If you buy dividend paying stocks one of the benefits is dividends are treated with less tax than interest income, which means you are keeping more of your money, that is a good thing. Many people would like to be a billionaire, the reality is the overwhelming will not make it and that is ok. However after we look at a billionaire’s lifestyle the more important thing is to examine how they keep their money working for them and not give it away.

In an article by Alan Rappeport of the New York Times News Service, an IRS report noted the top 25 billionaires between the years of 2014 and 2018, paid little in taxes. They all paid something $13.6 billion but they had $401 billion in wealth. The average person working for a company or having a paycheck because of the income they receive on a percentage comparison paid more tax than the billionaires. The billionaires paid 15.6% compared to the 37% tax bracket they are in.

The bias towards the tax system is on labor income versus wealth tax, it is the difference in assets which have risen and there would be a tax when the asset is sold, but not maintaining it. This is understandable because it is easier to deduct tax on labor than it is on wealth, which is why payroll taxes are in place and can easily be changed.

It should be noted most of the billionaires do not have elaborate tax avoidance schemes, they are relatively simple and much of it evolves not receive a large income. There are investment losses, borrowing against the value of stocks and deducting the costs of borrowing, making large charitable donations, having their companies pay for expenses, etc.

Linking to dividend paying stocks, we all have an idea of what is fair and what the tax system allows people to have. The same measures a relatively small shareholder uses are the same measures a large shareholder uses, should there be a cap? that is for politicians to decide but for now understand owing dividend paying stocks means your income is treated more favorably to you.

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

Those who live within the vicinity of Pittsburg when they think about aluminum they think Alcoa and for generations Alcoa dominated the aluminum industry, however the world leadership has shifted to China. China’s share of the global aluminum market has risen from 40% to 60% in the past decade.

According to an article by Andy Home of Reuters, China produced 3.2 million tonnes in April, 8% higher than a year ago and on an annualized basis 39.2 million tonnes according to the International Aluminum Institute (IAI).

Exports continue to flow totalling 1.66 million tonnes in the first quarter of the year.

China is short of aluminum raw material with imports of both primary metal and alloy still strong.

China has been historically a net exporter of aluminum, however last year China imported 1.2 million tonnes of unwrought alloy. Goldman Sachs noted a change in construction materials as the booster for alloy demand. A growing number of provinces have banned the use of timber for casting form work in the channels used to lay concrete. This switch is expected to increase demand by 500,000 tonnes.

Increased appetite for alloy has coincided with reduced imports of scrap aluminum used in alloy production melt. China has relented on its plans to ban completely imports of recyclable metal.

The biggest issue in making aluminum is access to cheap electrical power, hydro dams work great, however China, similar to the rest of the world, there is a desire to decarbonize. China uses coal for its electrical plants, or it has a problem.

China has a low price option which over the past 20 years has squeezed many Western smelters to be closed because they could not compete on price and China would just open up new coal plants and aluminum plants, will that change?

Linking to dividend paying stocks, in raw materials if the government wishes to subsidize an industry in can, but supply and demand will eventually catch up to the official policy, then markets will do what markets will do.

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

In the world of cryptocurrency there was always a element that criminals liked the currency because they could hide their money and it also enables direct online payments regardless of geographical location. The secrecy of it has led many in the establishment not to be involved but times are changing.

In an article from the Associated Press, a group called DarkSide hacked into Colonial Pipeline’s system and shut it down until Colonial paid a ransom. This was a larger operation than DarkSide had normally done because it affected 40% of the fuel going from Texas to the north and southeast of the US, people were not happy. The government was not happy and the Department of Justice was put into action.

The big story is the DOJ recovered most of the multimillion dollar ransom paid in cryptocurrency or reached into the the virtual digital wallet used by the hackers and took the money.

Linking to dividend paying stocks, hackers want money to live a lifestyle and to be rich and famous, taking their money away means they can not do that. Hackers will go after profitable companies because they have the money and can pay. Usually the insurance companies repay the companies, although it may mean insurance rates go up. It was interesting the DOJ can reach into the digital wallet and take back the money and hopefully they will do it again. The life of the treasurer of the dividend paying company became a little easier.

