The giants of the mining industry roam the world for commercially ore bodies and one of the largest mining companies is Rio Tinto. The global mining company with head offices in London, UK and Melbourne, Australia mines iron ore, copper, aluminum and specialty minerals.

In an article from Reuters, Rio Tinto is spending $2.4 billion to build and mine a lithium processing plant in Serbia. The reason for Serbia is the Rio Tinto has found an economically way to extract lithium from jadarite, a mineral that is found in one Serbian valley.

The first production is for 2026 and Sinead Kaufman, Chief Executive of Rio’s mineral division said the mine will be the largest in Europe for at least 10 years. The European companies of BMW, Volkswagen, Tesla have not given committed orders but they are showing lots of interest.

Rio plans a material increase in research and development beyond the $240 million it spends a year. Jared Osborne, general manager of the R&D facility said. The company is presently working to make aluminum carbon free and processes to produce green steel.

Linking to dividend paying stocks, companies which make a profit can have a longer time frame to understand and react to the market. In this example Rio Tinto is using its skills in mining, has an active R&D department and needs to try to have a 5 year outlook abut mining to produce an expected mineral in demand in the future. Part of the reason you want to own profitable companies is the expected long term horizon they should have and are investing in to ensure the company is profitable in the years to come.

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

When COVID struck and governments around the world closed their borders for public health, the airline industry which had seen greater and greater numbers of people travelling was was basically shut down. Now that vaccinating levels are increasing, people are willing to travel again and demand for aircraft is up. Airlines have to look to the future to have the correct sized plane at the correct terminal on the correct dates and it is a complex business. With increased demand, Airbus which has benefited from Boeing’s troubles wishes to increase production of its planes. That can be seen as a good thing for Airbus, but what about the supplier chain?

In an article by Tim Hepher of Reuters, the business model of Airbus is different than the business model of its supply chain. For example engines, similar to passenger vehicles, fuel efficiency improves every year and that can and does mean significant cost savings to the airlines. Generally as costs go down, profits go up. Airbus gets paid on delivery of new jets, allowing them to absorb fixed costs fairly quickly.

However on the engines supplier side, their business model has two aspects – building engines and servicing engines. If they are building more engines for more planes, the likelihood is some older aircraft will be retired and go to the desert or the engine companies will make less money on servicing older engines where profit margins are high, according to Teal Group analyst Richard Aboulafia.

The large aircraft engine producers are CFM – a GE-Safra venture, and Pratt & Whitney. All their CEOs have expressed concerned over the expanded production and the fact that many planes were not flying during the pandemic. They could come back into service so the engine companies could service them.

Another trend which affects airlines is from governments around the world want airlines to reduce their emissions and newer planes helps them accomplish that goal.

Linking to dividend paying companies, when you are investing part of your research is to understand how the company makes money or its business model. Understanding the business model allows you to have a reasonable idea of how the company makes money or which margins it can control or have influence on and when the company would not make money.

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

On Wall Street and most other streets, money talks. If you watch CNBC and other shows about the stock market, when they interview do, the person’s name, position and AUM are identified. The AUM is the assets under management, in theory the greater the number the higher influence the person has. In reality, the larger the fund, the more it functions similar to an index fund. Most fund managers have 30 stocks, not all of them will be beat the market or index but a few should. The ones under a billion under assets can be more easily be identified as actively funded.

In an article from Reuters, the Institutional Investors Group on Climate Change, have given notice to companies around the world that they had better have a climate change plan and equally important how is to be implemented. The 53 asset management companies include: UBS Asset Management, DWS, Legal & General Investment Management (many of them are based in Europe). The asset managers own stock and besides making a profit, companies are expected to have active climate reduction plans.

Linking to dividend paying stocks, at the Annual General Meetings we saw large asset managers vote for Board Members who represent climate change in the big energy companies. The statement from the Institutional Investors takes the step beyond the energy companies to the rest of the market. Institutional Investors tend to be the pension funds, retirement funds, or funds with a very long term focus, if a company does not have an active climate reduction plan, the Board Members will be changed.

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

In all markets and new changes, there is opportunities to be made and there are also people who know how the system works to move your money from your pocket to their pocket. Thanks to Tesla’s success there are many other companies that report to offer the same thing and in an capitalist economy that is a good thing. Unfortunately some of the offering will fail, some will partially succeed and some will be bought by the dominate players in the industry. Electric cars are coming, we all know that because governments around the world are mandating the large auto companies to produce electric vehicles by 2030, how we get to 2030 is a different issue.

