On January 6, people gathered for a demonstration in Washington and then advanced to the Capital Building and caused damage. There was fallout because of the building they went into – the building which houses the House of Representatives and Congress. Naturally there were consequences, and one of the many was Shopify terminated US President Donald Trump’s official web stores from using its platform.

In a column by Josh O’Kane, Shopify removed the Tump 2020 re-election campaign apparel and merchandise store and the one affiliated with his private business that sells everything from USB sticks to cocoa mix branded with his name.

Shopify, Twitter, Facebook and other companies stopped the message from President Trump because violence against the Capital Building has consequences. It also showed how quickly we have become dependent on such sites and how quickly they can come down.

Millions of retail companies have an on line presence and they use a third party because it is relatively easy to get started and do business. What most do not realize is when can the third party take down their business. What does the business do?

Linking to dividend paying stocks, all companies use other companies to help run their business. Most companies do not do everything in house, they pay others. Most of the time it works well, sometimes it does not. We saw a company called SolarWinds hacked through a company called JetBrains which helped run the software of SolarWinds. JetBrains has business with multiple companies. It is important to remember companies are only strong as their weakest link and all companies have a weak link somewhere.

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

For years we heard the most important consideration for a company was either access to China or the competition from China. If a company had access to China, its revenues would rise because of the large market which is China and its billion people. If competition from China was coming into your product or services, watch out because revenues could fall as they had lower prices. If you think about your smartphone and some of the many things it can do and does do, the makers of the technology are in China and Taiwan and Japan. In the technology world, 5G is coming or is here and you will have to update to take advantage.

Anything from China, there are reports and some are likely true that some of the information from Chinese technology products the information goes back to China to do something. We know in China that the state monitors its people, think the book 1984, some of that goes on today. The biggest smartphone maker in the world is a Chinese company called Huawei. It is highly likely they are the biggest because they have government support or co-operatives with the government.

Huawei also makes the components for the 5G system to work and governments around the world are not quite positive if Huawei should be the supplier or not. A number of European companies have gone with the competition of Huawei and the US imposed sanctions on access to semi-conductors.

In an article by David Kirton of Reuters, the US has banned US firms from selling essential US technology. In August, the ban was extended to foreign firms with US business, reaching chief suppliers such as Taiwan Semiconductor Manufacturing Co (TSMC). Among TSMC’s clients is Apple.

The ban on TSMC hurts Huawei because they use advanced chips for its handsets, 5G network base stations, servers, cloud computing and artificial intelligence products said Paul Triolo, head of global tech policy at Eurasia Group. Stockpiles only last so long.

Dan Wang, said Huawei will feel the impact most acutely in its consumer business which brought in 54% of its revenue in 2019.

In November, Huawei spun off budget smartphone line Honor in a sale which allows the brand to regain access to chips. The company may do the same for its premium brands.

Does President Biden’s policies on China?

Jefferies analyst Edison Lee said the company has enough chips to make about 500,000 5G base stations.

Linking to dividend paying stocks, analysts at various investment houses examine the strategy of every dividend paying company. If a company falls into disagree with a government around the world, some of them can take actions. A government has to have a tremendous amount of clout to stop sales of foreign companies doing business with US and China, one wonders what considerations were given to companies such as TSMC to pick one over the other. In any case, in a world where companies operate across many borders, they are prone to “chosen” by a government somewhere and need lobbyists to watch over their products and services. Ideally a dividend paying company has the ability to have retainers to help them.

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

Stocks that have moats have a built in advantage and just by owning them, as an investor you are protected from downside of the marketplace. If you own a few of the stocks that is good, if you do not part of your homework is to find similar stocks and own them.

Phil Dabo at Morningstar Research examined stocks that have moats from the Russell 1000 ( whatever company you invest through should have similar type of information).

