The cell phone has changed the world when it brought communication to those in the world who could never either afford or be able to receive a land line phone. That is a very good thing for the world. The smart phone brought apps which makes the smartphone a mini computer. Apps bring disruption and can be monetized to make money for many companies. If enough people use the app, then profits roll in. Facebook bought WhatsApp and is combining it with Messenger to bring in even more revenues. The theory is it all works, until technology runs into governments who like to control things.

In an article be Carolina Mandl and Marcela Ayres of the Associated Press, Facebook which is looking to add revenues outside of North America looked at Brazil and India and saw dollar signs. Both countries have a large middle income group who are dependent on cellphones. If a country is dependent, then it needs Apps and Facebook wanted to supply Brazil with Apps through the WhatsApp payment service.

In Brazil, payments is a $454 billion in card services and Facebook wanted WhatsApp to help move money around, then came the Central Bank President Roberto Campos who said shut the service down. The backstory is Facebook has spent years on trying to make money in Brazil saw a golden opportunity to use WhatsApp to move money at a fee. The problem is according to President Campos, Facebook talked about the idea, but never brought a proposal to the bank and the regulators had not figured out how to regulate Facebook’s operations.

Facebook was trying to avoid setting up as financial services company and was using VISA and Mastercard wires to carry out the transfers. VISA’s Brazil President Fernando Teles said WhatsApp approached him 2 years ago and they had been working together. VISA did not get a license for WhatsApp because they and Mastercard are already licensed.

Facebook thought they had a backdoor entry because there is a provision in the rules, small companies can start and operate if they have under 25 million transactions in a 12 month period. The Central Bank said this was to encourage small companies to enter the market, not giants like Facebook.

Facebook would be free to users, but merchants would be charged a fee.

Facebook is working with anyone who can ensure the payment system goes into operation.

Linking to dividend paying stocks, similar to everything in life, communication is the key. Communication with the stakeholders, the regulators and the public. Only seeing the potential market and trying to secure a percentage of it loses a great deal of money on the venture stock exchange. Often we believe, in a case like Facebook and Brazil, Facebook would have the operational advantage, the advantage of resources and the advantage of time. Perhaps someone rushed or assumed too much in the pursuit of the golden goose.

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

In these times of COVID, we know that some companies benefit from the economy, but some companies will and have filed for Chapter 11 bankruptcy. It does does not mean the company will not exist, but it does mean they can be restructured and come back to life. The issue to investors and the public is what kind of compensation should be given. The theory is in Chapter 11, company executives can or will move to other companies, should they be given extra compensation to stay?

In an article by Mike Spector and Jessica Dinapoli of Reuters, under a 2005 US bankruptcy law, companies are banned with few exceptions, from paying executives retention bonuses while in bankruptcy. But there is a loophole, granting payments before they file. Reuters examined 45 companies which have filed for Chapter 11 and 32 of them paid bonuses within 6 months of filing and half of them authorized payments within 2 months.

8 companies including JC Penny and Hertz approved bonuses 5 days before filing for bankruptcy. Hi-Crush paid 2 days before filing. JC Penny had 85,000 employees and approved nearly $10 million in bonuses. JC Penny President Jill Soltau received $6.2 million while the annual pay of the company’s median employee was $11,482. At its peak, JC Penny had 200,000 workers and 1,600 stores.

Neiman Marcus Group closed all of its 67 stores and 11,000 employees but paid $4 million in bonuses to Chairman and CE Geoffroy van Raemdonck.

Whiting Petroleum Corp paid $14.6 million in bonus to executives days before filing for Chapter 11.

Chesapeak Energy paid $25 million in bonuses.

Firms paying prebankruptcy bonuses know they would face scrutiny in court on compensation proposed after filings, said Clifford J White III, director of the US Trustee Program, a Justice Department division charged with monitoring bankruptcy proceedings. The trustees have no power to halt the payments paid even days before the filings.

