If you listen to the President during his virus updates, he talks about a V shaped recovery or a bounce back to what the economy was. He is hopeful, optimistic and is a cheerleader, but is it realistic? At the moment, no one knows but the expectations are it will not be a V shaped recovery. The first problem is when the closed shops are opened, will there be a rush to get in? Likely not as seen what is happening in China.

In an article by Reuters staff in China, the central bank slashed borrowing costs to stimulate the borrowing of money and people to start buying anything.

The GDP in China fell 6.5%, which is the first quarterly decline in 30 years for the world’s second largest economy. Will the largest economy, the US be that much different than the 2nd largest?

Japan based Nomura analysts noted unlike previous easing cycles, when most of the new credit went to finance spending on infrastructure, property and consumer durable goods, this we expect most of the new relief to help enterprises, banks and households survive the COVID crisis. (companies and people are trying to pay back bills).

One might expect in a service economy, the government almost has to give a monthly income for 3 months, before spending resumes the normal.

Linking to dividend paying stocks, if you own these stocks you are optimistic, the economy will be better however the economy will have and continuous to change. Start with your expectations and then move to bigger circles to determine what will get the economy back to normal? If those do not exist, what companies are doing well and continue to do well?

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

In mid April, the price of oil was plunging to -$37 dollars a barrel, it has since recovered as both Russia and Saudi Arabia cut production of oil, The cuts in production of oil tells you the game the two countries played was silly and the economy in general is in bad shape, if you believe the President’s projection of V shaped recovery – the economy is coming back better than before, reality maybe a better choice.

With every negative situation, somewhere there is a bullish situation or people believe there is a bullish situation. in terms of the weaknesses of oil prices, money is rushing to exchange traded ETFs for oil prices. In an article by Devika Krishna Kumas and Tim McLaughlin of Reuters, investors or “oil tourists” deposited $1.6 billion in the United States Oil Fund LP. When oil prices go up and return to what was normal, profits can be made.

John Love, chief executive of United States Commodity Funds LLC which manages the fund said the big fall in oil futures was the May crude but the fund did not hold any contracts. The fund had invested in forward contracts and short term US government debt. The fund has doubled in sized to $4.1 billion.

David Nadig of ETF Trends said all the money flowing into the fund are people trying to catch the bottom of the oil market.

The United States Oil ETF attempts to attract the price of West Texas Intermediate light sweet crude oil.

Linking to dividend paying stocks, in every market someone can see possible methods to capitalize on negative events. It is important you do that, for your own investments as people stay home longer than expected, are you invested in companies making money? Much of the analysis is how long with the situation last? one month – we can all adapt; 2 months or 3 months – we all need to make changes? You can seek opportunities but remember many investments become long term because the situation changed. If you are going to have long term investments try to ensure they produce dividends.

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

As part of your homework you should determine how to narrow the field to the best options of the best stocks which have also fallen in value. Then whatever decision you make is a good one.

Recently Sean Pugliese and Allan Meyer for Wickham Investment Counsel examined the S&P 500 index for low-volatility high dividend stocks with a focus on safety and value. The criteria were:

S&P 500 index focusing on large caps names.

beta to identify our low-volatility stocks – measures how much the stock moves relative to the market, to error of safety , the beta should be less than 1.

dividend yield , focusing on yields higher than 3.5%

dividend payout is the dividend payment divided by earnings. A lower number is preferred.

debt-to-equity which is debt outstanding divided by shareholder’s equity. Less leverage is preferred even though the interest rates are very low.

price to earnings is a valuation metric. The lower the number the better.

Company Mkt Cap beta Div Div Debt/ P/E Recent Price

($ Bil) Yld % Payout Equity $

Duke Energy 66.3 0.4 4.2 73.5 130.8 17.1 90.31

Pinnacle West Cap 9.2 0.4 3.8 81.3 105.8 16.6 82.23

Verizon Comm 237.8 0.5 4.3 52.0 181.6 11.7 57.44

Southern 63.6 0.5 4.1 54.2 168.5 18.8 60.33

Exelon Corp 38.1 0.5 3.9 48.1 117.3 12.8 39.15

Kellogg 21.5 0.6 3.6 80.3 288.4 16.2 62.74

Edison Internl 21.9 0.6 4.2 64.3 121.9 13.4 60.27

Pfizer Inc 196.3 0.6 4.3 50.3 82.6 13.6 35.39

Public Service Ent 26.7 0.6 3.7 56.0 107.5 15.7 52.95

Walgreens Boots 38.6 0.6 4.2 46.1 71.6 7.6 43.98

The other companies in the listed chart are Entergy Corp, Omnicom Group, PPL Corp, United Parcel Service, Paychex and Juniper Networks

Linking to dividend paying stocks, the above will give you names to consider and how to narrow a field down. What metric is the most important to you? The reason you wish to narrow the field is the idea is to buy and receive the dividend and it is safe and will be issued every year. The idea is not to buy for capital gains although any company making money consistently will over time be traded at higher P?E multiples and capital gains will come. Take your time, narrow the field and make good choices.

