Last month a Boeing 737 Max crashed in Africa, previously one had crashed in South east Asia and all countries grounded the airplanes. Curiously, in the United States the home of Boeing, the country was the last to ground the planes. At the time, Boeing said it was a software problem.

It may be the answer, however according to an article in the Wall Street Journal by Doug Cameron and Andrew Tangel, Boeing has factored a $1 billion in costs for the grounding. One can understand why Boeing kept saying the plane is safe. The 737 Max represents a significant portion of the expected revenues and profits of Boeing for the next 5 years.

Boeing CEO Dennis Mullenburg said there had been no technical slip in the development of the plane. There was no surprise or gap or unknown here or something that somehow slipped through a certification process. Mr. Mullenburg said Boeing will soon be retesting the plane and building back trust with airlines and pilots.

During the first quarter, profit fell 13% to $2.15 billion while sales slipped 2% to $22.92 billion. The results show Boeing’s other aircraft for airlines and the military are robust limiting the decline of the effects of the Max 737.

Since the last crash of the Max 737 the shares of Boeing dropped $27 billion to the company being valued at $212 billion.

Boeing has over 5,000 orders for the Max 737 or roughly 40% of the annual sales and profits. Since the crash, Boeing stopped buying back shares and was expecting to deliver 57 planes a month up from 42. In March it delivered 5 planes and for the first time in 7 years had no orders for the planes.

Linking to dividend paying stocks, most dividend stocks are diversified which means if there is a downturn in one sector, another sector is hopefully doing well. The diversified portfolio of Boeing help keep the stock in the $385 range down from a high of $440. If you had bought in January for $323 you would still be up money and for those reasons you wish to keep the stock for the long term.

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

 

Every once in a while you will read a story about corporate jets and jets for the very wealthy people.  The jets are faster and likely more comfortable than sitting on a commercial flight, whether it is first class or business class. As more and more jets, are bought and most of them are used for routine business of the company or usage by the executives. In an article by Tijana Martin of the Globe and Mail, she writes in 2017 a hedge fund figured out how to track the J&J or Johnson and Johnson plane. For a week it was in Switzerland near the headquarters of Actelion Ltd. The hedge funds people decided it meant an acquisition for J&J, they bought Actelion shares and watched it go up and make extra profits.

When the chief data officer of Quandl heard about the large payoff, he asked himself is it possible to automate the process. The answer turned out to yes, but huge amounts of data are needed. The satellites in the sky, communication networks, ground observers, radar networks, aircraft transponders and flight logs are entered into the systems. In addition – who owns the plane and what are they doing as well as media and company reports. The data is compiled and if the plane has something different and report is produced. The traders can do with the information it wants to.

Linking to dividend paying stocks, corporate executives have a need area of concern about the tracking of their rides. Information such as this means the world becomes a smaller place. Alternative data is a competitive advantage, although in an interview Warren Buffett offered the alternative to fly Netjets which are all registered in Netjets name. In government transparency is heard regularly, for public company executives it is possible to track their movements. Maybe law enforcement will gain access to the data to keep at little more honest.

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

The cannabis market is one which is undergoing a great deal of change because it was illegal, now it some states and Canada it is legal. It is expected over the next 5 years, cannabis will be legal in all of the United States. Because it is still illegal, there are rules which limited legal Cannabis companies. One of the rules is if the drug is illegal, then the stock can not trade on the New York Stock Exchange. According to an article by Mark Rendell and Jameson Berkow, half of the states have legalized cannabis for either medical or recreational use.

One of the leading cannabis companies is Canopy which is partly owned by the alcohol company Constellations Brands. Canopy is paying Acreage Holdings $300 for the right to purchase the company for $3.4 billion if pot and when pot is legalized in the US.

Due to the fact, a rights offer is not ownership, the deal does allowed for a change in ownership if, the law changes. In the meantime, Canopy, Acreage and Constellations can learn from each other as the companies evolve to a closer relationship. If shareholders agree to approve the deal, expect more companies who wish to be in cannabis field to use the Canopy and Acreage agreement as a model.

