In emergency planning, people are asked if there was a fire coming your way, you have time before needing to leave what would you do? The first answer is look after the people, then your personal identification and finally stuff? what stuff would you take and that leads to artwork or pictures. It is the same thing in the war.

In World War II, the Nazis besides taking over countries, systemically looted the art and valuables of the country they took over. Part of it was Hitler had a dream to build a giant museum in Linz, Austria dedicated to German and Germanic art. In the process before the war, the Nazi sent art experts to countries around Europe to identify what art was in the public museums and the art that would be taken. The other aspect of taking art is financial. Depending on the artist, depending on the quality, art can appreciate in value. The Germans would take all the known masters and the art favored by senior members of the Nazi party. At the same time, any art, valuables or property owned by Jews was taken and shipped to Germany. In Germany, the trains carrying Goring’s art had higher priority than supplies or weapons for the troops.

There is an interesting book about the subject and it was made into a movie staring George Clooney in 2014, the book is called The Monuments Men by Robert Edsel published by Center Street part of the Hachette Book Group, New York, 2009. In the book, Mr. Edsel outlines the importance the Nazis gave to the looting of art and how an unlikely group of Allied Heroes was able to recover most of the art. In the war, the last thing Generals worried about is saving the landscape, they are worried about defeating the enemy. If the enemy takes positions in sensitive areas, then it is their fault that something happens to the setting. After the battles are over is a time to worry about historical buildings and what is in them.

In the past to the victors went the spoils, as long as gold has a value, countries have gone to war and taken gold. The Spanish did it with Mexico and Peru for a time making the country the wealthiest in the world; Napoleon took art from St. Petersburg and Moscow as well as many treasurers from Italy; there are plenty of examples and continues to be plenty of examples of country looting another. The Nazis were more blatant about it. They even tried establishing new laws and procedures to “legalize” the looting activities.

Linking to dividend paying stocks, while some stocks have a history dating back to an era known as robber barons, because the rules were much more relaxed, now days we have rules and regulations. These rules help differentiate companies willing to break the rules and regulations and those that should and try not to. Ideally, the companies you invest in live by the rules and regulations and have a healthy profit margin which translates into profits and consistency of dividends.

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

 

When the President Trump tweets news media has to pay attention and so do the public relations side of companies. The President likes positive news and in his backyard is the Washington Post newspaper. The paper is owned by Jeff Bezos who owns the largest share in Amazon and this year is the world’s richest individual. Mr. Bezos owns the Washington Post through a personal investment and the holding is not part of the Amazon group. However, the President does not really mind because he often tweets about Amazon. In an article by Spencer Soper of Bloomberg News, the President has tweeted about Amazon and its payments to the US Postal Service.

The US Postal Service is an independent organization and its mail rates are set by a commission. This means the President can influence but can not direct the service. It is also true, with more and more people using email, the amount of mail has gone down. While we all like to get mail, most of us consumers do not regularly use it. We pay out bills on line and a host of other things.

In the article, the US Postal Service says in regards to the President’s claim, it is legally prohibited from charging shippers less than its delivery costs. Also, taxpayers do not directly support the Postal Service’s operations.

David Vernon an analyst at Bernstein Research who tracks the shipping industry estimated in 2015 the Postal Service handled 40% of Amazon’s volume. He estimated Amazon paid $2.00 a package which is about half what it would had to pay UPS or FedEx.

Linking to dividend paying stocks, when the President speaks or tweets, organizations have to pay attention to the tweets often to correct the facts. If it relates to their organization it will need to send out press releases in order to get its story in front of the news organizations to be reported. In the meantime, the President may have gone on to a different subject. This aspect of seemingly bouncing between subjects makes President Trump’s term interesting to say the least. In the past, President use to phone corporate President to get their views of the subject and then go to the public in needed.

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

 

When a person sees the US trade deficit at its highest level since 2008 as reported by Lucia Mutikani of Reuters it is easy to believe the President is correct in imposing tariffs on China. Although in this case what looks easy is actually much more complicated and that is the problem with the President and tariffs. Tariffs and politics have always been intertwined for most countries in the world, if the consuming broad middle income buy more goods and services that originate in the host country, that will stimulate the local, regional and national economies. The choice is to buy from another country.

If you go back to the start of the US, the big exporter of goods was Britain and Europe. In more recent times, the global supply chains believed China could make basic items and the cost to import them would still be much cheaper than to make it domestically. If you go into a dollar store or Wal-mart or many other department stores you will see the items are made outside of the US. The same thing with your phones, consider Apple which prided itself for many years as having no production facilities in the US. The software was designed and continues to be designed in the US, but production is done in Asia. This leads to a trade war – to change the trade deficit more production needs to be done in the US and do you believe it will happen.

