If you think about the auto industry after COVID, likely your first reaction is stay away from investing in the sector. Highways are less busy, people are using less gasoline, the normal commuting to downtowns or work is less and if people are staying home more there should be less demand on new vehicles.

Ford surprised everyone when it announced its latest quarter, it made money on strong demand for pickups and SUVs. Ford reported a net income in the third quarter of $2.4 billion or 60 cents a share versus $400 million or 11 cents a share a year earlier.

In an article from Reuters Ford’s profit was $3.6 billion or 65 cents a share, analysts had expected 19 cents a share.

The company repaid a $15 billion in revolving credit loans and ended the quarter with nearly $30 billion in cash and more than $45 billion in liquidity.

The company’s adjusted EBIT margin in the quarter was 9.7% with a full year target of 8%.

Fiat Chrysler also made a operating profit of $4 billion on margins of 13.8%.

Linking to dividend paying stocks, the automobile companies are often counted out because there is great change in the industry, however there are good margins and even if sales are slower, once they pick up profits are to made. If you read about the industry and the electronics in the vehicles, one day we can set the car on the highway and have a nap, vehicles are not going away. Too many people need vehicles to move around the neighborhoods where they live. The auto industry will continue to change and as long as margins are good, they will survive and grow.

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

In Europe the airlines often have direct government support or ownership, in the case of KLM-Air France two countries own the airlines. When times are good it is easy to share ownership, when times are tough such as the COVID situation, it is not easy. Both governments want their airlines to continue and have spin off jobs at the airports and economic development. In Europe, many industries have unions and stronger unions which the government either supports or does not oppose. However, in economics in order to stay in business, someone should make money or at least try to keep costs low.

In the KLM case it is the government who is management, and Dutch Finance Minister Wopke Hockstra said he was disappointed with the pilot union who rejected a wage freeze until 2025. The union said it has agreed to a wage freeze until March 2022 and would not extend it. The government had been stressing that KLM would receive a bailout of E 3.4 billion ($5.2 billion), if the pilots agreed as the other unions of ground and cabin crews (who make less money) had agreed to the extension in exchange for no loss of jobs.

According to a report in Reuters, KLM-Air France reported a drop of 67% in third quarter revenue to E 2.52 billion. The airline’s debt has risen by E 3 billion to E 9 billion.

Linking to dividend paying stocks, in all companies while everyone has the same end interest not everyone has the same vested interest. Some groups have more control than others and when you invest you need to know who the players are to know which groups have a say and which groups raise concerns which only need to be listened to.

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

In politics, words are flung around sometimes to get votes but words eventually matter. President Trump on the campaign trail, often says China will pay and then goes on to another subject. The issue with the President is he is not a very detailed person, he shouts from the rooftops and then goes to another roof to shout again. Sometimes you might like what he says, sometimes you dismiss him. But what if a target of what he says or tweets can fight back? China is the world’s second largest economy and has very distinct ideas of where it wants to be and is going. Every time the US has dropped from its normal response to anything which happens around the world as it does an inward US first policy, China sets in and takes the US’s place. We have seen China expand its relationships across the Asia (examine You Tube videos on the new Silk Road) and Africa (new ports for Chinese goods have been established and China has lent money to countries) and they will not step back when a new administration is in power in the US.

China is setting the stage for what it will do every time President Trump says China will pay. In an Associated Press article China passed a law restricting sensitive exports to protect national security. The law will apply to all companies in China and take affect December 1. The law in China will apply to civilian, military and nuclear programs, as well as goods, technologies and services related to national security. In simple terms just about everything.

The law is designed if other countries around the world including the US block Chinese communications gear supplier Huawei Technologies, Tencent Holdings’ We Chat, ByteDance Ltd.’TikTok app and others China will have a response. It is noted China has some of the most restrictive controls on its own people through facial recognition programs it can and does scan all the people at sporting events and find those who needed to be arrested. It is both interesting and scary at the same time.

In a related story, China is blaming the US for climate change getting worse. It is true the US has not signed onto the Paris Accord and President Trump’s administration cut regulations for clean air and clean water, but blaming the US without examining the face in the mirror is a little much.

Linking to dividend paying stocks, words from the President of the US or President of the company which you have investments matter. When the words are directed at the competition, expect the competition to have an ability to push back. If you think about the physics notion – for every action there is an equal and opposite reaction; not to expect reaction is foolish. Why would the competition roll over, particularly if they feel you are vulnerable? Measured words are sometimes boring, but measured words tell you about the long term plans, as opposed to what is happening today.

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

If you watched the Presidential debate, Vice President Biden said to battle climate change, the US needs to go green in terms of vehicles and saving of energy through retrofits. If Biden wins and the polls suggest he will, Wall Street firms are analyzing which green companies to own.

In an article by David Randall of Reuters, portfolio managers from Gabelli, Fairpointe Capital and Eaton Vance (soon to be a subsidiary of Morgan Stanley) are buying shares of companies ranging from semiconductors to industrial equipment to utilities.