Mr. Dabo used the following criteria for his list:

stocks with wide moats (Morningstar criteria – a wide moat company has a sustainable competitve advantage that enables it to keep competitors at bay for an extended period of time. The theory being they should be able to earn excess profits in perfectly competitive markets)

strong quarterly earnings momentum ( a measure of profitability)

high Morningstar Quantitative Financial Health Score – based on the company’s leverage

stocks with market capitalization of greater than $3.8 billion

Company Mkt Cap Wide Moat Fin’l Qtly Earns Qtly CF Divid 12M Price Recent

$ Bil Score Health Mo % Mo % Yld % Chg % Price

Johnson & Johnson 414.309 5 3 1.0 17.6 2.6 7.9 157.38

Graco 12.121 5 3 8.3 8.5 1.0 39.1 72.35

P&G 345.012 5 3 5.1 8.8 2.3 11.4 139.14

Microsoft 1,681.605 5 3 7.7 5.5 1.0 41.0 222.42

Expeditors Intl Wash 16.098 5 3 5.7 6.2 1.1 21.9 95.11

Costco Wholesale 166.896 5 3 5.8 5.8 0.7 28.2 376.78

Alphabet 1,104.579 5 3 4.5 5.0 n/a 31.0 1,751.88

Landstar System 5.168 5 3 5.8 2.6 0.6 18.3 134.66

Agilent Tech 36.358 5 3 2.8 4.6 0.7 38.9 118.49

Colgate-Palmolive 73.296 5 3 2.7 3.6 2.1 24.2 85.51

Linking to dividend paying stocks, on the list you can see some companies which likely you use the products. If you do that is a great place to start, if you use it why do others also use it. As long as you are a buyer you can determine if the quality and price keeps you coming back. The ideal in buying a dividend company is a monopoly or monopoly like conditions which allows for profitability to continue on a yearly basis. To do that the company has to continually execute well and that is part of your homework.

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

President Trump had a policy that any federal land which has minerals including oil should be opened up for drilling. The policy had favor among the western states but it also included Alaska. The Trump administration would take a look at millions of acres in Alaska and consider it would allow drilling on some of them, why leave them fallow?

In an article by Nichola Groom and Yereth Rosen of Reuters, the Trump administration opened up the sale of drilling leases in a pristine Arctic wildlife refuge, it is highly suspected there is oil there, but found few takers. The sale generated $14.4 million in high bids, a marked difference than in 2018 where bids brought in $1.8 billion.

The new Biden administration has pledged to protect the area and ban new oil and gas leasing on federal lands. JPMorgan Chase has said they would not raise money for the Arctic Refuge Area.

The winners on the tracts of land were the Alaska Industrial Development and Export Authority which won 9 tracts and 2 relatively small companies – Knik Arm Services and Regenerate Alaska won 2 tracts.

The Interior Department had pushed the sale for months, the big oil companies did not bid and in all likelihood the tracts will not be developed. The American Petroleum Institute cited weaker oil demand and changing federal policies. Note if you are in the drilling of oil and gas, you are not looking at this year’s forecast – it is 3 to 5 years down the road. (the drilling would happen, a commercial discovery would have to found and then the infrastructure to move the oil to the pipeline would have to be put into place, at of that takes time).

Linking to dividend paying stocks, all companies are connected to events in the world. Over the past decade we have seen the planet grow warmer or Climate Change, some of that is connected to the oil and gas industry. The risk reward model also includes the public attitudes and whether a company wants to hunker down and do what it does or attempt to work with the public opinion. No public company works in a vacuum, and eventually the public buys your product or service.

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

Marc Jones and Sujata Rao of Reuters examined the big 5 investment houses expectations for 2021 and the themes are:

Will the US dollar fall in price? When the Federal Reserve cut interest rates to 0% for many good reasons, it kicked away the dollar’s yield advantage over its peers. As long as COVID is a major concern, the government will need to intervene in the economy and that means more debt.

Re-emerging Markets – developing countries would see a benefit from recovering global trade, tourism, commodity prices increasing, a weaker US dollar and predictability in the White House. Morgan Stanley, Goldman Sachs, JPMorgan Chase and Bank of America are overweight emerging markets.