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

If you have a smart phone after making a few calls, entertainment is what you seek. Entertainment is a variety of methods but consider of the 2.5 billion Facebook monthly users, 700 million of the are engage with gaming content. Perhaps you are one of them, if you are not and that is good, you should know the global games business is worth $160 billion.

In an article by Seth Schiesel of the New York Times News Service, his discussions with Facebook noted the company was planning to introduce the app in June, but moved production up sooner. Mark Zuckerberg says gaming is entertainment that not just a form of passive consumption but entertainment that is interactive and brings people together. (if you ever went to Las Vegas – do you think gambling brought people together?)

Facebook’s app is designed largely for creating and watching live game-play, a fast growing online sector whose competition is Amazon’s Twitch; Google’s YouTube and Microsoft’s Mixer. In terms of total hours watched Facebook is behind YouTube and Twitch. The market leader is Amazon’s Twitch.

Linking to dividend paying stocks, if you are similar to me you have learnt about stool in Amazon’s revenue source – delivery of boxes with Amazon Prime; cloud computing (market leader) and Twitch. There is always things to learn, and hopefully you continue to learn during the pandemic and beyond.

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

In the retail market there are a wide variety of shops and some you will like and have shopped at. Most will be under pressure because of the virus. The virus stoppage means the retail stores have inventory or stuff in the store that likely no one wants to pay full price. The retail stores follow the seasons and need to sell their inventory for the next season. When the stores open there will be great sales for stuff that is for 2021, not necessarily for 2020. It is very hard to be a retailer right now.

Prior to the virus, the retail market was changing and some of the biggest names were in trouble, now it is more so. One of the big names is the Neiman Marcus Group founded in Dallas in 1907. The store became a national chain and in 2013 there was a leveraged buyout by Ares Management and Canada Pension Plan Investment Board. The chain owes $4.8 billion from a $6 billion buyout.

According to an article by Mike Spector and Jessica Dinapoli of Reuters, Neiman Marcus skipped millions of dollars in debt payment in mid April. Other department stores such as Macy’s and Nordstorm were borrowing money to stay afloat while JC Penny is considering bankruptcy filings to rework its unsustainable finances and save money on looming debt payments.

Standard & Poor which rates debt noted Neiman Marcus’s capital structure is unsustainable and move the rating into junk category.

Linking to dividend paying stocks, when you look at the big chains, you might think they are back by great real estate assets, but has the market changed forever or will it go back to normal. What can the mall stores be used for, it is a higher paying rent? Those are great questions which we will find out, if you want to invest in retail stores ensure they own the space not lease it for low rates. Do your homework or you will lose money. The investors first rule is try not to lose money.

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

How much money will US banks lose on loans because of the coronavirus recession?

After 2008 and throughout the 2010-2019, US banks had become more vibrant and had excess capital requirements required by the regulators. The banks were in great shape, the economy was growing, loan losses were down and bank earnings were expected to grow 2%. How a month or two has changed everything, in an article by David Henry of Reuters, losses are expected to be from 14 to 42%.

There are two variables for the change, one is the virus and to fight the virus the need for social distancing which has increased jobless into the 20 million numbers plus. The second is internal to the bank – accounting standards that require the banks to estimate losses for the lifetime of loans and set money aside to cover them. The 4 largest banks JPMorgan Chase, Bank of America, Citigroup and Wells Fargo reported a combined $24 billion in provisions for credit losses, which is 350% more than a year ago.

The projections are unknown because there are many assumptions in the figures – how long does the bank expect the recession to last; while the government stimulus will pay basic costs of rent and food, what about the bank loans? What does their Artificial Intelligence programs tell the banks?

Linking to dividend paying stocks, the banks have been great to hold and for the most part should be part of a diversified portfolio. We all do not know what the economy will look like in June, because shopping and going to bars and restaurants involves social interaction not social distancing.

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

In a normal year, the most important shopping day is what is called Back Friday or the day after Thanksgiving. What happens is people stop, get together with family and have little to do so the next day they go shopping. One can wonder what people are doing now – yes there is internet shopping with Amazon and Shopify but it is not the same.

In an article by Lucia Mutikani of Reuters US retail sales suffered a record drop in March and output at factories declined by the most since 1946. The good reason for the declines is the social distancing to fight the virus. One has to remember, in a service economy and having some of the biggest malls in the world, shopping is a normal thing for most Americans.

The dollar drop of 8% drop in retail sales is $46.2 billion. Auto sales were down 25.6%, gasoline prices while dropping to lowest levels in years sales were down 17.2%. If we are all at home, few people are driving.

Sales at clothing stores were down 50.5%, furniture stores down at 26.8% and spending at sporting goods, hobby, musical instruments and book stores down 23.3%. Sales at electronics and appliance stores decreased 15.1%.

Sales at restaurants and bars dropped 26.5%.

