In late June, the US Supreme Court ruled in favour of a consortium of energy companies seeking to seize land from the the state of New Jersey to build a $1 billion natural gas pipeline despite the state’s objections.

In an article by Lawrence Hurley of Reuters, the consortium of energy companies called PennEast Pipeline LLC wanted to build a pipeline from Pennsylvania to New Jersey to supply about 5 million homes in Pennsylvania and New Jersey. The pipeline had to go through lands owned by the State of New Jersey who said no.

However, the consortium of companies including South Jersey Industries, New Jersey Resources, Southern Co, UGI and Enbridge. had received a FERC or Federal Energy Regulatory Commission in 2018. The Supreme Court ruled 1938 law called the Natural Gas Act allowed private companies to seize necessary properties if they have received approval from the FERC. The ruling was 5-4.

Linking to dividend paying stocks, many have the ability to have a long lead time before projects can be approved. The pipeline companies started working on the project 10 years ago and have the patience and resources to ensue approvals are given. The issues changed from jobs to energy security to other concerns but the pipeline companies had a good argument and won. Patience and resources for companies which will affectively have a monopoly are good things to have, and usually there is a strategy to achieve the results.

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

In late June, Panasonic Corp sold its holding in Tesla for $3.61 billion, it had bought the shares in 2010 at $21.15 or $30 million.

In recent times we have seen more and more companies taking shares in partners to help them get started and grow. Panasonic is in the battery making industry and it made sense to buy shares in the partner company.

In an article in Reuters, the Board felt given Tesla’s growth, there is no need to continue to own the shares however the partnership with Tesla remains.

Sometimes one of the assets of large companies is their investment portfolio. Tesla shares was bought at $21.15 and held on the books at that price, the shares were sold for in the $670 range and the money will be used for growth purposes.

Linking to dividend paying stocks, companies that generate profits on a year to year basis often times have an investment portfolio of companies they do business with or they admire and generally they are passive investments. Unless there are corporate takeover winds and the company is ensuring over 50% is in friendly hands. One does not buy a company for its investments, but examining them can give you more reason to hold the stock. You might ask what is the policy of the investments the company has or what does it not buy?

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

In every economy, the most important part is the the ability of the bank’s to make loans or keep credit in the system. When the banks have to restrict credit the economy goes in a tailspin, when the banks can give credit the economy has great potential. It is up to the bankers and the regulators to determine how much credit to give and that is a good thing. In 2008 when the housing market collapsed, the banks gave very little credit or the government had to bail them out. The result was at downturn or potential downturn the Fed Reserve sets higher standards for the banks to buy back stock and increase dividends.

In an article by Lanahn Nguyen, Jeannna Smialek, and Peter Eavis of the New York Times News Service, the Federal Reserve has lifted restrictions on the banks ability to buyback stock and increase dividends.

The Fed’s Vice Chair for Supervision Randal Quarles, said the banking system is strongly positioned to support the ongoing recovery.

The Fed was worried about the potential of banks to be in trouble with increased amounts needed for loan losses, however the government’s programs of enhanced unemployment benefits and stimulus payments resulted in the banks not increasing their loan losses. That was a good thing and the Fed believes the biggest banks are safe to leave your money in.

The Fed tests the banks using a hypothetical case of how the banks would fare if a severe global recession happened and global real estate values fell and equity prices on the stock market fell by 55%. The result would be a loss of $470 billion among the top 23 banks with $160 billion from commercial real estate and corporate loans. The bank’s capital ratios would fall to 10.6%, but that is double the lowest required ratio.

Since the announcement, JPMorgan Chase has announced a $30 billion dollar stock buyback over the course of the year.

Linking to dividend paying stocks, it would be wonderful if all industries had an easy stress test to see if the profitable company paying dividends would easily pass the test. You could look to the results and then do all the other important things in your life as you continue to hold the shares for the dividends. For now the best stress test is the approval of the Federal Reserve. When a company buys back its shares the float is less so the Earnings per Share goes higher which results in the share price increase as the stock multiple goes to normal. The total return on your holding remains high.

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

In many regulatory bodies there often is the company on one side and some members of the public on the other side. On many regulatory bodies for a long time the bias was towards the company because the regulators are working with them on a daily or weekly or monthly basis. The devil you know versus the devil you do not know type of situation. The members of the public bring forth many viewpoints and some are always worth considering.

In corporate battles, the regulatory body is mediating between 2 companies they generally work with and it is interesting to see and watch.