Central Banking on it – everyone believes central banks around the world will keep interest rates low. Central banks worldwide spent $1.3 billion a hour since March on asset purchases. There were 190 rate cuts or one every 5 trading days, says Citibank.

JP Morgan estimates more than 80% of sovereign bonds from richer countries pay negative yields after factoring in inflation. Blackrock says to underweight the sector.

ESG: Here for Good the assets of investment funds adhering to Environmental, Social, and Governance (ESG) double this past year to $1.3 trillion. The pace is expected to increase.

2/3’s of ESG fund assets are in equities, but sustainable debt has grown 20% in 2020 to more than $620 billion.

Biden on tech – there may be a love hate relationship with tech under President Biden. In some areas Big Data, 5G, artificial intelligence, electric vehicles, robotics and cybersecurity President Biden’s policies may be just as combative as President Trump’s were.

Tech and e-commerce account for almost a 1/4 of US corporate profits and tech makes up 40% of MSCI’s emerging equity index.

Linking to dividend paying stocks, the trend in your life are shared with the rest of the world, what is important is what you do with it. We know that interest rates will be low because the recovery is a K shaped with many people benefiting and not benefiting from COVID recovery, the government has to ensure those benefiting continue to and those not benefiting are in position to do something when COVID is under control. Ideally in your portfolio are companies which try to stay within the law and continually make profits to pay dividends. If they are doing that you can sleep well at night.

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

Reuters reports business news and often polls experts, in a recent poll Reuters asked 39 economists and analysts what the price of the benchmark Brent crude price would be? The answer is $50.67 a barrel.

Last month the poll was at $49.45 although Brent crude was trading in the range of $51 a barrel.

West Texas Intermediate were expected to average $47.45 a barrel, recently the price traded in the range of $48 a barrel.

Why are the experts predicting a non rising price? Oil is a commodity and supply and demand drives the price. Given the stay at home recommendations by the government and the rise of virus variant and the slow deployment of the vaccine, demand is expected to remain low.

Linking to dividend paying stocks, for generations oil companies have been great dividend payers and long term wealth generators. If your portfolio has a heavy weighing in the oil and gas section, it is time to look for alternatives if you have not done so already.

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

Now that President Biden is in power, in theory it will be easier for people to be in a union. Under the pro business of President Trump, the government did not help and likely discouraged the activities. Whether you belong to a union or not, does not mean wages automatically go up. In political ads there are references to hard working people and often they are employed at higher wages in a union. However there are plenty of unions which are at the low wage scale, just above minimum. The issue is working conditions, if the pay is good.

In an article by Kate Conger of the New York Times News Service, more than 225 Google engineers and other workers have formed a union. The union met in secret for a year and is now coming forth. The issues will be pay, harassment and ethics. In many people’s mind the engineers that work for the tech companies work long hours, are well paid and have access to buying stock which if the company is successful allows for many to have million dollar homes. It is true some do, but in a very large company such as Alphabet or Google some do not.

In the world of tech there are contractors and they are paid less than full timers, so it often depends.

In the past, tech companies have resisted unions because they did not want them. As the industry continues to mature, maybe more companies will be unionized?

The new union at Google called the Alphabet Workers Union only represents a fraction of the 260,00 full time employees and contractors at Google. Part of their goal is to sustain pressure on management so that workers could force changes on workplace issues. The new union is called a minority union because they are allow to organize and then try to win a vote with the National Labor Relations Board, typically unions try to organize the majority and if they win the majority of votes they can bargain with management. The degree of success will depend on whether management wishes to work or work against the union.

Linking to dividend paying stocks, the focus on investing is the final result, did the company make a profit and can it pay a dividend. The longer you hold the shares, the more likely you are to examine the internal workings of the company. If you believe the company is relatively a good ethical company, there is little reason to examine the internal workings. One hopes and expects a good company wishes to keep its workforce and treats them in that manner, but it is an internal concern.