What was up – grocery stores went up 26.9% as more people made their own meals; health care is up 4.3%, building material stores were up 1.3%.

Linking to dividend paying stocks, when the pandemic eases what will you spend money on, besides bills? what about your friends and family? If you said clothes then one would expect others to do the same and maybe retail has an opportunity. However, we went in the shutdown with stores having inventory of winter stuff and starting to bring out the spring collection. The summer collection is shorts and less clothes. Do you believe the stores make a great deal of markup on the summer collection? When the economy does open up , what will be the v shape in sales and what will be lagging indicators?

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

Since the shutdown because of the coronavirus, one of the areas which remained open for consumers was the grocery stores. The first couple of weeks, there was a run on the stores, but supply chains adapted. When you consider the grocery stores, you have to consider supply systems – normally there are two an institutional component and a store component. The institutional supply is designed for high volumes so they do not need 12 eggs carton, they need 30 egg cartons. You can go through the other sections, or at some grocery stores they cater to the wholesale market and you can see the larger sizes. Most of us who shop in the consumer stores would never need that much product, for the shelf life when opened would mean we would have to throw things away. The shutdown has meant the institutional side of the business had to adapt to the consumer side of the business and it has not been easy, which is why the experts will tell you there is plenty of food, just not in the right package.

All supermarket chains are selling more product because everyone needs to eat and they have been cooking at home more. This means one of the few places a reasonably healthy person can go is the supermaket, which is good for the supermarket.

Scott Clayton of the TSI Network and associate editor of TSI Dividend Advisor examined top supermarkets in Canada and the US which offer high sales, expanded online sales, and dividends.

TSI Dividend System awards a point system:

1 point for 5 years of continuous dividend payments, 2 points for more than 5 years

2 points if the company has raised the payment in the past 5 years

1 point for management’s commitment to dividends

1 point for operating in non-cyclical industries

1 point for limited exposure to foreign currency rates and freedom from political interference

2 points for long term record of positive earnings and cash flow sufficient to cover dividend payments

1 point for an industry leader

Companies with 10 -12 points have the most secure dividends

7-9 above average

4-6 average

1-3 below average

Company Div Sustain Points Mkt Cap Div 1 Yr Return Recent

Rating $ bil Yld % % Price $

Kroger Highest 10 25.0 2.0 25.8 32.03

Walmart Highest 10 365.4 1.7 25.6 128.76

Loblaw Highest 10 26.4 1.7 10.0 72.83

Metro Highest 10 15.1 1.5 17.9 59.83

Costco Highest 10 138.7 0.8 26.0 310.27

Linking to dividend paying stocks, when you examine the list TSI makes most of the points are not highly embedded in the Annual Report, you can easily determine the points without being a math person. Every company which pays a dividend has a list on its web pages under investor and says what the dividends which were paid. You can see if the numbers are going up or not, in the President’s message you can read if they are committed to the dividend. The idea of any investing is trying to make it easy for you to determine if you should hold or not. If the answer is yes, then you do not have to do anything till the next year. Let your dividends come in.

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

Before the pandemic arrived, many people were dependent on tech companies to get around and get together. The companies became well known in the normal day so much Uber, Lyft and Airbnb was all you had to say and go the app on your phone. What has happened to them?

In an article by Barbara Ortutay, Dee-Ann Durbin and Michael Liedtke of the Associated Press, the companies were examined to see if they still are important as we all stay home or close to home. In the middle of April, Uber was down 25%, Lyft was down 28% and Airbnb and WeWork valuations were no where near what they were before.

Allen Adamson co-founder of Metaforce and a business professor at New York University noted with the market pressure will mean for all companies is the survival of the fittest. If they were going into the storm in bad shape, they will be in worse shape coming out.

Airbnb agreed to pay hosts $250 million for make up for some of the money lost to cancellations. AirDNA a data firm which helps property owners set rental rates, says the impact has been mixed. In New York City, bookings dropped 66%, but in the outer suburbs they were up as people left the city.

Two private equity firms – Silver Lake and 6th Street Partners invested $1 billion in debt and equity into the company as the expect Airbnb to emerge from the crisis in a stronger position.

Uber is to trying to reassure jittery investors than its aggressive expansion remains on track. Both Uber and Lyft are trying to preserve cash in part by emphasizing deliveries of food and other goods. Uber expects to end 2020 with $4 billion in cash or burning through $7 billion in 2020. On the driver side, even though drivers are delivering food, business is down 80%.

Companies that have benefited include Zoom Video Communications which has seen new highs and Blue Apron which was almost delisted, but revenues have increased as orders sharply increased.

Linking to dividend paying stocks, none of the above companies pay a dividend, for they are in the disruption phase in their industry. Hopefully by the end of May, companies can return to doing what they did before. It is important to notice companies which disrupt because they are linked to other companies. Before Airbnb, the choice was Bed and Breakfast or Hotels. Real estate was usually good for dividends, with the pandemic things look a little different depending on how long it lasts.

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