One of the reasons why we love democracy is that senior officials have to testify about what they are doing and how they are doing. Many times you may not like the answers, but one can ask. In mid May it was the Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell’s turn to take the seats. These men have lead more than $5 billion in stimulus to the economy. Are they doing it right? on the correct track? who is getting helped? and a multiple number of of issues were raised.

In an article by David Lawder of Reuters, both said more stimulus will likely be needed. Both departments have done the work in record time, however there were still areas not being helped from the side of the opposition.

Congress is considering more aid to states, increase pay for essential workers, and trying to help the small and medium sized businesses.

The federal reserve has slashed corporate interest rates near 0% and has worked to keep banks giving out credit. It established lending facilities for companies through the purchase of corporate bonds (prior to the virus, the fed only bought government bonds and corporate bonds were allowed to fail. Companies known as vulture investors came in to pick up good assets and Chapter 11 the rest. At the moment this is not happening is that good or bad for the economy as a whole?)

While Treasury has acted quickly, there has been errors but given 30 million on layoffs, hopefully more good was done than bad. Has expectations and oversight changed?

Linking to dividend paying stocks, the oversight of most companies is their annual meeting where shareholders can ask questions. Most meetings have been how has the company managed and will the profits be continuing? Easy questions to ask, hard to answer.

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

After the markets fell because of the COVID 19, they rebounded, but in every market there are some winners and losers. The technology sector has been increasing in value and hopefully in your portfolio there are technology stocks. When a group is moving ahead others, it is called momentum, the trick is which stocks in the group are the better ones to own.

Cary Christie at Trading Central came up with some answers and his criteria was:

large cap technology stocks or those with a market capitalization of $4 billion

stocks which had a positive percentage return over 52 weeks and in mid May over the past 4 weeks

P/E Ratios, Dividend ratios

Company Mkt Cap 1 Yr Price 4W Price YTD Price P/E Div Recent

($ bil) Perf % Perf % Perf % Yield Price $

Cognex Corp 10.4 39.0 25.2 8.8 84.2 0.4 60.98

Enphase Energy 7.5 299.5 67.8 130.9 60.6 n/a 60.16

Adobe Inc 183.7 37.3 13.9 15.7 57.9 n/a 381.30

Trade Desk 13.6 48.5 21.7 14.3 116.9 n/a 296.28

Fortinet Inc 23.2 74.1 39.6 34.6 66.8 n/a 143.70

Intuit 75.6 18.2 10.1 10.8 46.9 0.7 290.0

Microsoft 1,399.6 45.7 7.0 17.1 32.6 1.1 184.80

Marvell Tech 19.2 29.7 8.7 9.1 n/a 0.8 28.97

Splunk 26.0 18.5 24.4 9.6 n/a n/a 164.06

The chart above gives you some names to begin to consider and you can lower the capitalization to look at lower cost stocks. The important thing to note is some stocks have gone up since the crash in March, there are opportunities in every market. As you continually do your homework, you will have names which to buy, hold and sell.

Linking to dividend paying stocks, the economy has been in an upheaval for a considerable time. Similar to all things, as you look around with what programs you use, your companies and suppliers use, you will see opportunities. You can buy an index, which gives you a base to build, but it also means doing homework to see what companies are executing on their business plans.

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

When the government declared some stores as essential, it was a license to print money. The difference between JC Penny which has filed for Chapter 11 bankruptcy and Walmart is light and day. Walmart in mid May reported a great quarter – beating Wall Street’s quarterly revenue and profit estimates and doing record online sales.

In an article by Aishwarya Venugopal of Reuters, Walmart’s online business grew 74% as its investments in store pick up and delivery paid off. The number of new customers rose 4 times. Sales at its US stores rose 10% beating estimates of 8.8%. Total revenue rose 8.6% to 134.6 billion.

Walmart’s costs rose 900 million with the addition of 235,000 hourly workers. Operating margins were very healthy at 20.5% and adjusted earnings per share was $1.18 versus expectations of $1.12.

Linking to dividend paying stocks, while Walmart beat expectations or estimates, they were close which means Wall Street understands how Walmart makes money. For many companies on the stock market expectations or estimates will be very accurate, which means as an investor when you look at the estimates and see the company doing it, there should be little surprise. Most dividend paying companies fit into this category, if you buy an utility there should be little surprise in the reporting. If there is, you need to find alternatives. The lesson from Walmart is government policies matter to the bottom line.

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

The President who should have access to some of the “best and brightest” minds in the country and therefore the world, loves to talk about a V shaped recovery. We know he says he is a cheerleader but other countries around the world have opened up, what is there situation? V shaped or something else?