Mr. Biden has proposed a $2 trillion spending including installing more than 500,000 electric vehicle charging stations by 2030.

The Invesco Solar ETF has risen 20% in October, the VanEck Vectors Low Carbon Energy ETF is up 11.3% and the iShares Global Clean Energy ETF is up 14.4%.

Chris Dyer, director of global equity at Eaton Vance is buying companies such as Schneider Electric SE. Eaton Vance is looking at companies that are particularly geared to energy efficiency.

Cheryl Smith at Trillium Asset Management is looking at semiconductors and automotive components that would benefit from a push to electric vehicles.

The Global X Autonomous and Electric Vehicles ETF is up 5.7%

President Trump loves to talk about the oil industry however Exxon Mobil and Chevron has shed 51 and 40% respectively.

Linking to dividend paying stocks, the oil companies have been great dividend payers for generations but things change and it is always important to remember the top 10 companies of the 1980’s is not the top 10 companies of the 2010’s. Companies are still making money but the economy or alternatives come up. Change will happen, hopefully it happens over time and you can adjust to it and continue to earn dividends from profitable companies.

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

In all industries there are the companies producing at the top end of the market with the highest margins and those producing at the low end of the market and thus needing volume to meet the lower margins. At the low end, companies would love to do what the high end companies are doing and they try, whether they succeed is a different question but they try.

In the chip making world, Intel for years held the top end of the market and AMD or Advanced Micro Devices was at the lower end. However technology and uses of technology in the 5G world are changing which means there is an opportunity to shift the marketplace.

In an article by Don Clark of the New York Times News Service AMD agreed to buy Xilinx for $35 in stock. The deal will change AMD to be more competitive with Nvidia and compete with Intel as the market for data centers, 5G and automobile electronics change.

Sometimes consolidations are about duplicate product lines and cost-cutting, but AMD believes it can expand the business and boost profits. Lisa Su, AMD ‘s chief executive said Xilinx will help establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world.

A number of years ago, the statement was highly optimistic but Intel has suffered technological and financial stumbles and AMD has slowly grabbed a lead in some key measures of computing performance. Intel reported a 29% decline in quarterly profits.

Xilinx founded in 1984 is the biggest maker of a class of chips that can be reconfigured for a variety of specialized tasks after they leave the factory. Such field programmable gate arrays have long been popular in telecommunications applications, and 5G is coming. The gross margins at Xilinx are higher than AMD and company continues to generate considerable cash.

It is noted Huawei is one of Xilinx’s major customers. Huawei is being banned by various countries because of the idea that China receives data and could do something with it. However there are many countries around the world that welcome China and Huawei because they would not have the 5G abilities.

One of the reasons Intel is losing money is they bought Altera (Xilinx biggest competitor) for $16.7 billion in 2015 expecting to produce Altera chips in Intel factories. That process has failed to generate big returns, Intel continues to work on it.

AMD relies heavily on external manufacturing partners, as does Xilinx – particularly Taiwan Semiconductor Manufacturing Co. AMD and Axilix have pushed new technologies for creating new products from packaging multiple chips together.

Linking to dividend paying stocks, all companies look for the best method to generate high gross margins and if the companies are receiving them, investors love the companies. When you examine your investments what margins are the companies receiving and have they been consistent. For example in credit cards, the gross margin is 40% and consistent. It is not hard to earn profits and pay dividends when margins are very healthy.

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

If someone had asked you about the tin markets, you might not have anything to say for it is not a well know subject although prices have weather relatively well.

In an article by Andy Home of Reuters, the price of a tonne of tin since the start of 2020 is up 6.5% to $18.300. The high was in September reach $18.510.

Tin is classified as a critical mineral in the US, but not in Europe. Most people think of tin, they think about the tin can. The big issue in the market is what is China doing?

Total production per year is about 360,000 tonnes. If you think about the tin industry, for years it was a declining demand as steel-makers were using even thinner coatings and the packaging company shifted to using aluminum. The new usage for tin is nano-soldering in electronics. This usage now accounts for 48% of global usage, while tinplating was 13% according to the International Tin Association (ITA).

The producer of tin include the Belgium’s Metallo and the Wa area of Myanmar. China is the world’s largest producer and consumer of tin. The last mine in the US closed in 1993 and the last smelter in 1989.

Linking to dividend paying stocks, all commodities are such to supply and demand and the world’s users are always searching for alternatives. From the tin can to electronics, who was paying attention? There is money to be made in many sectors, sometimes it takes patience.

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

If you were going to own only one Wall Street bank in your portfolio, Goldman Sachs may be the one you should own. Jim Cramer owns it for his charitable trust (but remember Jim worked there), however the real reason is Goldman Sachs reported a 17.5% quarterly return on equity, its highest since 2010.

Many of Goldman’s clients are institutions and governments around the world, that is good for consistent earnings. The bank has a very strong trading desk and equally has very little exposure to vulnerable consumers and businesses suffering from unemployment and pandemic lockdowns. Goldman has some exposure to consumers through Apple pay, but it is relatively tiny.

