Whenever you invest, the choice is always what are the alternatives and how much risk there is. If the alternative is to by a Triple A bond yield 10% or invest in the stock market and hope, you might logically pick the bond. However in our reality, interest rates are close to 0 and one of the most important people who have a say on interest rates is Federal Reserve Chair Jerome Powell.

In an article by Howeard Schneider and Ann Saphir of Reuters, Mr. Powell said interest rates are not going up soon. Mr. Powell testified before the US Senate banking committee, the proceedings are televised and the words of Mr. Powell are analyzed in many reports afterwards. In the hearing, Mr. Powell said expect us to move carefully, patiently, and with a lot of warning. (if policies change to raise rates, it will not be a surprise).

The Fed has helped the economy through a $120 billion in monthly purchases of bonds both government and corporate. The policy is continuing for the forseeable future. Mr. Powell talked about the missing 10 million jobs, not pressure on the economy expanding. Mr. Powell recognized reality by saying the economic recovery remains uneven and far from complete. In the Washington Post, there is a running total of the number of people vaccinated. Mr. Powell said the economy or the return to normal depends on the number increasing to much higher numbers.

Linking to dividend paying stocks, with low interest rates investing in profitable companies which pay dividends is a very good alternative. If and when interest rates go above the average dividend yield, then money will flow to alternatives even though some do not debt. The world has $23 trillion in government spending and we still have low rates, perhaps dividend paying companies will never go out of style.

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

As long as the pandemic has happened, governments around the world have spent money to keep their economies keep going and this has produced a great deal of debt. At some point the debt will have to be paid down, but when countries begin to make progress in the countrywide vaccination program, traders have started to be concerned about inflation.

In an article by Lewis Krauskopf of Reuters, the yield on the benchmark 10-year Treasury note, climbed to a a one year high of 1.36%. That number is higher than 0%, but in relative terms it is still quite low and will remain low as determined by the Federal Reserve. There are whispers will rates go higher?

Eric Freedman, chief investment officer at US Bank Wealth Management, noted the theory is when government bond yields rise, all asset price should reprice lower, Mr. Freedman believes yields have not risen high enough to provide a competitive alternative to stocks.

BofA Global Research surveyed fund managers and they showed a record in the net percentage of investors taking higher than normal risk, cash allocations at the lowest levels since March 2013. Allocations to stocks and commissions at their highest level in about a decade.

Analysts at Citibank and Nomura believe if the 10 Year Treasury went higher than 1.5% stocks could drop 8 -10%.

At 22.2 times its forward price to earnings ratio, the S&P 500’s valuation is well above its long term average of 15.3% according to Refinitiv Datastream.

J Bryant Evans, a portfolio manager of Cozad Asset Management said if the 10 Year Treasury went above 3%, then bonds might start competing more aggressively with stocks.

Linking to dividend paying stocks, if you own dividend paying stocks, your dividend yield is compared to owning the 10 Year Treasury which should have least risk associated with it. There are multiple companies that have been profitable and able to increase their dividends every year. If you are worried, more towards these companies and until interest rates go above 5%, you need not worry. The new Chair of the Fed is not likely to increase rates until after 2022 or the midterms.

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

If you think about Tesla, you likely think about Elon Musk. Mr. Musk has many investments and one of the most public is Space X. Space X has ambition to go to Mars but it makes money from satellites. Starlink has plans to send up to 12,000 satellites and has sent up 1,000 already.

In an article by Alexandra Posadzki, Starlink Services would provide telephone services connecting consumers to its MSP’s platform to its MSP’s platform using its MSP’s platform using its network capacity. VOIP is a cheaper alternative to alternative to traditional telephone service, but relies on user’s internet connection.

The company says demand is strong for its service and more than 10,000 customers have already signed up to pay a monthly fee and the company says hundreds of thousands have expressed interest in the service. It is important to note Disney signed up 100 million people to its Disney plus channel and Verizon and Comcast has millions of monthly subscribers.

Linking to dividend paying stocks, in the communication business monthly subscribers are the key and there is plenty of competition for each and every subscriber. Loyalty is less and less and cost per monthly is important. It might be Starlink continues to bring down the costs, but it will take a long time before it reaches the market reach of the biggest companies. Celebrate the innovations, and watch them but ensure the metrics needed to make a profit are there before you invest your money and check it every quarter. With Disney, Comcast and Verizon you can do that, with Starlink you are hoping.

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

If you know Tesla stock, then you likely know after Elon Musk, one of the biggest backers of Telsa has been Cathie Wood of ARK Investments and ETFs. The higher stock price of Tesla and other innovative companies gave the ETF about 144% return on investment. This growth brought in mega funds or over $14.84 billion to make the fund at $26.6 billion. That is the wonderful news.

In an article by David Randall and Lewis Krauskopf of Reuters, the growth of ARK ETF is double edged sword, the success brings in more money, particularly retail investors. The downside is the fund becomes increasingly large for it to have mega returns the companies have to do even better. Will Tesla’s price double? triple? stay roughly the same or go down? Will the momentum stocks in innovation the fund holds double and triple? The larger a fund becomes the more it behaves like the S&P 500 index fund.

