If you look at a map on the US and look to the north you see blue or a waterway from the Atlantic Ocean to Buffalo across to Cleveland over to Chicago and up to Duluth and it is easy to see both great history and economic activity connected to the Great Lakes. Great American cities were form and expanded because of the movement of goods and services on the waterways. Many of us take the movement of goods on the waterways as normal or we do not give much thought to it.

In an article by Nicolas Van Praet and Eric Atkins of the Globe and Mail, the levels of the St. Lawrence River is lower than normal. The levels have dropped even though the water in the Great Lakes is monitored and controlled by the International Joint Commission, the primary source of water for the St. Lawrence River is Lake Ontario and according to the International Lake Ontario-St. Lawrence River Board, Lake Ontario has seen its driest conditions since 1966. The reason is as much as we in the north east like and dislike snow, the snow and the important snow melt is down meaning less water is flowing into the Lakes.

The lower levels in the St. Lawrence means ships carrying goods have to lightened or carry less goods or do more trips. The formula is each reduction of 10 centimetres of water represents about 3,000 metric tonnes that has to be removed. More trips mean higher fees. If you think about the ship which caused the blockage in the Suez Canal earlier this year, it was a massive ship moving containers, to keep up with the demand of moving containers.

Linking to dividend paying stocks, climate change affects logistics which affects the supply system which affects prices. When climate changes the normal, alternatives need to be found and alternatives always mean extra time and effort and higher fees. The alternatives are trains and trucks, but the cost is higher.

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

The bull market on Wall Street has continued which translates into higher share prices which translates into more supply or initial public offerings (IPOs).

In an article by Anirban Sen and Krystal Hu of Reuters, the IPO market has already total $171 billion which is greater than the $168 billion in the total year of 2020, according to data from Deallogic.

The market is expecting some big numbers in the last half of 2021 including Didi Chuxing Technology, Robinhood Markets Inc and Rivian Automative LLC.

According to Eddie Molloy co-head of equity capital markets for the Americas at Morgan Stanley, the IPO markets will continue to be very busy.

The average one day gain in IPOs has been 40.5% compared with 28.2% in 2020 and 25.5% in 2019.

Investment bankers are expecting the year end total to be between $250 and $300 billion in IPOs.

Jeff Bunzel, global co-head of equity capital markets at Deutsche Bank said $500 million used to be a pretty big IPO, now the numbers seem to be $750 million to over $1 billion.

Valuations are strong, fund flows are strong and all the ingredients that you need to have an active and successful IPO market remain intact right now.

The success of the IPO market is attracting companies that would stay private for longer periods of time said Paul Tropp, co-head of capital markets at Ropes & Gray.

Linking to dividend paying stocks, IPOs are not companies which pay dividends but it a diversified portfolio it is worthwhile owing some. However if you do buy, remember portfolio management and that means taking profits. At some point down the line, the markets will return to normal when profitable stable companies are the best investments for the long term, with your profits you can buy more dividend paying companies.

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

Every work day after 4 pm when markets close, banks do an inventory of how cash they have and invest in with the central bank in a operation called reverse repo. The money is parked with the Federal Reserve and all is good with the banking system for another day.

The issue is the size of the operation, in an article by Ian McGuggan , the size is about half a trillion dollars a day.

The size can be seen as a warning sign that the Fed’s program to pump cash into the economy has tipped to too much and it needs to be rebalanced or the Fed will taper its cash stoking tactics. The easiest method to do that would be raise rates a bit. The Fed has said they will continue the course until the economy is fully healed for those who were hurt the most.

The Fed has been buying $120 billion a month of Treasury and mortgage bonds since June 2020. The idea and it has worked is to hold down longer term interest costs by bidding up the price of bonds (remembering bond prices and yields work in opposite directions).

Much of the surplus cash appears to be going into reverse repos. A reverse repo is the Fed sells Treasury securities to a financial institution with the promise it will repurchase the securities the next day. This takes cash off the financial institution’s balance sheet overnight and turns it into an asset.