In an article by Nathan Vanderklippe of the Globe and Mail, he looked at China. The city of JinJiang is about 2 million in population with over 5,000 companies in the shoe business or 1 out every 3 workers, the city calls itself China’s Shoe Capital. With the virus shutdowns and the tariff war with the US, things are changing and factories shutting down or changing location to other countries.

In China, the National Bureau of Statistics reported an unemployment rate of 6%, but economists do not believe that number, they believe the number is closer to 20 to 70 million people are jobless which means a number closer to 30%.

The affect on workers is salaries for temporary workers have fallen and job postings attract 3 to 5 times as many applications.

Finance Minister Liu Kim said China would use a co-ordinated response to boost the country’s economy including the issuance of special treasury bonds and cuts to taxes and fees.

China’s weak social safety net means people will be driven to find work and people are accepting lower and lower pay.

Linking to dividend paying stocks, one expects a consistently profitable company to pay its employees reasonable wages and salaries because they can. However with the growing unemployment one can see the reason why Amazon decreased its additional pay to employees for working through the higher volumes of packages. There are more people willing to come to work at less money, why continue the pay when the government says open up or go back to normal? Profitable companies always will wrestle with the concept of earning more money and not paying enough? What is enough?

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

As people have been sheltering from home for the past weeks, do you believe one of the things they were looking to do was to buy a new car? It is possible because sales in April fell 50% from the previous year according to Cox Automotive, a market researcher.

In an article by Neal E Boudette of the New York Times News Service, auto companies have called back employees to start up the manufacturing industry. While the auto companies are no longer as important as the 1950’s when a GM executive said, “as GM goes so does the American economy.” Nowdays, the auto industry is importand and according to Jim Farley, the chief operating officer of Ford, restarting the entire auto ecosystem is how we restart the economy.

The economy is not a manufacturing based one, but is a service economy – people need to shop for 2/3s of the economy is people buying stuff. The auto plants across the country employ 400,000 employees or 4% of the the economy, however it is important to see the auto plants turning out vehicles.

Production will not bounce back quickly. The revival will unfold over a week or more as dozens of auto plants and hundreds of factories owned by parts suppliers gear up, and start making and shipping products. Remember the car you buy is put together at the auto plant, all the parts are not made at the auto plant. Given the former NAFTA which became the USMCA, the parts come from Mexico, Canada and the US which does mean multiple national, state and local government regulations.

GM said it will start with a single shift, as opposed to 2 or 3 shifts it had been running before the shutdown.

Linking to dividend paying stocks, while dividend paying companies tend to track most scenarios more easily, because they can allocate resources to do so, all companies need time to be flexible. Most companies are not as nimble as they would like to be, because they deal with people and people are not as flexible as companies would like. Ideally when you buy shares in the company, you like to see nimble and flexible companies ready for the challenges ahead.

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

When the virus was beginning to go through the population, most people believed there was short term pain needed for long term gain. The short term pain was to isolate people to ensure the virus was contained and then things would go back to normal as quick as possible. The solution was for the government to shutdown most of the economy, pay a bridge for those affected and then they would all resume. It was a great theory, but there was a flaw. Much of the economy and the design of cities are for people to meet in large groups or events. For example the train station has a market attached to it or very nearby which brings people together to meet and eat. Under social distancing, governments do not want people to meet as much. What do you do?

In an article by Lucia Mutikani of Reuters, the idea that everything would go back to normal or a V shaped recovery is looking like the dodo bird (it is extinct). Economists believe it will take a while for activity to rebound, even as businesses in many states are reopening.

Robert Frick, a corporate economist at Navy Federal Credit Union in Vienna, Virginia said the predicted second wave of layoffs may have started. This is more layoffs building on the initial layoffs as middle managers and those in support industries lose their job.

The first layoffs were overwhelming women and those on the lower end of the pay scale as they held the bulk of jobs in food services, retailing, and hospitality. Those who could work from home have tended to be higher paying jobs. When companies open up for business again, will they have as many employees or will they hire less to start?

Linking to dividend paying stocks, everyone has a theory or idea of what will or could happen and it is theory until it does happen. Fortunately for the market, some of those theories are correct and some of them are not, trading gives us clues which is correct for the time period. The only constant is cash flow is king, most of the time balance is the key but if either the bond market or the stock market gets ahead of itself issuing more bonds or stock is a good thing, until it is not. There is never perfect information but try not to be a cheerleader.

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

In an interdependent world, not all countries are equal but the rich countries try to help the poorer ones through institutions such as the World Bank and the International Monetary Fund or IMF. These institutions lend money to some of the poorest countries in the world, sometimes there is a kicker that they have to buy products from a richer country, but when a country is poor, what choices are there?

