The US basic materials stocks offer low valuations and above-average dividend yields, which is a good reason to examine the best stocks in the sector.

Gary Christie of Trading Central examined the sector with the following criteria:

the universe is the S&P 500

minimum market capitalization threshold of $2 billion to focus on the largest and most stable companies

the Price Earnings or P/E of 29 or less.

the Price to Sales ratio of 1.5 or less

dividend of 2.5% or greater

Company Mkt Cap P/E Price/ Div 1 Yr YTD Recent

$ Bil Sales Yield Perf% Perf % Price

Eastman Chemical 10.8 18.9 1.3 3.3 12.6 -0.1 79.50

Ternium SA (ADR) 3.6 16.6 0.4 6.6 – 2.4 -18.1 18.35

LyondellBassell Ind 24.3 12.0 0.8 5.8 -10.6 -23.1 72.51

Steel Dynamics 6.2 11.7 0.7 3.4 1.3 -13.8 29.32

MDU Resources 4.8 13.3 0.9 3.5 -14.0 -20.3 23.56

Comp Siderurgica Nac 3.9 11.9 1.1 2.5 -16.8 -15.4 2.95

Nucor Corp 13.9 27.6 0.7 3.5 -10.1 -18.2 45.98

Nutrien Ltd 21.7 26.0 1.1 4.7 -25.6 -20.6 38.04

Avient Corp 2.5 27.0 0.9 2.9 -18.1 -25.3 27.67

Linking to dividend paying stocks, when you buy a stock it means you did not buy something else which is ok. There are choices to be made, and the only when you look back will you know what the absolute best thing to buy is. Homework is important, lists similar to the above gives you names to examine and some of the names come up regularly which helps ensure you make a good decision. Most of us follow the industry which pays us or we have a bias toward that industry. There are many good companies for you to buy, which is the best one?

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

The price of gold has risen for a number of factors including all governments around the world have been running their printing press or deficit financing to as much as possible. One day although not in the near future, but sometime in late 2021 or 2022, policy makers and politicians will begin to talk about government deficits and higher inflation. The Central Bankers are ensuring the time frame is not this year. In normal times, whenever a commodity price increases and stays increased for a period of time, new miners are coming out of the woodwork to start mines or mine existing mines that became unprofitable at a lower price and the big companies since they are flushed with cash, want to spend it buying other companies. The cycle continues and then the price drops and consolidations will need to be done.

At a recent virtual conference, as reported by Tanisha Heiberg and Arunima Kumar of Reuters, the bigger gold mining companies are trying to damper their desire to spend money. Scotiabank estimated as of June 30 the top and mid-tier miners were holding over $5 billion in cash.

7 of the top 10 global gold miners including Newmont, the world’s biggest gold miner, Barrick Gold Corp, and South Afruca’s Gold Fields have cut planned output for the year by 7%, regulatory filings show.

The last time gold prices rose was in 2011 and gold miners spent like drunken sailors, overpaid for assets and then had to write off billions in assets when prices declined.

This year, Barrick increased its dividend 14% and Newmont boosted its payout 79%.

Linking to dividend paying stocks, one of the reasons you buy the shares is consistency. You want a dividend every year, if the company feels it wants to increase the dividend so much the better. Often times when companies, and people, have extra cash their is a desire to spend on acquisitions. Some go well, many do not. Giving money back to your shareholders is always a good idea.

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

If you think back to March when governments around the world closed the economy as much as possible to try to prevent the spread of COVID, the governments knew that shutting down the economy by asking people not to gather in groups was going to harm people’s livelihoods. Governments around the world open their wallets at the Central Banks and sent money to people, in the case of the US it was an extra $600 a week. At some point, governments were hoping that the virus would become a smaller issue and life would continue. We know COVID is not going away quickly, but governments are not positive what they should do. The President offered $300 and an extra $100 from the state if the state opted in, but most states did not because under the law they are not suppose to run deficits and by people not meeting in groups, taxes are way down, spending is up and deficits will be had, unless Washington sends money.

President Trump has campaigned saying, well there are guidelines for the people, but as a politician you should come to my rally, even though most of the states do not allow for conventions or gathering of people. It is odd, but the real issue is what to do with the people whose jobs are not coming back until people can gather – tourism, hospitality, conventions, travel, etc. In an article by Lucia Mutikani of Reuters, in mid September, at mid August more than 30 million people were on unemployment benefits. In addition, a number of companies such as the airlines were receiving money to keep people on the payroll are letting them go because they not longer receive the money and fewer people are flying.

