Foreign relations can be a tricky subject particularly if a country does not have a strong leader. If the country has a strong leader, then other countries can either support or try not to support them, but at least the other countries know who they are dealing with. In the case of Venezuela, there are 2 different people who believe they should be President – Nicolas Maduro and Juan Guaido. There was an election and Mr. Maduro said he won and is President at the moment. Mr. Guaido says the election was not fair so he should have won and for various reasons countries around the world have picked sides.

The economy of Venezuela was based on heavy oil and oil, but prices are down so the heavy oil production loses money and the economy of the country went down hill. When times were good the country imported 90% of what they consumed. With the drop in oil prices, all the prices which were subsidized have gone up, but people’s income have gone down.

As a country, Venezuela has assets and according to an article by Paul Waldie in May 2019, the Central Bank of Venezuela moved to cash in a gold swap contract it had with Deutsche Bank in London. The contract was secured by $1.95 billion worth of gold held at the Bank of England. The Venezuelans wanted payment.

This is where politics gets in the way, Mr. Guaido’s group said he won the election and demanded the gold remain in Britain. The Bank of England looked to the government and decided let the case end up in court, which is a good delaying tactic.

Last summer, the court noted the British government supports Mr. Guaido and the gold stays. The Venezuelan Central Bank appealed the ruling to a higher court and said while the British government supports Mr. Guaido it also supported maintaining diplomatic relations with the Maduro government. Similar to most countries, sitting on the fence and supporting both side is a good strategy.

Mr. Maduro said the money will go to fight the COVID costs, but Mr. Guaido believes the money will end up in someone’s bank account. An appeal to the Supreme Court of Britain will be done.

Linking to dividend paying stocks, one of the wonderful aspects of a profitable company is they have assets which can be divided up. When things go wrong financially for any company or country, examining the assets is top of the lists. As long as the company is profitable, few will complain whether the money should go to shareholders or be reinvested in the company and that is a good thing.

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

Prior to the election, President Trump communicated to the American public differently than the previous Presidents, the President tweeted a great deal. The former Presidents and maybe the new President Joe Biden used more formal communication methods – through the White House communications department. President Trump believed he was closer to the public by tweeting, but for the officials who sort out the details, Twitter messages had many fires to stop and occasionally sent markets up and down.

One example was the stimulus bill. In an article by Doina Chiacu and Richard Cowan of Reuters, President Trump in a tweet called off negotiations for the stimulus bill. The President wrote at my instructions, my representatives have stopped negotiation until after the election. The President wrote after the election we will pass a stimulus bill which focuses on hard working Americans and Small Business.

One might not think waiting another month for people who source of income is drying up is a good idea, but the President can negotiate the way he feels is best.

Wall Street analysts job is to determine what affect the action or inaction would have on the economy and the easy conclusion is spending would slow. The economy of the US depends on consumer spending and if people are concerned about when the next government assistance will come in, they will prioritize to housing, food, transportation and bills. The expenditures will have to wait.

The real reason why the stimulus bill is taking so long was a different idea of whether the economy should be wide open or closed. In some states the idea was to be open, in other states open a little and other states where COVID is higher closed down. If the economy is closed, then people can not meet in groups and many industries depend on people gathering. If people can not gather then some form of stimulus is needed.

Linking to dividend paying stocks, what the President says and does not say matters to analysts. In the form of open communication means everyone can see the information and determine if it is good, bad or neutral and adjust to your determination. One hopes that the President can see both the short and long term as you invest.

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

The election has happened and now the tough part of governing needs to happen, ensuring the economy moves upwards for the greatest number of people. With the election, companies all over the nation will be cost cutting until what was normal has returned.

In an article by Neil Irwin of the New York Times News Service, do not expect a V shaped recovery, it will be a slower recovery, why sectors that in theory should not be much affected by the pandemic at all are showing patterns akin to a severe recession.