If you think about the start of electricity there were 2 pioneers who seemingly had the biggest impact Tomas Edison and Nikola Tesla. Edison won the commercialization of electricity and Edison Power is named after him. Nikola Tesla was not written about in the history books until Elon Musk founded Tesla,

In an article by Jonathan Stempel and Ben Klayman of Reuters, the Manhatten DA charged Trevor Milton the billionaire founder and CEO of Nikola with defrauding investors by lying to them about the electric and hydrogen powered truck maker.

The closest the Nikola One ever came to driving was when the company engineers rolled a protype down a hill so it could be filmed for a commercial. In the meantime, all the press releases were to hype the stock and let Mr. Milton sell at a higher price.

Short seller Hindenburg Research wrote a report that labeled the company a fraud, and GM which was contracted to supply batteries and buy a 11% stake in the company has since left that relationship with no equity stake.

Linking to dividend paying stocks, it is wonderful to get excited about new developments, they are the life blood of the economy. It is wonderful to hear people discuss the new opportunity, but it something else to actually have sales and make a profit. If you ever watch the TV show Shark Tank, the question the Sharks ask is do you have sales. Is someone willing to buy what you are selling? With dividend producing stocks the answer is yes and they are consistent and year over year. You can ask your dividend paying companies how would the great opportunity fit into their company? if the answer is not yet, then look at different alternatives.

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

2 years ago there were crashes of the new Boeing 737 Max, given the passenger airline market is dominated by 2 companies – Airbus and Boeing this was not a good thing. Boeing was fortunate that COVID basically stopped travelling by the general public as they had to redo the software of the Max and be recertified for the planes to fly.

In an article by Ankit Ajmera and Eric M Johnson of Reuters, Boeing posted its first quarterly profit as deliveries of the Max 737 gained traction. For the past 2 years, Boeing has relied on its defense and service sales to keep the company running till it could sell passenger planes again.

The good news CEO David Calhoun told employees rather than reducing the workforce to 130,000 people the company will be keeping staffing at 140,000 people. The company still has concerns including with the 787 program and China has not certified the Max 737, but Mr. Calhourn is not too concern until mid 2022. If the Chinese are not buying, he and the lobbyists will be speaking to President Biden. (in a normal year, Boeing is one the biggest contributors to the exporting GNP.

Linking to dividend paying stocks, Boeing is fortunate to be diversified with passenger planes and military contracts. but the issue is a major setback took Boeing 2 years to recover. If you own stock in a company and it has a correction, it will take time to recover. A strategy is to decrease the number of shares you own, buy alternatives and use the money to slowly buy more shares in the company at a lower price. Investing for dividends means time is on your side, use time in your investing strategies.

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

During the pandemic as governments close down people gathering, there was little good news for the average person. Companies and people adapted to find tools to work from home as seamlessly as if they were in an office and that benefited a portion of the population. The other part managed with increased employment benefits, however there is good news coming from the COVID pandemic.

In an article by Frank Jordans of the Associated Press, a pharmaceutical company, BioNTech said it will use the mRNA technology to target malaria. The good news is because all the big pharma companies has been working together on the COVID vaccines, the technology allowed for a few years advancement in results.

According to the World Health Organization, there were 229 million cases of malaria in 2019. About 400,000 died with children under 5 accounting for 67% of the deaths.

BioNTech CEO Ugur Sahin said we are working on HIV, TB and malaria – all with a high unmet medical need. The company noted the knowledge and technology learned from the COVID vaccine will help make strides in these other diseases.

Linking to dividend paying stocks, with every downturn we always hope people learn something to help protect from the next downturn. In the medical world, there is great hope from what has been learnt and using artificial intelligence to learn even more. If and when new drugs come out, one would expect the price to be used to combat the disease will both be reasonable and profitable for big pharma companies.

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

One of the responsibilities of the Board of Directors is strategic directions – management will present various options and the Board signs off on it. One of the strategic directions is how is the industry developing and what mergers and acquisitions make a good fit for the company. One can easily imagine the greater the dollar value, the more preparation and fundamental revamping of the company is what is required. In the insurance brokerage industry, the largest company is Marsh & McLennan and the second and third are Aon and Willis Towers Watson. The second and third companies wanted to merge to make the combined company revenues of $20.3 billion versus Marsh of $17.2 billion. In Chicago, the tallest building in the city, formerly the Sears Tower is called the Willis Tower for the insurance company of Willis Towers Watson. Both Willis and Aon are global insurance companies started in London, England.

