The CEO of JPMorgan Chase Jamie Dimon by virtue of being the head of the largest bank in the US and Chair of the Business Roundtable is often seen as the face of the US banking sector or his views count for something.

In an article by Elizabeth Dilts Marshall of Reuters, on the JPMorgan Chase website, Mr. Dimon published his views of the economy in general. He said because of savings (people have not been able to spend on entertainment and hospitality) quantitative easing, a new infrastructure bill, a successful vaccine rollout, and a general feeling of getting out of the pandemic, the economy could boom until 2023.

Mr. Dimon said corporations would be willing to pay more in taxes, if the government adopted a rigorous budgeting, transparency and discipline when it comes to spending. Ideally they follow the corporate example of how to spend.

As a banker, the danger to a banker is writing off loans as uncollectable. Mr. Dimon is focusing a growing economy which should mean access to credit for both individuals and businesses.

Linking to dividend paying companies, in a growing economy, treasurers or CFOs should have a friend at the bank and be able to discuss a variety of financial options which is good for the company. The Treasurers should be using the banks access to credit with little problems, are they?

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

The company which pays has the biggest dividend payments in England is BP and for the past 100 years has been a very stable company to own. The British Royal family owns shares, but last year in the early stages of COVID, people stopped using their vehicles which led to oil prices falling and oil companies losing money. As the year went on, people started using their vehicles, the price of oil increased and oil companies have reaped the rewards as share prices increased.

In an article by Yadarisa Shabong of Reuters, BP announced it expects to hit its $35 billion net debt target in the first quarter of 2021 which is sooner than expected and can buy back shares.

CEO Bernard Looney said a combination of higher oil prices and the ability to sell assets faster than anticipated is allowing for the change. The buybacks will be in the range of $2 billion a year.

The reason why BP is selling assets is a shift to become a low carbon energy investments and pay down debt.

Linking to dividend paying stocks, many of these companies have tremendous assets which are carried at low book values. When the company decided to exit some businesses, there are assets to be sold which allows the company to pay down debt and change focus. The issue is how profitable are the new assets, relative to the ones they are selling, but sometimes consumers change and it is worthwhile going forward.

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

One of the reasons more individual investors are investing in the stock market is Reddit, which people chat about things. Other reasons are a bull market, low commissions, and keeping up with Jones, (you hear or see what other people in your age group are doing and wonder should I do the same thing?). If you remember, GameStop which is a traditional store front in malls selling video games. It is important to remember gamers size is similar to the entertainment industry – worth billions. One of the advantages of the internet is everyone has access to information, it is a little dauting at first to find it, but once you are used to it, the information is available to read and analyze. People were posting on Reddit about GameStop and many people bought stock and options and some made money as the price went from $19 to $347 and has settled in the $185 range will swings every once in a while.

In an article by Uday Sampath Kumar and Joshua Franklin of Reuters, the management of GameStop announced it will sell stock from $100 million to $1 billion to capitalize on the trend to owning its shares.

Every company to grow needs to raise money – it can be short term notes, sell bonds, issue stock, access lines of credit and something in between or combination. The company goes to investment bankers who for a fee help raise whatever the market is looking for at a good price for the company and investors.

GameStop with the money could transform its business becoming the digital go to company for games or invest in services for Gamers or some new businesses and it may one day be valued at the prices the stock is. One can hope or dream and watch how they can execute a business plan.

Linking to dividend paying stocks, fortunately these companies have the most options when it comes to how markets are doing and what the appetite for investors are. When stock prices reach new highs it is a good thing to sell more stock and when prices fall, the company can buy back the stock, the company can do bond issues; the important aspect is more the company to take advantage of what the markets of the world are giving them. If not, one has to question management of why they did not take advantage of opportunities?

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

Often times when a firm is successful, many investment bankers knock on their door to offer help. If the firm has been consistently successful over a few years, the interest is even higher. Archegos Capital Management is run by Bill Hwang and its clients are family interests. When a company manages family interest the regulatory environment is very low, because it assumed the family manages the governance. Archegos Capital Management was managing $12 billion, but it was concentrated in a very few names. The company became the largest shareholder of ViacomCBS and as the shares rose, the investment bankers offered the firm a way to make bigger returns. The investment banks would hold the shares in their name and sell Archegos synthetic products to increase the leverage and increase the return, this made Archegos control $20 billion in ViacomCBS stock. Under Mr. Hwang, the stock were from $12 to $50 to $100. All is good when share prices rise.

With a higher price, the management of ViacomCBS went into the markets to sell shares, they were going to sell $ 3 billion and Mr. Hwang was expected to buy $300 million of it. He did not buy because some of his other investments were not doing well, the other shareholders were allocated his holdings, but did not want they and they sold. The price went down and Mr. Hwang received a margin call.