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

Where ever you city you visit or live in, you can look at the towers downtown and see many corporations occupying the floors of the office buildings. You may think to yourself those companies are providing jobs for the economy, there support the United Way and Hospitals or your favorite charity and are doing good. The reality is the head office do those types of things, but they also use all the tax rules to pay as little as possible and still be good citizens. Around the world there exist countries which through book entries companies can pay no tax, just a post office box, a lawyer’s office and easy to receive permit. Technically the services are paid by the no tax country’s office and that is a tax deduction against the high tax country. Everyone knows it, the tax free country play important roles in the economy and they are not going away.

In an article by David Milliken of Reuters, the finance ministers of the G7 countries met in London in early June and decided to close the net of large companies to pay their fair share of tax. They will set a minimum so the race to the bottom is stopped and companies have to pay something to the countries in which they operate.

Naturally every finance minister wants their hands on more revenue, the mechanics of how to get it is and reduce some loopholes is the work arounds. In the world of corporate treasurers, whatever is reached needs to be abided by, however in the office buildings there are also consultants whose job it is to find the loopholes in the legislation to ensure the law is followed but not by as much money as finance ministers are hoping for.

Linking to dividend paying companies, by virtue of being profitable they will pay tax, how much is the debatable issue. Generally corporate treasurers will ensure there is something because they pay consultants to help write legislation to lessen competition or ensure they have a built in advantage. For the world having a minimum global tax rate is a good thing.

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

In 2020 a new vehicle for investing raised its head on Wall Street, the special purpose acquisition company or SPAC which is essentially raising money and given a blank check to the originators. This has meant most of the money invested has not been that wonderful, even though $300 billion has been raised in 2020 and 2021. If money is raised in the billions, the established money managers can not be far behind and one of the better fund managers is William Ackman. He runs a firm called Pershing Square and raised $4 billion in July 2020.

According to an article by Svea Herbst-Bayliss and Mathieu Rosemain of Reuters, the SPAC Pershing Square Tontine Holding is in talks to buy 10% of Universal Music Group that would value Universal at $40 billion (10 x $4 billion).

Typically SPACs usually aim to buy private companies and take them public as an alternative to listing shares through an IPO. Generally the process to list shares through an IPO is both time consuming and many regulatory hurdles to manage to ensure the company meets the requirements for listing, with a SPAC the time and regulatory hurdles are much less. The SPAC can buy the company and then change its name to the company if desired.

The interesting aspect to this deal is of all the companies in the world to buy, Mr. Ackman picked a company which benefits from growing streaming revenues or recurring revenues.

Linking to dividend paying companies, Mr. Ackman found a company with recurring revenues and expects to continue to generate these funds. It is a good strategy and something dividend investors know well. There is great value in constant revenues, the challenge is what to do with the cash and how the company keeps costs in line.

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

In global politics there are faults with every country, but sometimes looking at economics tells you what countries will and will not do. China does many things, some internal things few in the world like but China has a trump card – it is the center of the manufacturing of the world. As economies open up and demand more things, China is producing and selling them. In the case of the US, the ships coming from China are in such demand that it is cheaper to send them back empty than bring back some raw material with the ships.

In an article by Winni Zhou and Tome Westbrook of Reuters, the value of foreign cash deposits in China’s banks leapt over $1 trillion according to April’s reporting. The deposits have grown so large the banks are having a hard time to loan the currency, this poses a risk to the official efforts to control the price of the Chinese currency the yuan.

The yuan is trading at 6.4 times the price of a dollar and it has a real possibility of trading at 6.2 or 6.25 times the price of the yuan according to Rohit Arora, UBS’s Asia currency specialist. Mr. Arora expects the currency level to be near 6.38 at year end.

The People’s Bank of China (PBOC) has said that in mid June, the banks have to increase their reserves.

Paul Mackel a HSBC global FX strategies said the private sector has overtaken the central bank to absorb excess US dollar liquidity generate by the corporates and foreign investment inflows.

China is running the world’s largest current account surplus and government statistics show that half the dollar deposits are held by local companies.

Linking to dividend paying companies, in global politics it is easy to pick on China, but the reality is if the US picked on China too much they could dump US dollars and create many headaches for the US government. Even though the economies are inter related, good relationships are important to be maintained, although the countries will not agree on everything. In many manufacturing companies, as the 3rd largest economy in the world, many companies have and develop strong bases in China, which means the companies tend to be for the status quo in government relations.

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

Often times when you are reading the news, you have different opinions about the affects of something negative. For exaample in early June, the meatpacking company JBS SA had to cancel shifts because of a cyberattack. The different opinions reflects how much meat you eat or do not eat. For those who do not eat meat, the opinion might have been good, people can eat plant based products. For those who eat a lot of meat, the opinion might have been somebody is targeting our right to eat meat or meat prices will go up again.