In an article by Anirban Sen and Matt Scuffman of Reuters, trading revenue jumped 29% to $4.6 billion in the quarter. This business accounted for 42% of Goldman’s overall revenue.

The really good news is the bank set aside $278 million to cover loan losses bringing the number up to $2.8 billion as compared to JPMorgan Chase, Bank of America and Citigroup where the numbers are $10 to $20 billion.

Analysts had expected a profit of $5.57 a share, Goldman reported $9.68 a share.

Linking to dividend paying stocks, when a company has more institutions than individual consumers as customers they tend to have more consistent earnings. If consumers are active in markets, institutions will also be doing the same thing. As much as we sometimes think institutions can be more rational, they see the big jump in stock prices, the pressure is to have some exposure to active stocks to produce higher returns. Hopefully they examine the risk profile more to have fewer losses.

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

If you remember the trading markets this year, you will remember the markets declining over 10% and wondering who made money? It turns out there were some who made money but should have not. If you remember the movie Wall Street – the character Gordon Gecko says to the Bud after Bud gave him information about the pension of an aircraft company, what else do you have. Wall Street runs on information and it is better to have it before everyone else. Later Bud thinks is that insider trading? and wonders how much is enough? It turns out the White House gave some people insider information.

In an article by Kate Kelly and Mark Mazzetti of the New York Times Service, you may remember White House tapes of Bob Woodward, the President said COVID will be much worse than expected and is transported by air. Originally people thought that was the only person the President told and Mr. Woodward did nothing with the information.

On February 24, the President declared COVID very much under control, but hours earlier senior members of the President’s economic team privately addressed board members of the Hoover Institution. Tomas Phillipson, a senior economic advisor to the President told the group everything was not rosy, the outbreak could prove worse than the President was telling the public through news and twitter.

A hedge fund consultant wrote a document to be shared with other members, and wrote What struck me was that nearly every official raised the virus as a point of concern totally unprovoked. The document was circulated and they all though the same manner – short everything. One of the reasons why was the hedge fund consultant not only heard the virus will be worse that the public was being told, but the administration was not prepared to combat the pandemic.

By February 26, the US markets had fallen 300 points.

Other information gained on February 24 was the administration was asking for $2.5 billion in additional funding. On February 25, Nancy Messonnier told the public, it is not a question of if this will happen, but when will it happen.

The reality was President Trump knew but said he did not want to panic the nation. Some people started putting the pieces together and they said how do your make money, short the market. The market fell and their returns were higher.

Linking to dividend paying stocks, all words of the President matter. Whether the words are from the President of the US or President of the company you work for or invest in. There are always interested parties trying to put together pieces to make the pie and then they can make a decision. It looks like by saying one thing in public and another thing in private, those with assess to private discussions were able to take action before the general public. If the President had been more forthcoming everyone could act and make rational decisions for themselves.

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

It the northeast of the US, the biggest provider of electricity is a Canadian company called Hydro Quebec, they have great capacity in producing hydro and if you consider the ultimate consumers around the Boston area – a great capacity to consume hydro. There is only one thing in the way, other states which the hydro towers and lines must go through. If you ever looked at hydro corridor they cut the trees down in the corridor and place the lines and towers in the corridor. The result is electricity is delivered from the dams which the rivers and lakes ensure will run and green, clean electricity is delivered to consumers.

If the New England Clean Energy Connect goes through the contract will be a 20 year deal to supply $10 billion worth of electricity to Massachusetts. The state will decommission some gas plants and consumers will be generally happy when the lights are turned on the electricity is green and given the hydro rates can be relatively constant.

In an article by Adrian Morrow of the Globe and Mail, not everyone agrees with the corridor. The cutting of the trees has environmental groups concerned, the electrical companies who have gas-fired power plants (the vested interests) are not happy and some local politicians believe Maine is not getting enough benefits for its land. Hydro Quebec has offered the state of Maine discounted electricity and $258 million. If you want more information you can check out the New England Clean Energy Connect website.

Even though Maine’s governor and the the Public Utilities Commission both approved the transmission corridor, opponents received enough signatures to trigger a referendum under Maine law.

The real issue is Hydro Quebec has hired consultants and there is a referendum or vote on the corridor. Should Hydro Quebec be paying or should the state of Mass be paying for the consultants? According to filings with the Maine Ethics Commission, Hydro Quebec has spent $8.3 million on the ballot question.

Linking to dividend paying stocks, in many portfolios there will be electrical utilities because people need electricity for home and work, someone needs to provide the electricity and Utility Boards tend to increase the price each year which means every year the companies can pay their dividends. As we move to a greener economy, utility companies can provide greener electricity, however they will be logistics or transmitting the electricity from the source to the consumer. What is good and what will consumers accept? As investors you are interested in the result not how the electricity gets where it is going, but sometimes it is good to think about it for with most things there is a cost benefit to it.

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