Linking to dividend paying stocks, no cannabis stock pays a dividend, most operate in a deficit and expect high growth in the future as the legal market changes. When there is potential, sometimes it is best to wait for the best in breed to lead the pack and then you can invest when you wish to.

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

When the world’s biggest hedge fund with over $160 billion in assets speaks, people tend to listen. The hedge fund is Bridgewater based in Connecticut and in an article by Jennifer Ablan of Reuters, Bridgewater says the last 2 decades have been very good for corporations. Almost every major driver of profit margins has improved – labor’s bargaining power fell; tariffs fell; globalization increased; technology allowed for greater scale and lower marginal costs; anti-trust enforcement fell; and interest rates fell. Whatever corporations were asking from government, the government has delivered and if they had not, equities would be 40% lower in value.

Bridgewater does not believe the next decade things will continue. Incentives for offshore production have been reduced as global labor costs have moved closer to equilibrium, with domestic costs and rising trade conflict increasing the risk of offshoring is much smaller. Around the world, people are concerned about rising wealth inequalities. Similar to President Trump’s agenda – protectionism is increasing. As well government’s are tending to adding more regulation not less.

Linking to dividend paying stocks, while these stocks have benefited from government regulations there are also in a position to remain profitable as changes happen over time. There will always be many challenges, sometimes the profitable companies can handle the changes better which is good for you.

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

 

Off the coast of Florida is the island of Cuba and for many years, the US had not really known what they should or should not do. A former President Teddy Roosevelt led a group of horse riders up one of the hills to help capture the state and essentially make it an American colony. After 50 years of reign, the last few involving gambling, the mob and poor government, Fidel Castro lead a group which over threw the government and essentially made most of the economy under state control. Prior to this action, American companies owned large holdings or held interests in Cuba. President Kennedy’s sent people to overthrow Castro but ended badly and then US put on sanctions for Americans to visit Cuba except for the military base they control.

Since Americans could not invest in Cuba, because of sanctions for Cuba did not wish to pay any money for the assets they seized, other countries moved in. The Soviet Union propped up the economy and Britain, France, Canada, and Spain send tourists and have companies involved in the economy.

Since 1996, the US has passed or kept on the books to renew the Helms-Burton Act, this has been going on every 6 months when the statue is up for renew. According to an article in Reuters, President Trump extended the Title III exemption to 30 days. The idea being to put on pressure on Cuba for supporting Nicolas Maduro’s government in Venezuela.

Linking to dividend paying stocks, often these companies have foreign operations besides domestic operations. The companies try to stay on the right side of the law in the foreign land and whether it is for manufacturing or sales tends to have higher margins in the country. The downside of having foreign operations is the government can change the rules of business. When you consider investing, while foreign operations are valuable, they come at risks of currency and governments changes. If you believe the government will change, try and stay with domestic companies.

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

On You Tube there are many top 10 lists and there are always more each day. One of the lists was Top 10 Largest Public Corporations. The reason you may be interested in this type of list is to ensure you own some of the companies listed. The method is to multiply the number of shares outstanding by the price at closing of the company, It is important to note over the course of years, the list changes. At one time the big oil companies made up to 5 of the big companies. At that time, it would be logical to expect many of the fund companies would open the big companies – the oil companies. Times change, have you? The top 10 companies are

10.    Exxon Mobil

9.      JPMorgan Chase

8.      Ten Cent  of China

7.      Berkshire Hathaway

6.      Alibaba of China

5.      Facebook

4.      Microsoft

3.    Alphabet  or Google

2.     Amazon

1.     Apple

Linking to dividend paying stocks, the top companies in most countries change a little over time, but they do change. If you look at Forbes 20 years ago, 10 years ago and now there are changes in who is rich and which companies are the biggest. If your portfolio does not reflect it, there are ways you can benefit from the large tech stocks. The SPDR Tech index fund is used by many institutions; many US Dividend Stock funds are weighed heavily with tech. It is expected the tech will continue for more generations as our world changes.

