegas looks like, then you know the skyline of Macau for the same casinos operate in both places.

In an article by Farah Master and Donny Kwok of Reuters, shares of gambling casino stocks fell because Lei Wai Nong, Macau’s Secretary of Economy and Finance gave notice of a 45 day consultation period on the gambling industry pointing at deficiencies in industry supervision.

Bejing examined Macau and seems to be be wary of Macau’s acute reliance on gambling but has not said how the licence rebidding process will be judged.

JP Morgan analyst D.S. Kim downgraded to neutral or underweight all Macau gambling names from overweight because of the tougher scrutiny on capital management and daily operations ahead of licence renewals.

Beijing has stepped up a war on cross-border flows of funds for gambling, hitting the funding of Macau’s junket operators and their VIP customers. Similar to gambling casinos everywhere concerns about underground lending and illegal cash transfers every once raises the bureaucracy eyebrows.

Perhaps by Thanksgiving it will be time to revisit gambling stocks.

Linking to dividend paying stocks, investors all search for seeming recession proof stocks and generally gambling stocks are because in good times people gamble, in bad times more people gamble and the house wins. However all casinos are regulated by governments and governments can change their minds, watch the signs of regulatory bodies in whichever industry you invest in.

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