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.

In every country there exists cities because of their location, seemingly central to every other part of the country the city grows. In China, one of the cities that is a top national transportation hub is Zhengzhou. The city is located about 1,000 miles south west from the capital Beijing and has 12 million people, but it is the junction for major north-south and east-west high speed rail lines. China uses coal for generating electricity and many of the trains come through Zhengzhou, as well as the province of Henan is a major producer of grains, raw materials and manufactured goods.

In an article by Dominique Patton of Reuters, in July in 3 days, one year of rain fell which flooded the rivers and flooded the city. If you ever have watched what happens when a dam breaks, a rush of water flows through the downstream and the water has the forces to wipe out anything in its way. For us that means roads, bridges, cellphone towers, poles which carry electricity and the list goes on. The water picks up dirt along the way and deposits it whenever it reaches buildings which means when the water eventually goes down everything is dirty or needs to be cleaned or tossed out.

In planning for disasters such as floods the first response is people, then infrastructure and somewhere near the end homes. For people not in the city, after the people the first concern is the supply chain which has been not out, when will it be able to function. For a city such as Zhengzhou, analysts worry about which companies have significant production facilities and how long will they be non producing.

Linking to dividend paying stocks, all profitable companies typically have more than one location for their suppliers although they typically receive more from one location than another, but they have back up for just in case. It is good practice and production can be increased at the other facility, although it does take time. For the companies you invest in, what does their supply chain look like? how did the company handle the last time there was an shutdown in the supply system and with global warming how would it handle longer delays?

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

In every analysis one has to look at the glass and say it is half full or half empty? The market will react to all types of news and events, but one ability for institutional investors is to examine the cash on balance sheets of the S&P 500 companies.

In an article by Lewis Krauskopf of Reuters, according to Keith Lerner, chief market strategist at Truist Advisory Services, cash on balance sheets of S&P 500 companies has increased from $1.5 trillion to over $1.9 trillion when compared to the pandemic crisis in early 2020.

We know when consumers have cash, there are 2 things to do with it – spend it or save it/invest it, companies can do the same thing. The difference is when companies do it, shareholders can benefit.

If the company does a stock buyback, it has the affect of lowering the number of shares outstanding which means if the company trades at the same multiple, the price can raise to match the previous multiple. Companies have announced $350 billion in buybacks in the 2nd quarter, the largest since the 2nd quarter of 2018 when $275 billion was announced.

Another way to spend the cash would be to increase the dividend directly to shareholders, although if a company increases the dividend, it would be expected to pay the same dividend or increase it the following year. Total S&P 500 Dividend payouts rose 3.6% in the 2nd quarter, although that was short of the record payouts in the first quarter of 2020, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

If the company decides to invest the money as some will, Goldman Sachs is projecting S&P 500 cash spending on mergers and acquisitions will jump by 45% to $324 billion this year.

Linking to dividend paying stocks, if the stocks you own are profitable, expect to be rewarded one way or another as the company decides what to do with the extra cash. Deciding what to do is always a good position for a company to be in.

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

Most of believe that in the future technology is going to solve some of the problems on earth, we are not positive how, but we believe in the future of technology. It may and that is why technology stocks are a good thing to invest in, but which ones is always the question.

The biggest and best technology company for generations was IBM or International Business Machines. They were an early leader, had most of the large corporations and governments around the world as clients. The men and they were mostly men had a distinctive shirt and tie uniform and they were the problem solvers.

Part of the promise of technology is artificial intelligence or AI and the US looked to IBM to bring AI into the fold of computers. The majority of the public really does not know how the computers to work, only the promise of AI was going to make life in the future simpler and better.

In an article by Steve Lohr of The New York Times News Service, about 10 years ago, there was a contestant on the game show Jeopardy! who seemed to know all the questions. Could the supercomputer beat the contestant? IBM had a team and there was a show with their computer Watson and the computer won. For the public the results showed the promise and hope of AI, but what about at IBM?

The scientist behind Watson had a warning, beware what you promise. David Ferrucci, explained that Watson was engineered to identify word patterns and predict correct answers for the trivia game. It was not an all purpose box to take on the commercial world.

After Watson won the game, IBM poured millions of dollars in promoting Watson to their customer base and saw opportunity everywhere. However, it did not pan out in more contracts or advances into AI, the company is the fourth largest cloud computing company behind Amazon, Microsoft and Google. In the last 10 years, IBM’s stock price is down 10%.

Clearly the hype and challenges were more difficult than expected. Perhaps because IBM’s executives knew sales and service better than technology, perhaps they had too much money and could invest in just about everything, in any rate there has been many wrong turns and mishaps. Perhaps the idea was wonderful, the ability to execute was always need to be a catch up to match public and corporate expectations.

Linking to dividend paying stocks, in the business pages there are press releases from companies discussing opportunities they see in the marketplace. There are many opportunities to be seen, however what sets dividend paying companies and other companies is the ability to generate sales and profits. The issue is never the opportunity, the issue is can the product or service bring in sales and profits or is it better to wait and buy the companies in the space when they demonstrated sales and profits? No company gets it right all the time, but companies that can pay dividends tend to be selective enough to get it right to make profits and pay dividends. The total return on both the stock price and the dividends is the reason why you want to be a long term holder.

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

The third largest economy after the US and China is European community. The European Community is being affected by climate change more than the biggest economies who still place economy over environment. In the up coming climate talks in Scotland, Europe is planning to go big and make dramatic changes.

In an article by Steven Erlanger and Somini Sengupta of the New York Times News Service, Europe is changing policies and regulations to reduce green house emissions by 55% from 1990 levels by 2030. The grand total is to be net-zero for 2050. President Ursula von der Leyen of the European Commission put the world on notice by saying our current fossil fuel economy has reached its limit. Changes must be made and soon.

The implications are investments in clean energy to reach 2030 could top over $1.4 trillion, according to BloombergNEF. The policies and regulations will be aimed at those targets.

The first measure will affect the auto sector and by 2035 the sector needs to have zero-emissions vehicles. The switch will be from gasoline and diesel to electric and other zero emission vehicle. By 2035, vehicles in Europe will not have a tailpipe at the the back of the vehicles.

Other areas are to increase increase CO2 that can be absorbed by trees and farms or plant more trees. Energy efficiency is top of mind for all industries.

Renewal energy to increase from 32% to 40% or double what it is today.

The wealthier countries are going to help the poorer countries in Europe to make the transition with a Carbon Border Adjustment Mechanism border.

The rest of the world has to adapt because the companies in Europe will make it standard to ensure their customers supply chains meet the European standards.

Linking to dividend paying stocks, profitable companies have benefited from current policies, but change is it the offering and if the third biggest market is moving in one direction, a company which sells into the market has to show it is on the same path. How are your company investments moving towards less green house gases?

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