In an article by Tom Polansek and Mark Wienraub of Reuters, one of the largest company in the meatpacking industry was hit by a cyberattack. At the time, people were not positive where the attack came from, but it is important because the meat packing industry is a very concentrated one with 5 companies controlling the market. The largest meat packer in the world is headquartered in Brazil and is called JBS SA. In the US its brands include Swift and Pilgrim’s Pride and looking on its website has another 25 plus names. If you bought beef or chicken or pork in the past, you may have bought a JBS brand.

JBS runs meatpacking plants and controls 20% of the slaughter capacity for cattle and hogs. When a plant’s shift has to be cancelled for a couple days, the supply is not likely to push up prices, however anything longer than a couple of days, expect prices to rise because of supply and demand. As the summer begins, one expects meat consumption to rise

Linking to dividend paying stocks, companies such as JBS operated around the world and can move product from one country to another to keep supply moving. In terms of logistics it is an interesting thing to watch and understand. The bigger issue is consumption of meat and whether non meat substitutes will take a larger share or not. Retail companies will supply whatever consumers demand, the suppliers to the retail then have to understand and try to ensure supply and demand meet at profitable levels. Often times many industries are more concentrated than consumers tend to believe or expect, the concentration tends to be good for the companies which is good as an investor.

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

Australia is the world’s largest exporter of coking coal used to make steel and the world’s second biggest in thermal coal for power generation and industry. The Australian economy is heavily dependent on the export of commodities which Australia has many. Those in government are biased towards the commodity industries.

In that context, the Federal Court of Australia made the ruling in a class action suit brought by 8 teenagers, aged between 14 and 17 and an 86 year old nun acting as their litigation guardian. The ruling says the Minister of Environment must take into account how children would be harmed considering climate change when deciding to approve a coal mine expansion.

The Minister and the company said, that can work within the ruling of the court, the company saying most of the coal it was going to mine from its expansion is high quality coal.

Linking to dividend paying stocks, whenever there is commodity boom and prices rise, owning stocks in the commodity business are a good thing because the increased prices tend to mean profits which means dividends and stock buybacks. When prices decrease, it would not be a good thing to own them because cost cutting is the order of the day. If you do own commodity based investments, ride the boom and then seek alternatives to ensure you have locked in capital gains.

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

To judge optimism you are often asked is the glass half full or half empty, given the only time you have perfect information is looking backwards. The very good news is the degree of vaccinations is rising around the world which means more countries are allowing their citizens to gather. Whether the gathering is shopping, sporting or music events, or just being in close proximity to other people and not worrying about it. In the US over Memorial Day weekend, there was a tremendous urge to travel and eat at restaurants. That is a good thing.

All of us, look and particular numbers to gage whether the outcome of the event we are watching is a good thing or ask the question is the glass half empty or half full. Depending on your decision, it will lead to more decisions. In an article by Reuters, the writer examined a few issues in the world’s economy.

Payrolls and inflation – how fast is the US recovery? If the recovery is strong as hoped, economists were expecting 621,000 jobs in May, then the fed can ease off stimulus or bond buying. If not, then the fed has to continue what it is doing. Will inflation raise its head? we are seeing prices in retail stores increasing but there were offsets as people were not driving as much. Now that driving and traffic congestion is becoming a thing again, what is the offset?

Europe for the most part shut down and the European Central Bank or ECB had to help everyone out. Is inflation in Europe rising faster than expected? The ECB meets in June and will make a decision.

The price of oil has rebounded from its low when very low demands can about from the pandemic, the price of oil has increased. Commodity increases tend to mean more output, with OPEC open up supply?

The second biggest economy in the world is China and their monetary dollar is called the yuan. The price of the yuan has been increasing, is this forex market manipulation or will the increasing yuan mean higher prices of goods from China, adding to the world’s inflation?

Linking to dividend paying stocks, at any time in the month or year there are always many concerns which can mean the sky is falling. If you have limited or no leverage on your dividend paying stocks, then you will say stock prices will go up and down or fluctuate, but as long as the company is profitable and can pay dividends, I can sleep well at night. If you have a good sized portfolio that gives you steady income you can acknowledge there are many concerns, but there are many good reasons why the stock market is a good investment.

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