In today’s low interest rate environment the trade is a wash in terms of profit and loss as the repurchase takes place at the same price of the original sale. Why do it? without them the interest rate would sink into negative territory, according to Robert Armstrong writing in the Financial Times.

Oliver Allen, markets economist at Capital Economics wrote one of the reasons why bond yields are staying low is the portfolio adjustments by the large US banks. Regulations to ensure banking safety means banks are required to hold large amounts of high quality liquid assets, such as Treasury bills. Given that central bank reserves and reverse repos are near zero, the banks may be buying US Treasuries instead.

Mr. Allen believes by year end the 10 year Treasury will be yield 2.25%.

Linking to dividend paying stocks, there are many elements which affect the market and those in the industry look to a wide range of metrics. As a smaller investor these things are good to know but you can judge your company how long it has been profitable and can pay dividends. Then you can determine how the biggest divisions are doing, if you believe the divisions are doing well, there is little to do and that can be a very good thing for you can focus on family and summer.

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

Is the glass half empty or half full? It depends on who you talk to is the answer particularly if the issue is inflation.

In an article by David Randall of Reuters, it is easy to see reasons why the glass is half full and inflation is raising its head, in many industries because of supply and demand there are backlogs in the movement of goods from factories around the world to distribution hubs to consumers; consumer price indexes are rising as prices rise; wages and salaries have risen; the Fed is trying to buy less in the bond market.

However, maybe the glass is half full, according to Russ Koesterich, portfolio manager of the $27.6 billion BlackRock Global Allocation fund, as long as the increase in inflation is modest, stocks could continue to move higher.

Generally as the population ages, older consumers purchased less stuff so that is disinflationary force, along with the gains in efficiency due to technology. We know companies are doing more with robotics and Artificial Intelligence to make gains in efficiency.

Jeff Mayberry, portfolio manager of the DoubleLine Strategic Commodity fund said the market was looking for a reason for inflation to be transitory and they got it.

Morgan Stanley’s Michael Wilson believe the rate of change for inflation is peaking which means some commodity prices will fall and shipping bottlenecks will be corrected.

Mohamed El-Erian, chief economist advisor at Allianz said the world’s most powerful central bank is not thinking about thinking about easing its foot off the stimulus accelerator.

Linking to dividend paying stocks, the dividend yield you receive is compared to the interest rate on bonds, which for A rated companies and the government a guarantee. As long as the yield is higher for dividend paying companies, your total return of dividend and stock price over the long term will likely be higher for dividend paying companies. Inflation has raised its head, you need to ask do the companies you invest it have the ability to raise prices to keep their margins?

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

It is a rare politician that does not support some sort of trade deal because although all western politicians say they like the market system, companies will lobby some countries unfairly help their home industries which makes selling their products very hard. In the world of aviation there are two giants and then other companies are on the horizon Boeing and Airbus. Since the US has opened up, the passengers boarded one of the two companies planes.

If you think back to the the past administration, former President Trump said America first and wanted a tariff on anything to have the supply chain be based in the US. That never happened, but along the way the other countries the tariffs were aimed at, imposed tariffs on American goods exported and generally they had little to do with the bigger industries. In an article by Lorne Cook and Aamer Madhani of Reuters, the US had imposed what could have amount to $7.5 billion on European exports because they said France and other countries subsidized Airbus (they do); the EU imposed tariffs on the US of $4 billion because the EU said the the US subsidized Boeing (they do but it more indirect).

President Biden was recently in Europe and the US Trade Representative Katherine Tai said the 2 sides have come to terms to phase out the tariffs on each side regarding aviation. The tariffs on aluminum and steel are still in effect and hopefully will come to resolution by the year end. Ms. Tai noted the tariffs were imposed on Europe but the focus should have been on China, as Europe is a close ally of the US.

Linking to dividend paying stocks, politicians say things and some of it will never come to pass, some of it with cause concerns to companies who export (most of them) and some of the words will tend to hamper sales. The politicians have their own agenda, but it is wonderful if they actually meant the reality of companies. In a competitive environment for sales working against your own government is not the ideal.

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

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.