There were many companies who kept workers on because of the government help, those programs are ending and the layoffs start. Even in head office, the term is management of companies and enterprises the 3.9% decrease is higher than the 2.4% drop during the 2008 recession.

Compounding the problem is as in all recessions, the shifts that were happening already have been accelerating. This means when the economy does get back to full health, many jobs will no longer exist and many other workers will need to find other types of work. Historically those adjustments take time (one hopes the government in charge is helpful to the shift, rather than expecting people to do it themselves).

Sofia Koropeckj, an economist at Moody’s Analytics expects there to be a steady state but not until 2023 or 2024. It is expected upwards of 5 million people will have troubles because their jobs disappeared or have changed significantly.

An example is Herron Printing & Graphics based in Gaithersburg, Maryland. The company produces a number of items or trinkets companies give out at trade shows, which are presently not being held. The company produces restraurants menus, which have a low demand, because menus are on line. The company produces note pads you would pick up in a hotel, which few are staying at. Business is down 90%. Randy Herron is President of the National Print Owners Association. If they are not printing, then no new software or equipment is needed.

Trucking is a large business employing thousands of workers. The industry is working below February levels with employment down 5% and trucking tonnage down by 9%. The industry is not buying new trucks.

Buying a new vehicle and truck employment levels have changed because more and more people research the vehicles on line first. When they go to a dealership it is for a test drive. The price haggling is done on line, which allows consumers move choice to find alternatives.

In every recession, the recession starts in one sector and then moves outwards. In 2008 the recession was housing prices went down; the 2001 recession was the price of dot.com companies declining. The recession starts in a sector and then rolls into others and millions of people begin to lose their jobs. The challenge for the administration is not to prevent the structural changes, it is to ensure new jobs are being created and the pain is short-lived. The past 2 recessions had jobless recoveries which took years for the process to play out. What will happen now?

Linking to dividend paying stocks, these companies tend to be leaders in their field and from an investment point of view that is great. They are also well and need to do cost cutting which affects people which is not so good. Governments have a role (the idea of Andrew Wang and the $1,000 a month dividend sounds very good to bring the economy back). what will the government do?

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

If you were to be asked what is the second biggest fashion retailer, what company would you say? The biggest is Spanish company Zara which reported a return to profit in May-July quarter. The second largest is Swedish company H&M.

In an article by Anna Ringstrom of Reuters, Chief executive Helena Hellmersson said although the challenges are far from over, we believe the worst is behind us and we are well placed to come out of the crisis stronger. The company has expanded its network of shops around the world, will aim to cut their number by a net of 250 or 5% of the stores in their current network. The chain has 5,000 stores.

The company said sales in the stores has continue to recovery and reported a smaller than expected drop in third quarter profit.

Analysts at JPM it a note said, H&M has improved the quality of the H&M business model and infrastructure and the turnaround is still very much well on track.

The company is expected to make 2.37 billion crowns (or $352.8 million).

Linking to dividend paying stocks, all companies had to ensure their inventory levels are well managed. There is a process to all retail companies – the item comes in at full price for a month or so, then seasons begin to change and sales happen and then larger profit mark downs occur then the items are sent to other retailers to send at or near costs. Managing inventory and ensuring customers receive what they want, when they want is a challenge which keeps people in the retail world. How does your company manage their inventory?

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

When you buy a dividend paying company, it often has production facilities in multiple locations, this is good for diversification. It is also good when companies play off each municipality and state to receive the most grants or forgivable loans or industrial bonds or other incentives municipalities and states can offer. All companies were started somewhere so that is their historical home, but many other the years move to other areas. In the case of Boeing, the company was founded in the Seattle area, the corporate headquarters a few years ago was moved to Chicago and the company established a plant in South Carolina in 2012.