For state unemployment benefits fell to a seasonally adjusted 860,000 people, economists were expecting 850,000.

Some of the claims were dropping because people were beginning to exhaust their benefits which are limited to 26 weeks in most states.

Meanwhile in Washington, the President is campaigning as the economy has opened up and all is good. There is an election going on, so we do not know if policies will be changed.

Linking to dividend paying stocks, when governments gave money to people to help them get through the shutdowns it was a good thing to do. While people lost their jobs, spending was able to continue although many had extra weeks for adjustments. As an individual, when you buy dividend paying stocks the money you earn can be used to buy more stocks or pay bills or other concerns you have. The dividends allow you to have some options, hopefully over time the options increase as more money comes in. Generally there are a few times when systems can be changed, perhaps this is one of them.

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

In the world of mergers and acquisitions there are 2 distinct parts to the proposal. The first is how does the company add value to the existing shareholders and with many mergers it is easy to see. There are natural extensions of what the company is doing now. The questions are what talent is coming, did the company get the right price at the right time to do what it needs to do. The second distinct phase of an acquisitions is selling the merger to government officials or non direct shareholders. Somewhere in government are levers to make the merger go smoothly or throw wrenches into the operations. If the company has not thought about both distinct phases problems will happen.

In an article by Kate Holton and Douglas Busvine of Reuters, in the example of Nvidia, the company is headquartered in the US and at the present time has the best chips for gaming, AI, smartphones and a host of other uses. Nvidia wants to purchase Arm Ltd based in London, UK for $40 billion from Japan’s Softbank Group Corp. In terms of increasing the use of chip design, the deal makes a great deal of sense for Nvidia.

In London, Arm is a handful of global tech companies headquartered in the London area, in this case Cambridge. One of the most important institutions around Cambridge is the University. Similar to many university towns and cities, a growing technology complex has grown around it including Arm. Therefore Nvidia has promise to invest $40 billion including more jobs and more R&D in England. At one time, the idea of a merger was to send more jobs back to where the company was headquartered and leave servicing and distribution in the merged company. Now days, particularly with COVID and technology jobs, governments are trying to secure as many jobs as possible in their jurisdiction.

Linking to dividend paying stocks, these are the companies with the continuing cash to invest in mergers and every year or two, there is a merger and acquisitions. The basis used to be the spreadsheet and how much more the possible company can add and where costs can be cut. In these days, the added feature is what does the different levels of government say or will do both in terms of politics and using their purchasing powers?

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

Boeing for the past number of years has been the biggest contributor to GNP of selling goods outside of the US. Think about all the manufacturing companies in the US and Boeing’s planes were the biggest contributor or Boeing sold many planes per year.

Boeing’s new plane the 737 Max was on track to continue being the number one exporter in the country, then a couple of crashes happened and the problem was in the computer system. All the countries followed the US and grounded the plane. Thank goodness for COVID meant that Boeing had lots of time to fix the problem. The 737 Max was going to be the cash cow for Boeing for the next 10 plus years.

In an article by Rachit Vats and Eric M Johnson of Reuters, Boeing secured its firs 737 Max order in 2020. Due to COVID, Boeing has received 445 cancelled orders in 2020. It does have a back log of $409 billion in aircraft.

Boeing sold the plane to Poland’s Enter Air. Brokerage company Jefferies said in August, it expects Boeing to deliver 138 aircraft in 2020 down from 380 in 2019.

Linking to dividend paying companies, although the 737 Max is expected to be the cash cow for Boeing, the company is large and diversified enough to deliver airplanes to the domestic,military and space markets. The company continued although not at a pace expected. Boeing has the capability to continue to make profits even though its cash cow was down. It was good news for Boeing to sell some planes and once people feel safe on a plane and can and will fly for business and leisure travel, the stocks will do better. For your investments, how diversified are you companies, could they stand to lose their cash cows?

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

When you think about the global supply system, one of the most important aspects is the containers that move from manufacturing plants to trains to ship yards to ships to trucks to distribution points around the world. The biggest company in the container shipment is a Danish company called Maersk which has 20% or 1 in 5 containers shipped worldwide.

The company has grown to a variety of divisions and in a press release in early September the company announced it was reorganizing its operations. The company had been under pressure from investors to change from a conglomeration to a leaner more focused company.