Along comes the virus which all countries shut their border to people, one has to remember the biggest export of a poor country will be its people who send money back home to their families and relatives. The countries typically have little resources or if they do have a resource it is tied to the commodity prices which go up and down depending on the world’s economy. Prior to the virus shutdown, the countries had a weak health system, high debt levels and few resources to manage both. With the virus what does a poor country do?

According to an article by Andrea Shalal of Reuters, IMF managing director Kristalina Georgieva said the IMF was going to revise its forecast that the global output would shrink by 3% in 2020 and developing countries would need more than $2.5 trillion to weather the storm.

At the moment, the IMF is going to cover the debt service payments of 25 of the poorest countries for 6 months. The IMF said further assistance was likely needed, but if it cancelled debt payments the IMF’s credit rating and ability to provide low cost funding would be harmed.

Linking to dividend paying stocks, the reasons why the countries are in trouble are always multiple but you can easily apply the same logic to the poorest citizens in your country. Should they be helped? how do you help? what does that mean? When you bring the analysis to companies focus on cash flow – how do they receive it? how much are they getting? is it enough?

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

At the present time interest rates are very very very low, however some of the best companies to invest in have little debt and solid balance sheets to grow through all cycles of the economy. In a chart by Emily Halverson-Duncan of Morningstar Research, she looked through the company’s data base at 2,092 stocks and came up with the top 15.

debt to equity ratio less than or equal to 1.1

debt to total assets ratio in the lower 2/3 of its peers, this chart is 0.4 or lower

cash flow to debt in the top 2/3 of its peers in this chart it is 0.27 or higher

market capitalization in the top 2/3 of its peers, it this chart it is 1.3 billion or higher

trailing ROE in the top 1/3 of peer, the value is 16.9% or higher

5 year beat of less than 1.3

The companies which are in the list are:

Company Mkt Cap Debt/ Debt/ CF/ Trailing 5 Yr Div Recent

($ bil) Equity T Assets Debt ROE% Beta Yld Price

NetEase.com 46.032 0.0 0.0 0.0 23.3 0.7 1.9 359.77

Take-Two Interact 14.728 0.1 0.0 6.1 24.2 0.5 0.0 129.85

Logitech Internat 8.597 0.0 0.0 18.2 29.4 1.0 1.4 51.39

CommVault Systems 2.094 0.0 0.0 10.4 20.1 0.8 0.0 44.95

Veeva Systems 28.708 0.0 0.0 9.6 22.3 0.9 0.0 192.34

National Beverage 2.423 0.1 0.1 4.1 32.9 1.1 0.0 51.98

WD-40 Co 2.393 0.5 0.2 1.0 36.5 -0.1 1.5 175.11

Intuit Inc 73.030 0.2 0.1 3.5 50.8 1.0 0.8 280.36

Biogen 51.244 0.4 0.2 1.3 48.4 0.5 0.0 314.02

Cadence Design 23.021 0.2 0.1 2.2 36.9 1.1 0.0 82.46

the other companies on the list are:

Accenture, Paychex, VMware Inc, Lululemon Athetica and Copart

Linking to dividend paying stocks. the world is awash in inexpensive debt but some companies do not need the debt financing, they generate enough cash flow not to have debt. Notice some of the companies are in the software business but they are not household names. This is why these lists help you decide what is important in your investing decisions.

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

If you are similar to those in the north east, we have finally received warm weather on a constant basis and have a desire to live outdoors. Part of the outdoor experience with kids is going to an amusement park at least once during the summer. The closer you live, the more inviting is the season pass. With the virus all parks are closed, but there is hope for North American parks.

In an article by Sam McNeil of Reuters the Shanghai Disneyland reopened. In early May when the article was written, Disney was limiting visitors, requiring masks and checking everyone for their temperature. The good news for Disney was the opening was sold out, however that meant normal capacity is 80,000 people per day, Disney had cut that to 30% or 24.000 people.

If you look at the virus controls, the industry with the biggest effect is tourism and there are many people with jobs in tourism field. When you think of Disney – you might think of an entertainment juggernaut with movies – from Disney cartoons, pictures, Marvel movies, but they said its quarterly profit went down 91%. Tourism and the gathering of people helps make Disney money.

Linking to dividend paying stocks, we are all adjusting to the virus and it takes time but as investors it is important to continually ask how does your company make profits. Then you can go through different risk scenarios of can they continue through different cycles, if the answer is yes, the price of the shares will go up and down, but if profits are made and dividends paid you have to do little but ensure they are added to your account. There will be many companies not doing well in the summer, but with your dividends you can look for opportunities because somewhere there is always a bull market which you can take advantage of.

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