The investment bankers included Goldman Sachs, Morgan Stanley, Deutshe Bank, Nourma Securities and Credit Suisse. All were making increased fees from Archegos, but the risk level was rising or if and when share prices decreased, margin calls were made, however Archegos did not have the money to pay down the debt requirements. Goldman and Morgan Stanley sold billions of dollars of shares to take them off their books, the other investment bankers were slower to sell and thus incurred losses. (there is a movie called Margin Call staring Kevin Spacey which would give you the idea of how it happens).

At Credit Suisse according to an article by Brenna Hughes Neghaiwi and Matt Scuffman of Reuters, the CEO of Credit Suisse Thomas Gottstein fired the heads of its investment bank and risk divisions for allowing a concentration of money into Archegos as Credit Suisse lost $5.9 billion on the sales by Archegos. The issue is why not the exposure to Archegos Capital Management become so big?

The risk department is suppose to ensure risk levels are manageable, and investment bankers bring in fee income but the income should be consistent. At a large investment bank, there is no reason to back a frim, unless the government is offering a bailout if something happens. Ideally, firms such as Credit Suisse pay millions to manage risk, what would cause Credit Suisse have no more exposure?

Credit Suisse also lost money when a UK firm called Greensill, which was disrupting the supply chain system declared Chapter 11 bankruptcy.

Linking to dividend paying stocks, everyone loves profits, but profits need to be managed. It can be very expensive to chase fees with seemingly low regard for what happens if everything does not work out and prices fall or contracts which people hope for do not materialize. It is easier to say yes, but no can save you money and there is always a balance. Consistently profitable companies tend to know when to say no, they are not perfect but they tend not to need growth at any cost. With your investments, the companies tend to receive many opportunities but say no to most of them, do you have a sense of when they say no?

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

If you think about Atlanta Georgia, one of the reasons you may have know about it is the prime airport for Delta airlines. Ever since the late 1970’s the major airlines have been using a hub and spoke model – American Airlines uses Dallas; United uses Chicago and Delta uses Atlanta. This strategy had made these very busy airports even busier which translates in jobs at the airport and jobs inside the airport servicing the public. In Atlanta, Delta is the largest private sector employers with over 34,500 in corporate office and in the airport. In the airline business as we have seen, government support is critical and Delta has a long history of working with local, regional and national politicians.

After the Presidential and Senate elections in Georgia where Democrats won, the Republicans who traditionally controlled elected power decided to change the rules to ensure Republicans had every advantage and the Democrats would be disadvantaged. Normally parties think about their policies and why those policies did or did not sell with the voters, but if you control the voting process why not change it? In most states, it would have gone through and there would be concern but not a backlash.

This time around, the motivation for change was seen because the normal reason is to combat fraud, but an election which was counted 3 times and enough election fraud to change the result could not be found, it seems strange to rationalize voter fraud in an election. Because the rationalization was so bad, corporate executives including the biggest in Georgia – Delta, Home Depot and Coke all said the legislation has to change to seem to be fair. One might wonder why the long voting lines in Georgia exists for Democratic voters while Republicans have short lines?

In an article from the Associated Press the Republicans in the Georgia House, Senate and Governor has sent a backlash to Delta by cancelling a gas tax rebate. In the world of airlines, fuel costs are the reason why Boeing and Airbus come with new models which use less fuel. Fuel costs affect the bottom line because fuel costs is a variable and needs to be used. Prices on airline similar to auto fuel goes up and down.

Linking to dividend paying stocks, most companies internally try to reflect social concerns for employees and customers but try not to say politically unless it is okay to do so or society has changed. Companies which come out for a political party although it is hard not to write a check to help the parties. Companies giving hundreds of thousands of dollars typically want something more than an individual giving $100. The issue for politicians as in the case of Georgia is companies have options of where to invest – in the state giving them grief or another state which would welcome the company with open arms and many tax deferrals.

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

In COVID times when the government sees a company messing up, things change quickly.

In Baltimore, there is a plant owned by Emergent BioSolutions Inc. which was making vaccine doses for two companies – Astra-Zeneca and J&J and made a large mistake. The 2 vaccines have different ingredients and they were mixed up.

In an article by Sheryl Gay Stolberg of the New York Times News Service, the Biden Administration through the Department of Health and Human Services decided to change the leadership and made the plant only making one vaccine.

The mix up is a setback and a public relations debacle for Emergent. The company based in Maryland had built up a profitable business by teaming up with the federal government – primarily by selling its anthrax vaccines to the Strategic National Stockpile.

J&J is working with Merck whose officials would help with the management of the Baltimore plant.

Emergent’s Baltimore plant was built with taxpayer support and is one of two plants are federally designated as Centers for Innovation in Advanced Development and Manufacturing. The money was part of Operation Warp Speed.