In an article by Ross Marowits of the Canadian Press, the 2 railways that are based in Canada, Canadian National CN and Canadian Pacific (CP) are fighting each other to buy Kansas City Southern.

A number of years ago, CN bought Illinois Central running from Chicago to New Orleans; CP owns railway tracks that go to Kansas City. The railway Kansas City Southern goes from Kansas City to Mexico City including the manufacturing base of Mexico to bring goods to the US consumer.

If CN wins the battle and KCS has accepted their higher offer, then they would have to sell some tracks otherwise they would have a monopoly. If CP wins, they would have access to Mexico City or the stakes are high.

The fight is over a voting trust agreement which CP says is not good, however CN disagrees. To bolster their arguments both companies have gone to their customers and partners to write letters pro and con to the regulatory body of the US Surface Transportation Board who has yet made a decision.

The customers is this case are over 1,000 suppliers from every side of the rail industry, many of the largest ports in North America, trade associations, local chambers of commerce, state legislators, 2 governors, and 11 members of Congress. Each company has spent time and money doing the full political press on the regulatory body. The issue of public interest is very much of the table. The companies have also ensured past members of the US Surface Transportation Board have wrote opinions which the current Board has seen.

Linking to dividend paying companies, one of the advantages of the companies is there reach into regulatory bodies to ensure consistency and stability. Often most of the lobby is done behind the scenes, but when 2 generally friendly competitors fight, sometimes what is behind the curtain is revealed for all to see.

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

A number of years ago, it was very possible for those in the executive suites to deny climate change and people can still do it, but public companies will not have choices. All public companies have to follow government regulations or be sued.

In an article by Huw Jones of Reuters, at the recent Group of 7 Finance Ministers, they back the creation of International Sustainability Standards Board (ISSB) to write baseline rules for disclosures on how climate change will affect companies’ performance.

The ISSB will be in operation before the November UN COP26 climate conference in Glasgow, Scotland.

The reason for the ISSB is investors have complained about a patchwork of requirements across the world. At the moment, the standards in the Euro community is higher than the US, are standards are needed.

The ISSB is being set up by the London based International Financial Reporting Standards Foundation which writes accounting rules used in 140 countries.

Linking to dividend paying stocks, all companies are trying to sell their goods and services into the market place and sometimes the marketplace rules change. You often hear the stability and consistency from the executive suites and the ISSB is one to do that. Some companies will lead on climate change measures because it saves them money, and they have determined their customers expect them to be leaders. Sometimes being a leader will save money on issuing bonds because the company is seen as green. With companies saving money and winning customers is the issue, even if your company has monopoly like conditions.

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

As a consumer when you look around you can see some prices rising and when prices are rising the natural reaction is expecting your wages to rise, when that happens inflation is built into the system. It is normal, but the federal reserve or Fed can help mitigate the rise. Should they? when is the time to allow the markets to do its normal thing? We know some people have been working consistently since COVID, but there are millions who did not, what does the Fed do?

In an article by Kate Duguid of Reuters, the Fed is giving mixed messages because they know that inflation is a concern, but it is not time to release the actions to control inflation. Fed Chair Jay Powell has said he believes some of the price increases will go down because the supply chain will be better and the pent up demand will normalize.

One of the benchmarks to look towards how investors feel about inflation is the 5 year forward break-even inflation rate which tracks the expected rate of inflation in 5 years time. It was recently at 2.2% below the 7 year high of 2.4%

The personal consumption expenditures price index (PCE) the Fed’s preferred measure for inflation rose 3.6% in April from a year earlier.

Last August, the Fed adopted a flexible average inflation target (FAIT) that is designed to be somewhat more forgiving to price pressures that in the past. The FAIT helps the Fed worry about both maximum employment and stable prices.

Linking to dividend paying stocks, when inflation rises bond yields have to go higher, at the moment bond yields are lower than dividend yields. If that changes money will flow to the higher yields, particularly in the yields are being paid by the US Treasury or government bonds. The Fed Chair has not allowed that to happen and in August the Fed Reserve has an meeting at Jackson Hole, Wyoming which will have all Fed watches waiting to hear what they say and do. Till then the total return on dividend paying stocks is a good method to keep your money invested in.

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

If you live near a port on the ocean, one of the biggest economic activities in the community has been the rise of people going to sea for an adventure. In most cruises, the ships sail through the evening and land at a port during the daytime. When the cruise ship arrives upwards of a 1,000 people go into the community to spend money and on shore some logistics on fuel, food and garbage are taken care of. For the host community cruise ships are a welcome sight.