In every proposed merger, the process involves the company which wants to merge, the second company agreeing to merge, the appropriate senior management positions, then shareholders have to agree and then you sell the merger to your customers on better customer service. Very often with billion dollar mergers, the lobbyists have spoken to the government and its regulatory bodies to assure government approvals.

Governments change and when the pro company Trump administration changed to the Biden administration, the new administration noted it will not automatically approve every merger. It was up to senior management and the Board to listen to what the regulators will do and take their considerations in their plans for the future.

The Department of Justice has a new mandate from President Biden and argued the combination of the two companies would reduce competition and lead to higher prices. Given both companies offer health and retirement plans for employees, reinsurance and a host of other actuaries services there was a high possibility of higher prices. The combined company was willing to sell some of its holdings, but not to the satisfaction of the Justice Department or which meant the timelines of senior management.

Linking to dividend paying stocks, there was a valid reason for the potential merger and Aon will pay Willis a $1 billion termination fee, which Willis will use to buy back stock. When a merger of any size is announced, senior management must work with the other company’s management to determine how the new company would fit into their operations – everything from people, computer systems, customers and equally important retaining people even though there would be change. There is a great deal of time and effort which needs to be done. When a company drops the merger, everything has to be put back in place which will need time and effort. When a proposed merger is of two profitable companies they can still make profits as the companies change their directions back to pre merger operations. Perhaps under a new administration the merger appeal will rise again.

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

If you pay attention to Washington politics often you will hear the government will talk about the power of big tech and maybe it should be broken up. Nothing much happens and then you will hear the words again. There is an element of truth to what Washington politicians are discussing.

In an article by David Streitfeld of the New York Times News Service, In April 2020, the CEO of Amazon Jeff Bezos said Amazon would not make a profit and spend the money on people rather than profits. Mr. Bezos was expecting to break even, the quarterly result came in July 2020, Amazon had a record operating profit of $5.8 billion. The months since have established new records. Amazon’s margins, which measure the profit on every dollar of sales are the highest in the history of Amazon.

The combined stock market valuation of Apple, Alphabet, Nvidia, Tesla, Microsoft, Amazon and Facebook increased by 70% to more than $10 trillion or the entire size of the US stock market in 2002. Apple has enough cash in the bank to give every American $600.

PayPal, the digital payments company, had 325 million active accounts before the pandemic, now it has 392 million active accounts.

In March 2020, Glenn Kelman CEO of online real estate broker Redfin received a call from Henry Ellenbogen who started his own fund. He asked Mr. Kelman when people start touring homes via an iPhone that this was a good way to see a home, If that happens how will you compete with other brokerage companies? If you have looked at buying homes, video has been adapted to something people are willing to use.

Zoom is both a verb and a stock market winner for virtual lives.

Linking to dividend paying stocks, during the pandemic if you had not invested in tech, your portfolio would have suffered, however all companies are using tech to meet the demands of their customers and use technology. Whether we will all continue to do or we want something else is a matter of debate, however as long as the technology is relative easy to use and you feel safe in using it, the world has changed and even large companies have adapted, and usually large companies adapting takes more time. Sometimes change can be good for large companies.

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

When you think about demand for crude oil, where do you think the demand is coming from. If you were conserving energy and not thought about it, the answer is China has been the global oil demand driver for the past 10 years, accounting for 44% of worldwide growth in imports since 2015.

In an article by Florence Tan and Shu Zhang of Reuters, unlike America, China has a number of independent oil refineries and they receive quota every year. China is trying to consolidate the refinery capacity in an effort to reduce emissions.

Shandong refiners, where most of the small independent refiners, known as teapots, are located will reduce imports by around 350,00 b/d and 250,000 b/d in 3rd and 4th quarters according to FGE.

The slowdown in China means oil from Africa, Brazil and Russia is going to Europe and the US.

The shakeup in quota system in China means Sinopec and PetroChina are likely to consolidate their positions as top Chinese crude traders as the independents are sidelined.

Rystad Energy, FGE and Energy Aspects forecast higher refining throughout at 14.5 million b/d to 14.6 million b/d in the 2nd half with imports between 10.85 b/d and 11.5 million b/d.

Linking to dividend paying stocks, it is easier to see in an economy similar to China but government policy often helps the larger players in an industry. It China’s case the desire to reduce emissions means consolidation to the bigger players who have the resources to ensure the best technology is being used to reduce emissions at refineries. With large companies that are profitable, it is easier for the government to make decisions and larger companies who have the resources to carry out government wishes at good margins with the added bonus of reducing competition.

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