Linking to dividend paying stocks, many times investors should know the company is not doing well, fortunately with dividend paying stocks the time begins when a company cuts the dividend. After a company cuts their dividend, you can determine how long will it be or what conditions must happen before they raise it. As dividend buyers you get to “love” your stocks, when they cut the dividends be prepared to find alternatives.

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

After COVID shutdown the economy, the government began to use its leverage to ensure the economy still functioned. At first it was going to be a 3 month operation because many believed by the summer, most businesses would return to what was normal. As time went on, the length of time that many industries which require crowds and very hard to social distance, they were going to be shut down for longer periods of time, governments had to do more. The federal reserve besides telling the world interest rates were going to stay low for an extended period of time, the bank bought government and corporate bonds. The buying of the corporate bonds sent a very clear signal for companies to issue bonds because the bank was a buyer and as a result billions of bonds have been issued. Every time the bonds are issued, Wall Street firms make a large commission or large fees.

In an article by Elizabeth Dilts and Mashall Nivedita, one of the banks which has more of its operations selling stocks and bonds is Morgan Stanley. The company reported a record quarterly profit that benefited from huge swings in financial markets. Similar results was posted by Goldman Sachs.

Morgan Stanley CEO James Gorman noted record profits are wonderful but they are very hard to repeat in the coming quarters. Over the past decade, Morgan Stanley has gone from a pure trading company to one which expanded into wealth and asset management which means a greater diversified revenue stream. With asset management, there should be reasonably consistent revenue whether the markets go up or down. Morgan Stanley has a relative small consumer loan division, more to be involved but not large enough to take write downs. With the big banks were setting aside billions in loan reserve, Morgan Stanley set aside $239 million.

Linking to dividend paying stocks, in every industry some companies benefit more from the ebbs and flows of the economy than others. Morgan Stanley has benefited from the trading volumes and larger asset management revenue streams. Banks with thousands of loans to small and medium sized businesses that are closed for months are not benefiting, they are still doing okay, but not benefiting. As the economy changes, examine your portfolio how does the company make money and does it benefit from the existing economic conditions or when would it change?

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

If you think about 4 short years ago, the President of the US talked about no need for the the US to sign the Paris Accord on Climate Change. The President and many in his cabinet believed climate change was debatable and could be ignored. During the COVID we have seen pictures and results that the environment was improved with the shutdown, which simply means we all have an effect on climate change. Very few people believe that the economy should stay shut in and fewer people drive vehicles and factories do not make goods, however the air over China was much improved during its shutdown.

The oil giants including Exxon Mobil which for a long time help fund the science to cause doubt on if climate change was a thing or not, joined the biggest oil company in the world, Aramco, China’s CN
PC to set goals to cut greenhouse gas emissions.

In an article by Ron Bousso of Reuters, the Oil and Gas Climate Initiative (OGCI) set targets which the oil companies is achievable but will allow them to stay in business. The OGCI said the group’s collective carbon intensity would be reported annually with data reviewed by EY (Ernst and Young) as an independent third party.

Linking to dividend paying stocks, there were growing number of funds including Norway’s Soverign Fund which decided not to invest in bonds and stocks of oil and gas companies because of climate change. If the data shows the OGCI is lowering carbon in the atmosphere, then the funds can buy stock and bonds again. Similar to most transactions in the stock market, price and access to capital play a significant factor in decision making process, this is a reason most large corporate concerns have policies to reduce greenhouse gas and it is the right thing to do.

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

President Trump loves to talk about America first and his administration has a dislike of foreign workers, except in the food processing sector. As an administration he can make policies that suit him, but in a recent article by Michael Casey of the Associated Press, the effects on the ground are a little different than how the White House sees reality.

In a normal world, which the President wants to get back to, people travel from the cities to holiday spots because it is cooler and people are closer to nature. The wonderful attractions add to the atmosphere however the reality is the regions have tiny labor pools and there are millions of tourists which come through the area. The companies rely on green cards, J-1 and H-2b visas to staff the service sector jobs which the tourists use.The argument is the 20 million Americans could do the job, but the people have to go to the beach communities and mountain getaways, find housing and be paid at the hospitality rate. In addition rising housing costs and the jobs are not social distancing from other people.

