At the moment, thanks to the US trillion dollar stimulus the banks are ok in their risk management ratios. That being said, the credit cards which are issued by the millions to generate extra profits, the longer the economy is a shutdown phase, the more at risk the banks are. The government has given money to pay the house payments and food, but maybe not enough for credit card payments. Analysts are beginning to question, will the banks have to go to drastic measures if the shutdown lasts longer?

In an article by David Henry of Reuters, according to Goldman Sachs banking analyst Richard Ramsden credit cards have an outsized impact on the banks who have given out over $2 trillion in loans to consumers.

When someone goes into unemployment, particularly for an expecting short time, the person typically does not cut back all the expenses, because of the expectation the same at home limits would only last a month or maximum 2 months. As consumers waited for the government to send money, they tapped into their credit card lines. It is entirely probable that card card losses may double under severe economic stress and the number is tied to unemployment rates. Commercial loans losses are also expected to triple.

The good news, under existing conditions, the big banks can still pay their dividends but must be worried about the political chatter. The European Central Bank told their lenders to skip dividends and share buy backs. The Treasury has made no such demand.

Linking to dividend paying stocks, companies that accept and need government support, also must know it comes with a political consideration. High profile actions from the government mean the government wants the appearance of sharing the risk.

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

Prior to the Coronavirus the fastest growing part of the tourism industry was cruise ships. The cruise ship industry dominated by 3 companies which control 80% of the industry are Carnival, Royal Caribbean, and Norwegian Cruise Lines. In a segment by Hassan Minhaj of the Netflix show Patriot Act, he examined the cruise industry in the amusing way he does it. The cruise ship industry has developed to super convenient and advertised as non stop fun. The companies advertise from $1500 from a person for a 7 day cruise to higher end prices. The cruise industry has themed the weeks to whatever your interest is from Disney – Star War’s to Marvel to whatever there is an convention there is a theme cruise week. In a normal week, 30 million people take a cruise and more are considering going on a cruise.

Mr. Minhaj also looked at the negative side of the cruise industry – non of the cruise ships pay tax in the US because of ship registration – think tax haven countries; the industry has a whole has paid $100 million in fines for polluting the oceans; the ships use a great deal of energy (not fuel efficient); the tickets allow the cruise to enter and search your cabin; the labor regulations are not the greatest.

On the other hand, going on a cruise when the weather is wonderful can be a great vacation.

Linking to dividend paying stocks, until the virus, the cruise industry was a growing aspect of the vacation market and millions of people from all income groups went on the cruise. If you have never been on a cruise, you are not likely to be on one in the next 3 months. If you have taken a cruise would you go again? what would entice you to go again? If you would go again, then the industry might still have legs; if you would not go again, then stay away from the stocks.

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

If you have been to a shopping mall lately, you would have noticed all the shops which sell clothing and other things were declared non essential as we were order to stay at home. All the people who work in the stores are laid off, and it is important to feel compassion for them. As an investor, you should ask yourself are any of the stocks, worth buying or looking at to gain more information?

One of the people who published a chard was Shirley Li of FactSet.

Ms. Li used FactSet’s Universal Screening to examine:

-companies selling nonessential consumer goods and services

• a labor management scores using MSCI ESG Research – they focus on environmental, social and government data. The data also includes supply chain management and employee well being.

Company Mkt Cap Recent Close Labor Mgmt Price Rtn Price Rtn Div

$bil Mar 23-Apr 6 Feb 19- Apr 6 yield %

Hasbro 12.9 100.70 8.8 37.3 % -32.6% 3.8

Best Buy 19.4 85.07 8.6 18.7 – 31.5 3.7

Whilrpool 7.3 130.81 7.5 44.0 -37.2 5.2

D R Horton 16.6 52.12 7.0 24.7 -40.4 1.9

Tiffany 21.9 181.27 7.0 5.3 -4.5 1.8

Expedia 9.2 74.72 6.9 3.9 -56.7 2.6

Under Armour 4.6 12.71 6.6 11.5 -45.7 0.0

NVR Inc 12.3 3806.45 6.5 23.7 -32.1 0.0

Linking to dividend paying stocks, in the above chart the weeks of Feb 19 to April 6 shows massive declines as the investment community dropped retail stocks, There was a reason to drop them, however in the bulk selling the good companies were sold as well as the not so good ones. As an investor it is up to you to do homework to determine which ones are to be considered when they go up. There are always many choices, how do you narrow the field in order to buy the best choice for you?