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

 

 

 

 

In contrast to Wells Fargo, JPMorgan Chase posted a better than expected quarterly profit. In an article by Elizabeth Dilts and David Henry of Reuters, the largest bank in the US by assets showed strength across its business lines powered by solid US economic growth, moderate inflation, and strong consumer and business confidence.

Loans in the consumer division rose 4% from a year ago. Overall revenue rose 4.7% to $29.85 billion beating the analysts expectation of $28.44 billion.

The bank’s net interest margin edged up 0.02% from the 4th quarter. The bank expects the number to be constant for the next few quarters.

Unlike Wells Fargo which is expecting the net interest income to decline, JPMorgan Chase expects an increase of 4% over 2018.

Although the bank added $90 million provision for credit losses, Chief Financial Officer Marianne Lake did see the provisions as signs of credit deterioration.

The bank’s net income rose to $9.18 billion or $2.65 a share, up from $8.71 billion or $2.37 a share. Analysts had expected $2.35 a share.

Linking to dividend paying stocks, it is hard not to own a bank in a dividend stock portfolio because unless the entire economy collapses and from the Hearings on the House Banking Committee, the banks are well capitalized and very profitable. They can weather 99% of any downturn in the economy and still make money.

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

One of the biggest holdings of Warren Buffett in the banking field is Wells Fargo and for many years it was a steady dependable stock to hold. Then came the sales scanda, in which the CEO want and demanded every customer have 12 relationships with the bank no matter the size of the account. People opened accounts with little money in them, but the accounts were opened and the regulators found out. For the past couple of years. Wells Fargo has an revolving door at the executive suite to try to fix the problems and regain trust from its customers.

In an article from Reuters, the bank expected to make less money on its net interest income outlook and reported a decline in total quarterly revenue.

The reason net interest income outlook was a significance is other competitors are raising their expectations. Wells expects its net interest income to fall 2% to 5%, previously the expectations was plus or minus 2%.

Wells increased its provision for bad loans from $654 million to $845 million. The senior management believe there will be a slowing down in the economy.

Wells Fargo’s net income applicable to common stock rose to $5.51 billion or $1.20 a share, a year earlier it was $4.73 billion or 96 cents a share. On an adjusted basis the company earned $1.03 a share versus the street’s expectation of $1.09.

The lender’s efficiency ratio, the amount of money the company makes from a dollar of revenue improved from a year eariler but lower than the 4th quarter.

Linking to dividend paying stocks, for many years Wells Fargo was a good solid banking company to hold, then came the sales scandal and the regulators have been going through the bank which is still large but the shares have stayed the same for 3 years. For large institutions large scandals take time to clean up and then it can move similar to the rest of its competitors.

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

In mid April, Chevron announced the purchase of Anadarko Petroleum Corp for $33 billion stock and cash, the deal increases the size of Chevron to be the big Four – Exxon Mobil, Chevron, Shell and BP. The deal for Chevron is about the Permian Basin Shale and LNG. The Permian Basin shale is in Texas and New Mexico and due to fracking has made the US energy self sufficient and there is plenty of oil to be recovered. LNG stands for Liquefied Natural Gas. In an article by John Benny and Jennifer Miller of Reuters, Chevron’s Chief Executive Mike Wirth said the deal offers a compelling and unique fit in similar areas. Chevron expects to sell $15 billion in assets over time to pay for the deal.

Chevron owns 2.3 million acres in the Permian Basin and the combined company would have a 75 mile corridor across the Permian’s Delaware basin. Drillinginfor analyst Andrew Dittmar estimated Chevron is paying about $50,000 an acre for Anadarko’s west Texas holdings.

Chevron said the deal would add to its free cash flow and profit one year after closing as long as oil prices stay above $60 barrel.

Linking to dividend paying stocks, it is hard not to have an energy company in your portfolio because as long as oil prices are greater than $50, they make large profits. The higher the price of oil, the more the profit even as the world slowly moves away from fossil fuels. The companies have free cash flow to pay and increase dividends and overtime the price of the shares increase in value.

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