Last year according to the state department more than 108,000 J-1 summer work travel visas were issued, this year the number is 1,787 in early July. This has resulted in many businesses scrambling to fill openings and the answer is to scale back hours or close completely. The jobs pay $14.00 a hour, now if the service sector paid double or triple such as the oil fields in North Dakota people would be moving across the country for the work.

Linking to dividend paying stocks, while we all want everyone to be well employed, the reality is service level jobs tend to be the lowest paying, are part time, seasonal but they are needed. If you do the math, hundreds of dollars could be the result of taking a seasonal job not thousands. Fortunately as a tech investor you can make that investing in the Nasdaq stocks. When we invest in stocks we ask the company to make a profit and pay dividends we do not ask how they are doing it as long as they are well above the law in their ethics.

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

In Europe, there is a more complex relationship between companies and unions and countries tending to back certain industries over others. In the airline business, there are 2 competing companies Boeing in the US and Airbus which is headquartered in France. In order to ensure all European countries do not try to start their own airline, Airbus has significant operations across Europe. During the COVID crisis, one of the main factors in controlling the disease is to social distance and not be together with large social groups. This health concern has put a damper on tourism, entertainment and airports and transportation companies. Demand is down, coming back very slowly and the option of management is cut their payrolls. If the government is not going to subsidize the payroll, layoffs are a good option for it saves money or cuts down on spending money.

In an article by Johanna Decorse and Alexander Hubner of Reuters, thousands of airbus workers protested on the proposed cuts of 15,000 workers. Similar to workers across the world, those who work in industries that do not benefit from COVID are subject to layoffs and who should pay them? Governments around the world offered a short term solution, but as the economy does not go back to normal, when should governments step in and when should industry shoulder the burden?

One protester said we are starting our careers and thought we would have jobs until the end of our careers as long as we worked hard. Nobody could imagine this. In many ways this is true, prior to COVID Airbus and Boeing were the biggest players in a growing industry which allowed for more people around the world to travel. Times have changed.

Linking to dividend paying stocks, as an investor you have done your research picked a good company and expect to receive dividends because of the past history of the company. Then COVID happens and some companies benefit and some companies do not. It is not anyone’s fault that a perfectly good company such as Real Estate company owning Malls and allowing people to shop are suddenly rents are not being collected as the mall is closed down. Many people will be going through the same sentiment as the quote above, nobody could imagine this. Fortunately the governments around the world have provide assistance, but try to remove the assistance before everyone is back to normal will be very difficult. We will see more strikes because of uncertainty.

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

The next time you go to the airport there will be many changes in response to the COVID and many of the changes will remain after the COVID situation returns to what was normal. The normal is lots of people meeting together and enjoying it.

In an article by Tracy Rucinski of Reuters the airport leading the change is Dallas-Fort Worth International Airport (DFW) largely because American Airlines uses DFW as its hub. At the moment, the DFW airport is the world’s busiest airport thanks to the American Airlines.

The new normal is going to more and more around self service said Sean Donohue, chief executive of the DFW Airport. There is self check in for luggage, all its restrooms with technology developed by Infax Inc.

For check in, DFW is piloting 3 technology options for luggage: Amadeus It Group, SA’s ICM, SITA and Materna IPS.

Last year DFW rooled out biometric boarding where your face is the the boarding pass for international passengers. This year domestic passengers are included. The makers of the technology is VeriScan

In the HVAC system, DFW is starting to use ultraviolet technology that can kill germs before they circulate in the system.

To pay for all the cleaning, DFW has uspending about $100 million on capital expenses and trying to reduce operating costs by 20%.

In April only 10,000 passengers a day used DFW, the numbers have increased to 114,000 on July 11 which is half of last year.

Airports have expanded over the past years to include a great deal of shopping and dining space, to increase revenues. Will the business model be changing?