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

We have seen western governments try to help employees who have been off work because the most effective manner to combat the coronavirus is to keep 6 feet away from other people. The US has given out more than $2.3 trillion in loans and grants and more is coming. Now imagine what non western countries are doing, because they have the same concerns but less resources to implement the stay at home policies.

In an article by Geoffrey York of the Globe and Mail, African countries are seeking to raise between $100 and $150 billion in financial help from a wide range of lenders as a projected 20 million people will lose their jobs. African countries are looking at the International Monetary Fund (IMF), the World Bank, the African Development Bank and the New Development Bank – created by Brazil, Russia, India, China and South Africa.

Linking to dividend paying stocks, everyone around the world is facing the same virus, yet the President of the US thinks only his country is facing the problems of the coronavirus and its economic declines. From an investor point of view, for most companies in the S&P 500, Africa is not a large market but diversification is a wonderful thing, until the world faces the small problem.

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

One of the big stories about the virus was a shortage of toilet paper and people beginning to buy more than they normally would need. It was a good story because the shelf space at the local markets was bare. In a recent Washington Post post

In turns out there are practical reasons why the shortage exists. It goes back to the supply lines. There are two distinct markets of toilet paper – the institutional and the retail. For the institutional market, the washrooms in the offices, the factories, warehouses rely on one ply toilet paper in the large roles. There is normal production of the those spools of toilet paper and the margins on the production are not high. The supply system to the institutional market is different than the retail market.

The second market is the 2 ply or 3 ply, we buy for our homes. Normally the two markets are in syc, however with the stay at home orders, the demand for the 2 ply and 3 ply went up, while the manufacturers did increased production it was not enough to keep the spaces full.

The manufacturers have a problem – how much toilet paper do they produce given the market will automatically change once restrictions are taken off. When people return to institutional uses of toilet paper, the demand for local toilet paper will fall. If you have noticed over the years, every week there seems to be a sale on toilet paper or the margins are thin as the companies fight for market share.

Linking to dividend paying stocks, all supply and distribution systems work until they do not as they are disrupted. When you watch the news, enjoy the problems but examine the supply lines or think logistics to see the solutions.

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

The Summer Olympics have been going on since 1896 every 4th year, and they were expected to happen in Tokyo, Japan this summer. The games have been postponed for both athletes and tourists. Similar to other events that are postponed there are good things and bad things about the postponement and an article by Graham Dunbar of the Associated Press highlights the organizers concerns.

The good news is by 2021 rolls around, all the facilities will be up and running and the concerns of new buildings will have been fixed.

The bad news is similar to most cities around the world, the athletes village was slated to be sold as housing for residents of Tokyo. The buyers will not be able to move in, what do the orgainzers do?

There are 41 venues all include a supply of goods and services, the contracts have to be changed to 2021.

The official budget for the games was $12.6 billion with the IOC contributing $1.3 billion.

Of the revenue side, TV advertising contributed to 73% of the IOC’s $5.7 billion in revenues. The governing bodies were expecting to receive $540 billion.

The IOC has yet to reschedule their Annual General Meeting in July and their presidential election in Athens in 2021.

Linking to dividend paying stocks, while as a population we miss the Olympics, we understand the athletes and tourists would not be in thesync because of social distancing. The world changes and that is both good and bad. On the good side the Olympics will be run in an off year, but the 2024 would be back on the 4 year cycle. The support of the athletes will raise the goodwill of the country and hopefully make money for NBC as we all watch sports for a seemingly magical time. In terms of money, the sponsors who to raise revenues with their goodwill promotions.