In an article by Eric M Johnson of Reuters, the company examined their costs, decided on a cost-cutting strategy to move operations for the Dreamliner or the Boeing 787 production from Seattle to North Charleston, South Carolina. It was good news for one city, bad news for another. The company said, the single site would improve operational efficiency as the US plane maker adjusts to the market downturn and positions itself for recovery.

If the idea of union and non union workforces played a role, it might have. Seattle is unionized, the union tried to organize the South Carolina plant but was unsuccessful.

In Washington State and in Seattle, politicians took out their “swords” and called the move an insult to the workers who work there and would examine the company’s favorable tax treatment.

The labor force in South Carolina maybe less expensive, but for Boeing to increase production to the 10 or 11 planes a month will mean a significant investment in the South Carolina facility.

Linking to dividend paying stocks, all large companies will go through a similar type of decision making process when it comes to cost cutting. One facility will benefit while another will not. One hopes the remaining plant location was enough diversified that people will do other things. However with every production facility an infrastructure develops to help train and support those jobs. From the community colleges and universities to retraining facilities to supplier jobs in the community. What decisions will they make? When profits are being made, all can be good with the company. When the company enters a cost cutting program, the benefits are to the company not the community.

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

There are many methods to accumulate wealth – you can marry into it (there are many stories about people overlooking the negative aspects of their spouse for the money they bring into the marriage). You can win a lottery (the writer plays a lottery but rarely wins over $15). You can be a robber baron – steal it from people. You can invest in the perfect stock and it goes up and you win, although you should be reminded that there are many stocks in the market and only a few that are very big winners. The other way is over time – if you live in the correct neighborhood over time your home will go up in value. You can live on less than you make and save the rest to make investments or you can live on a little less than you make and make investments. For the average person, the last example is the best one.

Andrew Hallam wrote an article in the Globe and Mail and he wrote he was a teacher. He used the examples:

Jill begins at 16 and invests $240 a month every month till she is 65. How much would Jill save? The answer is $240 a month x 12 months x 49 years is $141, 120.

Lisa starts investing $1500 a month at the age of 40. How much does she save at 65? The same process $1500 x 12 months x 25 years is $450,000.

Who would have more if they averaged 8% a year. Why 8%?

Short term returns are often horrible, but investing is not a sprint, it is a marathon. Using information from DQYDJ.com and the Stingy Investor Asset Mixed calculator, the results were:

for the 25 years ending in 2008, the average was 10.2%

if you started in January 1929, 25 years late the average was 8.14%

Using compound interest and 8% to be conservative the answer is Lisa would have $1,421,179 but Jill would have $1,718,310.

There are a wide variety of funds to put your money into such as ETFs or mutual funds but the key is to start early, keep fees reasonably low and let compound interest help you.

Linking to dividend paying stocks, ideally some of your investments include a dividend stock ETF or fund because the dividends which can be rolled over means the companies inside the fund are making money and they will tend to trade at higher multiples for stock growth. You benefit it two ways even though you are trying to ensure capital preservation is the key.

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

In the world, of multi billion dollar markets, there is two ways to examine the markets. The markets are an example of supply and demand and the best information tends to rise to the top and eventually everyone has similar information or people will try to cheat. In the world of the large banks, they occassionally get caught cheating, but no one ever goes to jail. The bank agrees to pay money and admits some wrong doing but nothing illegal to send people to jail.

In these equations, the issue is did the bank make sufficient money to increase profits and pay bonuses and have enough to pay the fine in reserve? If they did, seemingly procedures are changed and life goes on.

In an article by Abhishek Manikandan and Michelle Price of Reuters, JPMorgan Chase & Co agreed to pay $920 million and admitted to doing wrong. The money was broken up to $436.4 million in fines, $311.7 million in restitution, and $172 million in disgorgement the Commodity Futures Trading Commission (CFTC) said. The fine was the biggest ever settlement imposed by the derivatives regulator.

What JPMorgan did between 2008 and 2016, was engaged in a pattern of manipulation in the precious futures and US Treasuries futures market. Traders would place orders on one side of the market they never intended to execute, to create a false impression of buy or sell interest that would raise or lower prices. The practice is known as spoofing.