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

The sexy part of investment banking is mergers and acquisitions because 2 companies join forces to have greater market share and expand their offerings. The reality is do the 2 companies join to become a stronger force? sometimes yes, sometimes no. Not surprising in 2020, when governments shut down the movement of people, mergers and acquisitions were down, for a while they almost stopped.

In an article by Joshua Franklin and Pamela Barbaglia of Reuters, Cary Kochman, Citigroup’s global co-head of M&A said the biggest story has to be enormous rebound we have experienced. After almost no activity, we went through a 3-5 year cycle in just 6 months.

The value of M&A globally dropped 5% to $3.6 trillion on data from Refintiv. There was 48,226 deals compare with 50,113 in 2019. A stock market rally and access to cheap financing gave chief executives confidence to pursue transformative transactions again.

Dealmakers see 2021 picking up steam in 2021 with companies, private equity firms and SPACs (special purpose acquisition companies) all doing acquisitions.

M&A volume in the US was down 23% to $1.4 trillion which is 40% of global deal-making, Europe was $989 billion or 35% and Asia-Pacific was $872 billion.

Private equity firms capitalized on the plentiful financing available and did leveraged buyouts of $570 billion.

More than 200 SPACs have raised $78 billion. SPACs typically buy a company 5 times the size of their IPO or according to a Goldman Sachs report that could mean $300 billion in activity in 2021 and 2022.

Linking to dividend paying stocks, when you buy the companies you buy them because they are profitable and can pay a dividend. In a rising stock market and access to very inexpensive money, most companies think growth or getting bigger. It is relatively inexpensive for them to buy something to enhance product lines or services. Just because it is relatively inexpensive as an investor you have to ask is it a good thing which the company is merging with. If the answer is no, cash out and look at alternatives. If the answer is yes, watch the time lines of expected savings and market share.

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

If you think about electric cars, at the moment the name Tesla will likely come to the forefront. There are good reasons why you may think about Tesla – the stock has been on a great run, the cars, from the people who drive them are a joy to drive. Is Tesla a software company or a manufacturing company? How you answer the question determines your outlook on the company. However every company has competition. At the moment the competition is behind Tesla but in the automotive world, expect the competition to have very similar vehicles very quickly. Recently saw an article that 54% of the new cars being sold in Norway are electric and most are not Tesla.

In an article by Jack Ewing of the New York Times News Service, Mr. Ewing examined what the German manufacturers are doing. The German manufacturers include: Porsche, Audi, BMW, Daimler and VW.

Porsche started out with they have a reputation of high performance vehicles – the electric vehicle has to be a real Porsche, said Stefan Weckbach, the Porsche executive in charge of the Taycan. Reviewers of the Taycan noted the car can accelerate like a Porsche but it cannot go as far as the Tesla Model S and last Tesla’s self driving software.

Audi, Porsche and VW are all corporately related will be selling the e-tron GT, the emphasis is on driving comfort rather than setting speed records. In 2022, Audi plans to sell the Q4 electric SUV. Because of the electric motor, auto designers make the interiors of the electric car roomier than gasoline cars.

VW hopes to do what it does best, drive down the cost for each vehicle with massive production volumes and beat Tesla on price.

In 2021, Mercedes a division of Daimler with introduce the EQS, to complement its S class series. In 2022 it will introduce a SUV, because the most popular vehicle sold in the US is a SUV.

BMW will not be producing a fully electric vehicle until 2025, instead offering electrified versions of its conventional models.

Renault which is produced in France and is aligned with Nissan has been producing the Zoe which is the best selling battery powered car in Europe during 2020.

Tesla will be producing vehicles in Europe in 2021 at a plant in Gruenheide, east of Berlin.

Linking to dividend producing stocks, when you invest in a manufacturing company you constantly need to look to the future because of the lag time it takes to invest millions of dollars to produce what you hope the public will buy. If the company gets it right, then they have a good year. If not there is next year. In all fields there is competition, although some companies names come up every year as a dividend buyer you expect them to maintain their market share, if it falls seek alternatives.

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