Linking to dividend paying stocks, it is very rare for any government to order changes in private sector manufacturing because the government generally does not do. It supports, regulates, protects but it does not actually do the work. In a pandemic and meeting very strict targets, different rules apply. The government did not takeover the plant, Emergent still owns it but meeting government criteria is important, when administration changes management needs to be flexible,

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

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All of us hope that as soon as many as people as possible are vaccinated, the economy improves for everyone. In the last year, those who have jobs which involves meeting groups of people – tourism, hospitality, sporting events, conventions, hotels, and the list goes on have a very slow recovery. Those who can work from home or have jobs the government calls essential had a good recovery, because there has been less ability to spend on leisure and away from home, there likely was savings.

In an article by Ben Casselman of the New York Times News Service, the US job market in March was very good. 916,000 jobs or nearly twice as many as in February and the most since August were reported by the Labour Department. The unemployment rate fell to 6%.

The good news were people were receiving their $1,400 cheques and some were saving, some were paying bills and some were paying rent and meeting payments on old bills.

Daniel Zhao, senior economist for the career site Glassdoor, said the March numbers were not the biggest but it looks like a finish line can be seen.

President Biden noted there is still a big hole, the US still has 8.4 million less jobs than in February 2020. There is a report in the Wall Street Journal saying of those who went to payday lenders or subprime auto loans over 10% are over 60 days behind. (If someone gets behind for those companies, they will lose their vehicle because it is almost impossible to get ahead given the interest rates charged).

Many economists expect this time the jobs numbers will continue to get better because the vaccines mean less opportunity for governments to shut down the economy for public health safety.

The economy is coming back but it is a K shaped, not a V shaped.

Linking to dividend paying stocks, many companies depend on a wide number of people buying their goods, so when the economy is divided sales are still made, but sometimes they are less than what they could be. When you buy your investments understand how they are diversified and sales can continue no matter how the economy is performing.

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

In the search for commodity products, the products are below the earth’s surface waiting to be discovered. If the world can use the products, companies begin to invest money and then partnerships with the government happen. The expectation is a reasonable stable working environment.

In an article by Geoffrey York of the Globe and Mail, in the country of Mozambique which is located on the eastern coast of Africa, north of South Africa and east of Zimbabwe, trillions of natural gas was found. The project to harness the natural gas was going to be Africa’s biggest foreign investment project a $60 billion offshore gas development. The LNG development is led by France’s Total SA and includes ExxonMobil, Italy’s Eni SA. The development was expected to create a city of 150,000 people and across the country could spur up to $128 billion in capital investments across the country. The LNG would turn Mozambique into the world’s 4th or 5th largest producer of liquefied natural gas and the country’s revenues would turn it into a middle income country. The financing was going to be led by South Africa’s Standard Bank.

Countries around the world have sent soldiers, Portugal, the US, South Africa private contractor, Russian military contractor. The country was going to have a reasonable stable working environment and the government would be able to help the people of the country.

The drawback is hundreds of Islamist rebels killed dozens of people and captured a town called Palma and things were put on hold. Total announced the construction which was delayed and restarted is on delay again. The President of Mozambique Filipe Nyusi and his ruling party Frelimo which is supporting the project said the project will go forth.

Linking to dividend paying stocks, to make money of a yearly basis most companies need a reasonable stable working environment and where that exists, companies can execute their strategies. All over the world, companies are looking for a stable working environment and plans will come. When the pendulum changes, investing closer to home always seems desirable, however investing in commodities means going to where the commodities are.

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

The most profitable company in the world is Saudi Aramco which is majority controlled by the Saudi Arabia and has access to the least costly oil to drill (their base price is $2.60 per barrel, which allowed it to pay $75 billion in dividends). Saudi still has billions of barrels of oil in the country and although there is a push to electrify the vehicles in the world, do not expect the end of oil usage.

In North America we are North America centric, but in the world there exists other economies do the same or similar things as in North America. In an article by Muyu Xu and Florence Tan of Reuters, Chief Executive of Saudi Aramco Amin Nasser was at the China Development Forum and told the Chinese that Saudi Aramco will supply China all the oil they need for the next 50 years and they will be top priority.

Saudi Arabia, is the world’s biggest oil exporter and supplier China with 1.86 million barrels a day up 2.1% for the month’s of January and February.

The second biggest supplier to China is Russia. Mr. Nasser noted we appreciate that sustainable energy solutions are crucial to a faster and smoother global transition but it will take time. Chinese demands was very close to prepandemic levels, while Asia and East Asia has seen a strong pickup.

Chinese President Xi Jinping announced in September that China would brings it peak carbon emissions by 2030 and reached carbon neutrality by 2060.

Mr. Nasser expects opportunities in downstream projects to help to meet China’s needs for heavy transport and chemicals, as well as lubricants and non-metallic materials.

Experts from China National Petroleum Corp’s research institute have forecasted China’s oil demand will cap at 730 million tonnes by 2025.

Linking to dividend paying stocks, we all know the world is changing, but it takes time. Time is on your side when you buy dividend paying stocks because you can enjoy the dividends and look for alternatives at a leisurely basis. If the dividends or profitability of your investments changes, you can easily make changes to the alternatives you have researched.

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