Some of the trades were made on JPMorgan’s own account and some were made on behalf of hedge fund clients. The bank was warned about it in 2014 and instituted a new surveillance system but kept doing it anyways. Daniel Pinto, co-president of JPMorgan and chief executive of the Corporate and Investment Bank said the individuals who did the trades are no longer with the bank. (although it safe to say they left with bonuses in trac).

Mr. Pinto says the bank has invested considerable resources into boosting its internal compliance policies, surveillance systems and training programs.

The CFTC has been using more data analysis to spot potential wrongdoing and some of the ideas came from the health care fraud schemes. The CFTC and Justice Department mined the data to see how the worst actors were and surprising or not surprisingly came up with a big bank.

Linking to dividend paying stocks, any market where there is money to be lost or made, there will be some form of fraud. The wonderful analysis for a company actually doing things and making money can be use and are used for companies that have the potential to make money. To try to be as legal as possible, error on the side of investing in profitable companies which can sustain their dividends. No company is perfect, but one can determine the values of it when problems come up. How does the company deal with them under the pressures of consistently making money.

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

As a dividend investor, you are used to voting. Every company where you have an investment has an annual meeting and you should vote. Most of us, as long as the company is making profits and can pay a dividend vote for management.

There is a vote for President and other offices and you should vote. The writer has been involved in the political process over the years from knocking on doors, to giving literature, to fundraising, to recruiting candidates, to helping run campaigns. Some candidates have been wonderful, some not so, but the process is important. I hope you vote or have voted.

For an investor, governments play a role, not the majority, but governments can pass laws which make the day to day business of running a company easier or harder. As an investor, you like when governments make life easier, but there is a balance, similar to everything else in life.

Linking to dividend paying stocks, one of the reasons why you invest in these shares as the companies have gone through economic cycles and political cycles and still make profits to pay dividends. Who ever wins will not likely change what good companies are doing already. As an investor you have many different viewpoints, which is good, but casting your vote is important. VOTE

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

COVID has changed retail shopping in the US, but in some countries shopping on line was pushed ahead a number of years, but people were already shopping on line. All retail companies over the past few years have invested in shopping online, COVID pushed the line ahead the equivalent of 10 years into 1 year. Then there are countries where companies similar to Amazon were available but were being subsidized by countries such as the US, Germany and Britain. An example is Italy.

In an article by Adam Satariano and Emma Bubola of the New York Times News Service, Italy is a country that has preferred to shop in stores, pay cash to buying online in record numbers. If you think about Italy, the numerous coffee shops for people to go outside brings an image that seems natural. Go shopping and stop at small restaurant before going home.

North America is Amazon’s largest market accounting for 2/3s of its $245.5 billion global consumer business. But the Seattle based company has been targeting Europe and other markets to grow.

Amazon entered Italy 10 years ago or in 2010, and prior to COVID 40% of Italians shopped on line compared to 87% in Britain and 79% in Germany according to Eurostat, an European Union government statistics group. Although people shopped on line, e commerce accounts for 8% of retail spending in the country.

In 2020, the total online sales are estimated to grow 26% to a record E22.7 billion ($35.4 billion) according to researchers from Polytechnic University of Milan.

One reason for fewer online shopping in Italy is small and medium sized businesses make up roughly 67% of the economy and 78% of employment. Many companies saw online as a life line or opportunity to stay in business.

Amazon has added 2 new fulfilment centers and 7 delivery stations pushing its workforce up to 8,500 well up from the 200 in 2011.

Linking to dividend paying stocks, to build up and take advantage of opportunities companies need the infrastructure in place. When demand builds the process is repeated over and over to satisfy the customer and keep them coming back. In Italy there were challenges with internet infrastructure but all companies had the same concerns, who takes advantages of it?

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