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

The corona virus affect particularly on the elderly is many who have the virus will die. If you try to find positives in that statement from a financial point of view you might look at funeral homes.

The news about funeral homes is that while many companies are independent there are large chains and we know the population is aging, which on the surface is a good thing. One of the big questions about the increased number of deaths is how do funeral companies make their money?

At every funeral home there is a large number of choices – from the basic pine box to the large open caskets. However with social distancing in affect and few attendees to the funeral, people are expected to request more pine boxes or lower cost funerals. Given part of the funeral is the reception, lower numbers mean lower revenues.

Funerals also make money from selling the funerals in advance. As people age, this is a good thing to look at and do, it makes it the entire process easier when someone dies. With many people at home both working and waiting to go back to work; and the ones working just going home, one can reasonably expect fewer funerals will be sold in advance.

In the article by David Berman he spoke to some funeral companies and the expected growth rate for the chains to buy the independents is effectively frozen. The large companies have to preserve their cash, while the independents are too busy to consider mergers.

The increase in deaths due to the virus will be offset by other deaths – fewer people dying from motor vehicles for there is less vehicles on the road. The project 240,000 deaths is less than 9% of the normal deaths in a year.

All the big chain funeral companies such as Service Corp International and Hillenbrand stocks are down similar to most, they should begin to climb towards their highs because the population is aging.

Linking to dividend paying stocks, the virus has changed many business models and that is both a good and bad thing. As long as you can see both sides with a bias towards the good thing, buying stocks for the longer term is a wonderful idea.

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

One of the most famous hotels in London is called the Ritz and it is owned by the Sir David and Sir Frederick Barclary. The brothers are twins and they are also billionaires who started in property development, branched off into hotels and also own newspapers, retail companies and a package delivery service.

In an article by Paul Waldie of the Canadian Press, the twins are getting older, just like everyone else, and started to think who should run the privately held empire. Each twin has a family and Sir David believes his son Aidan should be the person while Sir Frederick believes his daughter Amanda should have majority stake.

A number of years ago, the twins bought an island in the Channel Islands to built a 92 room castle for both families to enjoy; now the families are split between mansions in London and Monaco.

The ongoing feud which has seen the insides of a court room a number of times is who can sell the Ritz Hotel. Sir David is negotiating with a Saudi group to pay $750 pounds or $1.3 billion. Sir Frederick believes the hotel is worth more than a $1 billion pounds. Sir Frederick is negotiating with a group from Qatar.

The next court date is May.

Linking to dividend paying stocks, once you have money coming into your account, the next step is to allocate it. At first the task is reinvest or take some out to spend elsewhere. As time goes on and the amounts become larger the task is how much to invest or spend elsewhere. Those are good problems to have, however even with the very wealthy communication remains a key.

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

A number of years ago, charts were made showing over the years the Stock Market Index climbed over the years, offering the advice if you bought stocks over the years they would be worth more than if you did not buy stocks. It was a lovely chart, what it did not tell you the most important aspect of the index was on a quarterly basis it dropped some “losers” and added “winners” which is the reason why the index was up on a long term basis. For us as individuals, it is harder to drop stocks, which is the reason most of us have at least one stock that you held onto longer than you were expecting to.

The S&P Dow Jones Indices typically does a rebalancing at the end of every quarter, in a press release the company is delaying the process to late June.

When the S&P rebalances it means all the index funds have to sell the “losers” and buy the “winners” to ensure their holdings agree with the S&P. The S&P Dow Jones Indices has a formula which determines who the winners and losers are and includes such information such as the number of shares available to shareholders, market capitalization as well as past performance.

Linking to dividend paying stocks, most dividend stocks are easily in the formula for the inclusion in the index which help on the long term capital gains aspect; the dividend being paid allows for shareholders to examine the dividend to see if it is sustainable and then hopefully continue to hold or do nothing. That can be a very good response.

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