The company had sold its oil and gas division to Total (the 4th largest oil and gas company in the world, headquartered in France) in 2017.

The company has many brands and its Damco freight forwarding business and Africa-focused carrier Safmarine will be interated into Maersk by the end of the year and the brands will cease to exist.

Maersk has 80,000 employees, between 26,000 and 27,000 will be affected but that does not mean most will lose their jobs. There will some consolidation into back offices and marketing.

Linking to dividend paying stocks, while those of us in North America pay more attention to North America headquartered stocks, investors around the world worry about the same things for companies around the world. Sometimes being a conglomerate is a wonderful thing, sometimes it is not. There is not magic solution but as long as a company is making profits and can pay a dividend, there are less concerns. When the company loses money as world conditions change, then investors around the world will examine is this that best solution? or could something for focused work better?

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

When COVID arrived and the solution to slow down or try to stop the pandemic was to social distance, this meant parts of the economy had to be shut down. The biggest parts of the economy was the travel. hospitality and entertainment. We were all told to stay closer to our homes and if possible work from there. It has been a credit to thousands of companies that work from home can and does take place. For those who companies shut down, the stimulus package gave a $600 a week jobless benefit. The package ended and Congress has been negotiating for a new package. The President wanted to give something, so he signed an Executive Order for $300 from the federal government and some from the state government (understanding many states are running record deficits, they did not sign on).

In an article by Christopher Rugaber and Leah Willingham of Reuters, they examined the details of the Executive Order. The $300 the President signed comes with a host of restrictions and bureaucratic hurdles which means more than 1 million people will receive nothing.

Across the US minimum wage is low and there is a threshold to receive the $300, the jobless must be receiving more than $100 in state benefits to qualify. In addition, the person who is jobless must certify the reason why they are jobless is because of the coronavirus.

Eliza Forsythe an economist at the University of Illinois calculates at least 6% of the people receiving state aid or 840,000 Americans will not qualify for the $300 federal benefit because they earned too little. If people were working in the gig or were on contract, they will not qualify.

Some states are raising their minimums up to $100, so all qualify for the $300. However in states such as Mississippi the minimum payment is $30, Nevada is $16 and Connecticut is $15. The concern is how long will the benefits need to be paid?

Linking to dividend paying stocks, if you own these the idea is the income allows you to top up your other income or you can live off your dividends. For those with limited options, the politicians often present shiny new objects to the public, but similar to most government programs the details or how the program is implement is key. If you have dividend income, that is wonderful but understand the system is not fair to everyone and the COVID has shown many warts in the system. Will they or should they be changed? do not know, but understanding tends to be the start.

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

If you listen to President Trump, the US has stalled the Chinese manufacturing machine because of tariffs and shifting jobs from China to the US. If you examine reality, something else is going on.

In an article from Keith Bradsher of the New York Times News Service, the manufacturing sector of China has come roaring back.

The question is why? China does have a low cost, skilled labor and a very efficient infrastructure system which is very hard to overcome. The secret sauce has been the banking sector. The biggest banks are state-controlled and they have been offering extra loans to cope with the pandemic.

The Chinese government through the banks offered companies extra loans even if the companies did not need it as well as the government issued partial rebates on taxes and other government mandated taxes that together exceed 3% of the company’s sales. The government want to ensure good companies did not fail because of needing a bit of cash.

If you consider what families across the US and Europe working from home, their entertainment and travel budgets went to improvements of the house. Whether that was computing screens, stereo systems, power tools and home saunas. All of which are made in China.

In the article, the stereo system Trueanalog President Philip Richardson said China has the largest supply system of the parts you need to make a speaker, and China has the most stable, affordable labor force. Why would he move operations out of China?

In terms of the Chinese Yuan, the currency has remained weak relative to the Euro and US dollar. Foreign economists believe the state banks were selling Yuan and buying dollars or euros to prop up their currencies. The government says they are committed to maintaining a most stable value for the currency.

Linking to dividend paying stocks, no company exists in isolation. The manufacturing plant opens up but it needs parts to put together or a supply system. It is possible to make every part yourself but most companies as they grow in size and need to have lower costs find it is best to outsource your parts. An ecosystem of suppliers builds up and as long as the manufacturing company is successful, all will be good. As sales go, will the suppliers stay with the lone company or want diversification? Time will tell but some diversification is better than none. As you make your investments, look at the supply system and logistics to help understand the long term potential for success.

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