In an article by Adriana Gomez Licon and Marta Lavandier of the Associated Press, the first cruise ship left Fort Lauderdale which is just north of Miami and has a wonderful port.

The big 3 companies in the cruise ship industry are Carnival, Norwegian and Royal Caribbean which all have branded names in ships. One of Royal Caribbean brands is Celebrity Cruises which unveiled Celebrity Edge which costs $1 billion in December 2018 and it was the first ship to set sail in 15 months.

The Port at Fort Lauderdale is called Port Everglades and the Governor noted the port lost more than $30 million in revenue in fiscal year 2020.

During the 15 months shutdown the big 3 companies had to raise $40 billion in financing just to stay afloat. Collectively they lost $20 billion last year and another $4.5 billion in the first quarter in 2021 according to SEC filings.

The good news for the cruise industry is according to an interview by President Arnold W Donald, President and CEO of Carnival Cruises, the world’s largest leisure travel company, they have 8 million people who are repeat cruisers. There should be and is a large pent up demand to cruise when people feel safe to do so.

Linking to dividend paying stocks, in a downturn profitable companies which can pay a dividend have the ability to bounce back at higher levels because of the many assets they have and can draw upon. As you do your research, you can determine how well the assets are being used.

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

If you can think about times before COVID, you might consider infrastructure bills pork bills. What that typically meant was a bill for infrastructure would be proposed and to pass it every Senator would add whatever his/her district needed. Some of the infrastructure was needed, some of it would be a bridge to nowhere, expansion of highways for easier access to cottages, you name it it was there. Was all of it necessary? no but it provided ribbon cutting opportunities and construction jobs in the district.

Post COVID, all the concerns are still abound but politics plays a greater role. In an article by Zeke Miller of the Associated Press, the $1 trillion bill backed by politicians of both parties seems to have legs to be passed. If passed, much of the spending would typically go to the biggest players in the field of construction, consulting, engineering firms, etc.

The politicians who back the bill, all say it is badly needed as infrastructure was talked about during the last administration, but little was done. Given the employment rates, construction jobs are a good thing for the public to see.

In the Senate, to pass the legislation 60 votes are needed, the Democrats can receive 50, plus the Vice President if needed or need at least 10 Republican votes. The Minority Leader Mitch McConnell has gone on various news shows to say he wants nothing done, because it would hurt Republican chances in 2022 elections. The Republican Senators lead by Mitt Romney believe infrastructure needs to be done and hopefully they pass the bill.

Linking to dividend paying stocks, invariably with a government bill of a trillion dollars some public companies will benefit for the money. The downside of government contracts is the time element which leads to advantages for larger established companies. With the signing of contracts, profitable companies will continue to have diversified income stream for a number of years to come.

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

If you were to think about investing in the stock market, most investors were buy and hold investors. There were reasons for that, commissions were expensive, to open a trading account you needed thousands of dollars, the brokerage industry was not really interested in small accounts because they did not generate fees or commissions because by definition they are small accounts. It was hard to open an account for you would have been told you can buy a mutual fund account or a bank product. For a number of reasons many small investors did not trade on the stock exchange.

In the the last few years, that has changed and there are multiple firms where small investors can open accounts and begin trading at no commission. The process is the democratization of Wall Street. With all changes there are some good and not so good things about it. For the moment, the new entrants have been rising the wave of increases in Wall Street, but the rule of Wall Street is stocks go up and they go down.

In January the rise of meme stocks and Wall Street Bets on Reddit form. If you never been there, you should look at it. The meme stocks are considered GameStop, AMC, Blackberry and a few others. From a fundamental analysis the stocks trade at higher multiples than they should, however the price rose and the meme stock traders occasionally push up prices. This increases volatiltiy.

In an article by Erin Griffith of the New York Times News Service, Gavin Baker an investor at Atreides Management noted volatility is moving from market to market and I am treating it as the new normal.

In general, governments have tried to ensure people have money to spend during the shutdowns of the pandemic and bank deposits grew to $18.5 trillion in the first three months of the year compared to $15.8 trillion in the same period of 2020. During the shutdown, people could not spend money on leisure and entertainment and some bought stocks. When they can spend on leisure and entertainment will they buy stocks?

There are some who are suggesting the markets will fall such as Michael Bury and it could.

Linking to dividend paying stocks, when you buy a dividend paying stock the company is making a profit and paying you a dividend. The market will value the profit making and raise and lower the price of the stock, the dividend can still flow when the price of the stock goes up and down. In the long run, owning profitable stocks is good and when they pay a dividend they provide insurance of what the market does.

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