If you listen to the President who is a cheerleader for the economy, he expects a V shaped recovery. He says it is because he needs it for re-election, he is a cheerleader for the economy and hopes, he has no idea, or the economy is likely to be more L shaped. It will likely be some of the above, but you can look to other countries to see how they are looking towards their economies recovering.

In an article by Nathan Vanderllippe, the Asian correspondent of the Globe and Mail, the Chinese government planners do not expect economic difficulties to ease any time soon.

China has the ability to move its people into where ever it sees fit, believes the challenges ahead will have never been seen before. Prior to the COVID shutdown, the economy was growing and for the past 20 years, the economy has only been growing. The government will earmark nearly $400 billion for local governments to bolster employment, uphold basic living standards, and support private companies through reductions in rental costs and and subsidies for consumption.

The plans call for $20 billion to put more than 35 million people through vocational skills training in the next 2 years, while expanding the colleges by 2 million.

Government revenues fell by 14.5% in the first 4 months of 2020. Government spending on COVID was $30 billion. Do you believe the numbers from China are higher?

Over 560 million people have no bank savings which is not good for savings and investment says Ding Changfa, a professor of economics at Xiamen University.

Linking to dividend paying stocks, across the world there are huge opportunities and challenges. As you do your investing understand how your companies make a profit. As governments continue to use its monetary and fiscal measures, some of them will benefit dividend paying companies as they pay less fees.

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

Hopefully you remember the situation in Italy in February and March, the singing from the balconies was wonderful, however the government shutdown and the state of the hospitals was very hard to manage. In an article by Angelo Amante and Christiano Corvino of Reuters, they reported the 8 week shutdown left an economy already on its knees laden with more debt and unemployed people. The European Commission expects the Italian economy to shrink nearly 10%.

In times of trouble, people in general tend to buy gold and in Italy, Mr. Barrotta the manager of 3 Compro One gold shops has seen a 50% increase in purchasing of gold in 2 weeks since the Italian economy opened up. The price of gold is up 25% since December.

Italians are also using pawn shops to keep paying the bills. Pawn shops in Italy near the the Plazza Monte di Pieta have been in operations since the 17th Century.

Linking to dividend paying stocks, gold is a bell weather commodity to buy when you feel the world is going no where, there are various means of buying gold – the physical commodity, coins, gold stocks and certificates. If you buy the commodity, it pays no interest or dividends while you wait. You might be correct and might lose out of other opportunities, in investing only time when tell if you made the right decision.

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

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.