Jimmy Lee of Wealth Consulting Group noted EFTs that can up more than 100% in a year can come down just as hard.

Cathie Wood before helping working for ARK worked with AllianceBernstein as chief investment officer of thematic portfiols and co-manager of global positions at Tupelo Capital Management. ARK was founded in 2014 to focus on innovative companies.

When ETFs move their positions around, particularly when they are large, use market makers to ensure transactions move smoothly. When they use market makers, information about what they are do makes the rounds of Wall Street. Sometimes it is a little harder to make as much money when the ETF is large.

Linking to dividend paying stocks, having innovative stocks rise in value is exciting because they offer a vision for the future and we all want to believe the future will better. In investing sometimes the tried and true is easier to live with because the money you invested you want to ensure it is available for you to live better. Companies that will do something in the future, hopefully, shares will go up and down, sometimes like a yo yo. Ideally profitable companies that can pay dividends will be more stable in terms of their share price and that can allow you to sleep well at night. Your money can grow over time and that can be just as exciting as the yo you stocks.

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

All systems work until they do not and then everyone looks for the enemy or villain. In late February the hydro grid in Texas failed. In was terrible and similar to most events there was a wide variety of reasons. Power plants than run on natural gas, oil and nuclear froze, windmills and solar panels did not generate electricity (although they make up 10% of the supply) and electricity did not come to many Texans. There are many consequences but blaming the victim is high on the list. As the snow and ice came with the freezing weather, people turned up their heat or caused a spike in demand. With limited supply, the regulator of the electricity system had to do revolving blackouts to keep the system running.

In an article by Matthew Daly of the Associated Press, the politicians jumped into the blame game. The Governor and Lt Governor blamed the Green New Deal or 10% of the system for failing the entire system. This was concerned suspect once people learned of solar and wind capacity, after the state they are in is Texas. Texas is the center of the oil and gas industry and leading producer of natural gas. If the the components in a natural gas generator froze, it might be more reasonable to blame the ability of the system to endure winter weather. It should be noted the average temperate in February tends to be in the 50’s not the 30’s. Over the next few months there will be a report on what happened and how to avoid it in the future.

For many years Texas has been the home of surplus natural gas and this means for the average consumer for their gas and electric bill, they do not have fix prices, after it is Texas. During the outage, natural gas prices went up and not just a bit but over a 100 times typical levels. Minnesota Senator Tina Smith among others said the producers had to pay spot prices and they pass the expenses to customers and it is too high. Senator Smith wrote to the Energy Department, Federal Energy Regulatory Commission and the Commodities Future Trading Commission.

An example of the spot pricing increasing was in Winfield, Kansas the price of natural gas was $3.00 per unit, it increased to $400 a unit. Normally, Winfield pays $1.5 million a year in gas costs, expects to be charged $10 million for the week.

Linking to dividend paying stocks, when GameStop shares soared, it was a news event and many try to speculate. When natural gas prices soared, fewer people could speculate although over the coming months you will hear some who did. Commodity prices can and do jump, it is part of the cycles and squeezes, to try to stay away from the the squeezes invest in profitable companies that can pay dividends. They can pay their bills, likely have policies and procedures to deal with the hopefully one time events and life can continue.

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

Hopefully, in the way you earn a living, you are not dependent on commodity prices, however if you think about mining, one of the considerations should be the commodity price cycle. Hopefully most young people when they learn something about economics see the price-demand charts. For the mining companies of the world, those charts are what defines them. The higher the demand, the higher the prices. For investors around the world, when you hear about the return to normal that should mean higher demand for something. If President Biden passes the infrastructure bill, it will mean higher demand for basic commodities and that means higher prices because of more construction.

Generally when the average person thinks about commodities they think about gold and silver. (apparently there is a day in Vietnam where the average citizen is suppose to buy gold to have a lucky year – if one is cynical, the jewelry companies are doing a great thing in the country). For industrial purposes the commodity to think about is the price of copper. Some of the readers will remember a number of years ago, the price of copper was high enough for people to strip old houses of copper, go to electrical utility sites and steal copper. Hopefully people are not doing that now.

In an article by Niall McGee, copper futures hit a 8 year high trading as high as $3.84 a pound on the Chicago Mercantile Exchange or CME. The reasons why copper is increasing in price is rebounding global demand (more users), a tightening supply and looking to the future on copper’s use in a green energy world.

Robin Bhar, an independent consultant with London-based Robin Bahr Metals & Mining Consulting believes the market is overheated, because speculators have jumped into the metals.

Citibank analyst Alexander Hacking noted Citi expects demand will outstrip supply by a half million tonnes of copper this year. In the future, the green deal could increase the demand because battery powered electric cars typically use about 3 times more copper than internal combustion engine cars. (although the reality is work will go on to find a less expensive alternative).

In 2011, copper prices peaked at $4.50 a pound. The price fell in 2012, when expectations of China’s demand fell dramatically. At the moment, the existing mines are forced to dig deeper which is more expensive to the miner. However there are mines being developed in Democratic Republic of Congo, Chile, Panama to name a few places around the world.