Linking to dividend paying stocks, airports similar to DFW can invest in the technology solutions to ensure they not only feel safe but are safe as passengers expectations change. It will take time before regional airports which will need to do the safe thing have the same technology because similar to all technology the earlier versions are more expensive. As time goes on, the price drops to where all can afford. To be a market leader is a wonderful thing, but it comes with the price that innovation has to be in the budgets and not cut. If your company begins to slip and spends less on innovation it is time to find alternatives.

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

One of the industries which was enjoying continuing growth was the cruise ship industry. There are a number of factors including the baby boom generation is retiring and many of them have the ability to go on cruises and like them. Having been on a cruise, there is much to enjoy – buffets of food, sit down dinners, entertainment of numerous types of entertainment offered, if the weather is warm – the opportunity to sit outside and watch the water and every second day landing at a different port to get off the ship on to dry land. One can easily imagine where the ship docks, the people of the country gear up to cater to the cruisers. A great deal of economy for and around the ship is created.

Carnival has a variety of ships in offerings and one of them is AIDA Cruises based in Germany. In early July, there was an article about AIDA in Dubai ready to cruise. One can remember back to March and hear the stories of which countries could the cruise ships dock in. There were a number of ships which no one wanted to allow to dock because of COVID cases, part of the reason was how the air conditioning system works. If COVID travels through the air, then once it gets into the air condition system everyone is a risk. AIDA announced it has introduced a number of measures to complement existing health and hygiene standards. The other large cruise lines – Royal Caribbean and Norwegian Cruise Line Holdings Ltd are also enhancing standards. Will you go cruising soon?

Linking to dividend paying stocks, every community around the world looks to the hospitality and entertainment world to add to their economy. In some places it can be sporting events or theme parks or festivals or something to bring people together to spend their money in the community. Most of us have gone to one or more events in our life times and we enjoy them, but in reality they are economic generators for the community or city. One hopes they will continue because they add enjoyment to our lives and give us something to talk about and plan and go to. At the moment, some companies benefit from COVID more than others, at some point there will be a change and things will begin to head back to normal. With the companies that benefit be over value? will the companies that did not benefit be undervalued? are there companies which can go through the cycle and have consistent earnings? there is always homework to be done which allows you to be prepared.

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

There is a 1983 comedy called Trading Places starting Dan Aykroyd and Eddie Murphy and some of the movie involves trading commodities and having access to information prior to the the rest of the traders. The desire for great information is as old as traders wanting to make more money. In the case of Trading Places it was about the weather, it the present day you have 24 access to weather from around the world and some of it you can use and other piece is weather.

In an article by Laura Sanicola of Reuters, Apple started tracking human mobility trends, capturing user activity in searching for directions on smartphones. Smartphones can and do reveal a great deal of data from you – where you go and have been; but traders are not worried about your trends, they are worried about the general trend. Are people getting out more? how far are they going? are they using more gasoline?

Traders in the oil industry initially salivated about gaining a new information source because it was closer to real time data. For Memorial Day the US Energy Information Administration noted gasoline usage fell 6% for the week including the holiday. That was not good news, because 70% of oil consumption worldwide is through vehicles. The problem with the Apple data is the information is based on the search rather than miles traveled.

Two other sources are Tom-Tom the global location technology company which monitors real-time traffic congestion in major world cities and the Dallas Federal Reserve Bank’s mobility and engagement index. That index tracts various mobility metrics including how far user devices travel in a day and how long they stay away from home. The figures are reported on a lagging basis. Apple’s information was real time.

Another source of information is GasBuddy which monitors fuel prices and transaction volumes at gas stations across the US and Canada. The Oil Price Information Service provides pricing on refined products.

Linking to dividend paying stocks, one of the things you do not have to do is monitor closely your stocks which you have chosen. If you are trading on information, the better information you have, hopefully the better decisions you make. If you buy dividend paying companies all you need to know is the company profitable and can it pay its dividends. If the answer is yes, you can rest and enjoy the dividends paid to you and think what will I buy in the future knowing patience is a virtue.

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