Linking to dividend paying stocks, in some industries the most important aspect of the business is the commodity price and all you have to do is look at the price and determine is the price going to be stable or go up or down? If you believe the price is stable and will go up, you can invest and you should have capital gains and dividends as the company makes profits. If you determine the other direction it is time to find alternatives that are more stable. Think about those simple supply and demand charts (guns versus butter) and try to bring you investments down to the simple level. Then it is easier to make a decision to hold or find alternatives.

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

In firms around the world, sometimes what they do and how politicians act are a broken connection and need to be investigated. They need to be investigated because the politician does something which causes the stock to fall and the issue is did anyone make money from it? In Brazil which is run by President Jair Bolsonaro who tries to be a populist had an issue with the state-controlled oil company raising its prices for diesel or gas prices.

In an article by Aluisio Alves of Reuters, the President of Brazil changed the President of the oil company called Petrobras from Roberto Castello Branco to Joaquim Silva e Luma. The problem is on Thursday, the President of Brazil mentioned the changes on his Facebook account and complained about the rise in the price of diesel. On Friday or the next day in the Brazilian stock market the common shares of Petrobras or Petroleo Brasilerio SA lost 8% of their value and the preferred shares lost 6.6% of their value or the company was worth $5.2 billion less. Who made money shortening the stock?

On the face of it. Mr. Luna maybe a good administrator, he is a former army general and was in charge of overseeing the state-run Itaipu hydro dam on the border of Brazil and Paraguay and Argentina. Mr. Luna said he needs to find a balance in fuel pricing considering the impact on shareholders, investors, sellers and consumers.

The former President of Petrobras Mr. Branco had spent his time trying to sell underperforming assets and pay down debt. The stock market was liking what Mr. Branco was doing. It is not the first time, the President of Brazil has interfered in the state oil company.

Linking to dividend paying stocks, when the government is a partner whether it is silent or majority controlled, it has an agenda which involves winning more votes. Winning more votes has more to do with variable pricing than with a running a profitable company which can pay dividends. Often times, in a state controlled company, it will end up with assets that have to do with encouraging people to vote for it rather than rationalize the company. In addition what it owns and how much it pays its senior executives may come up in elections. If you own shares in such a company, be careful around election time.

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

One easy method to examine any company is did they do what they say they would do or how is there execution of strategy. When the strategy is released it looks good or if you do not think it looks good you should quickly find alternatives or have enough shares to change management. Strategy is a key reason why as a shareholder you pay the senior executives higher than normal compensation packages, so how is being executed?

Every company has a logistics concern, in the northeast as this is being written it is snowing or weather is a concern. In the automotive world, every new vehicle has at least 100 chips it in, at the moment there is worldwide chip shortage because of demand due to the COVID adaptions companies had to make and people using gaming more than in the past. At GM the largest of the companies making internal combustion engines, Chief executive Mary Barra said GM will not lose any production of its high profit full size pickup trucks and SUVs, although the supply of computer chips is a bit fluid.

In an article by Ben Klayman and Paul Lienert of Reuters, the shortage of computer chips which is called fluid could shave up to $2 billion from 2021 profits. GM reported a 4th quarter profit of $2.8 billion.

If you want a GM car, there are production cuts at North American plants and rival Ford has lost some production of its high profit top selling F-150 pickup truck.

Similar to every large organization taking a stake in a computer chip company or increasing its horizontal leverage is an option. Do you make the parts yourself? outsource them, but be the biggest customer? or take your chances in the normal sourcing of parts?

Linking to dividend paying companies, profitable companies have various strategies to deal with the above questions to determine how the company maintains its ability to make profits and pay dividends. All companies go through the options, as extraordinary few companies do everything in house, they use the products of another company to add value to what they do. One method to investing is try not to invest in the final product but who are the suppliers to the company? There are always different methods to invest.

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

For as long as there has been smartphones there has been dating apps. People need a way to meet and apps are a good first step. It is not surprising there are many dating apps and those who use them likely use more than one. Each of the app has its advantages and disadvantages, but it is a large market.

Bumble is an app which is unique among dating applications for letting women make the first move. It empowers women to feel safer and more in control of the dating which is a good thing.

Women have become large users which attracts men which eventually means the company has decided to sell shares in the IPO or Initial Public Offering market. It is a good thing to do because in 2020 companies raised a record $168 billion according to Dealogic.

In an article from Reuters, Bumble is selling 45 million shares at $39 a share to raise as much as $1.8 billion valuing the company at $7 billion. Last year the company had considered offering 34.5 million shares at $28 to $30 a share. One of the big beneficiaries will by Blackstone Group who is a majority shareholder. Goldman Sachs and Citigroup are the lead underwriters.

Linking to dividend paying stocks, in a crowded market such as dating apps, Bumble offered something unique and people were attracted to it. It is surprising that it was the first app to let women make the first move because 50% of the customers are women. The market to empower women must be a big market, perhaps we will see more companies cater to women.

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