In terms of the US and China tariffs, China will target items that fall in President Trump’s base of political support. By targeting those items, the idea is to push the price up to be less competitive which can bring in alternative suppliers.  Who do you believe will  blink first? In the meantime, the stock market will be prone to fluctuate.

Linking to dividend paying stocks, many of these companies have embraced the supply chains that exist and have benefited from it. For the President to win, some of the companies will have to change and knowing people do not like to change, companies also do not like like to change a winning formula. The good news is many dividend paying companies have been earning profits and paying dividends for years and will be able to manage their way through the maze. It may mean some of the money the President gave corporations by reducing their taxes they will set up one production facility or upgrade one, but keep the other aspects of the supply chain very healthy.

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

There are many movies about Jesse James for they robbed stagecoaches and banks after the Civil War. It was time of many changes and recently there was a movie made in 2010 called American Bandits: Frank and Jesse. The movie did not have great reviews but it does have a few interesting lines. After the Civil War, people went back to whatever they did and the military (the Yankees) administered the southern states. One aspect the military imposed was no preaching, no voting, no ability to sit on a jury, no ability to be elected to office; or very few rights. One could easily argue the Army had to put these measures into place to keep the peace and allow society to change. One of the consequences of taking away peoples rights was the population half supported and cheered the actions of Frank and Jesse James. When they robbed the Army of the payroll, people said good. If the James needed safe homes, they were easily found. Eventually times would change.

Linking to dividend paying companies, many dividend paying companies take over or merge with other companies. There are many reasons, but sometimes how they merge rustles feathers to make the execution of the merger less than desirable. There is no magic portion to merge companies, however larger organizations should learn how to do it better than most. If the company has a poor track record, then the merger should keep the monopoly and margins stay high, all shareholders will benefit. If margins fall after a merger, it is time to find alternatives.

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

 

According to an article by tom Krisher of the Associated Press President Trump who loves to cut regulations for businesses wishes to change the EPA auto gas-mileage standards. The Trump administration believes anything the former Obama administration did was bad, is going to allow car companies not to meet the standard of 36 miles a gallon by 2025. The reality is automobliles contribute to pollution because of many people need to drive a vehicle everyday. The options for transit, bikes and walking are poor so people drive. One of the best methods to cut back on pollution is raise gas mileage standards. While industry may not love it, as a consumer you do not need to fill up the gas tank as much which saves you money.

In the world of gas regulation, California is the biggest state for auto sales and people driving. Another aspect because of the mountains on the coast, the wind does not move the air as much as it does it other states. California over the years has set its own rules and due to its size of market the automobile companies have complied with their number. The EPA or Washington tends to agree with the California number. If the President changes the EPA number, auto companies will have two numbers which makes their lives more difficult. Unlike writing, a change to plants takes years to make one way or the other – it is harder to change the production plant than a piece of paper.

Linking to dividend paying stocks, in general business likes less regulations, but they want enough to keep out some competition. There is always, it depends sometimes business likes regulations, sometimes business would prefer less. However in terms of collection of data, business always likes more.

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

 

In a column by Nick Turner of Bloomberg News, shoe maker and fitness company Baltimore based Under Armour revealed its fitness app was hacked. In 2015, Under Armour bought the software company MyFitnessPal in an effort to become the biggest tracker of fitness information. The idea was to expand on the company’s roots in athletic apparel and accessories.

The good thing is million of people use it, the bad thing is owning an data-centric business meant the information was vulnerable. Under Armour has enlisted security firms to help with its investigations and to beef up security. In the meantime it is asking users to change their passwords.

All companies collect data, it helps them make decisions. At issue is how is the data protected so only the company can use the data. In Under Armour’s case it appears they are doing the correct thing, however the stock price did fall 5% until they announce they have implemented tighter security controls of their information.

Linking to dividend paying stocks, all companies deal in data – big data and the more information they can collect the more they can use it for one purpose or another. There is no easy method except to note if there is a breach of data, the stock should fall at least 5%. What the company does about it, will determine the next direction of the stock.

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

In Southwestern US, the continuing shale oil production has lead to increasing energy self sufficiency. Shale oil production has benefited from technology uses and fracturing to unlock the oil in the shale. In an article by Clifford Krauss of New York Times News Service the good news is the oil can be unlocked and according to Sven Del Pozzo an expert of the Permian Basin at the energy consultancy IHS Markit – some of the wells are monsters and tremendously profitable. Those are music to ears of investors. The merger of Concho and RSP Permian for $9.5 billion will mean the company with 27 rigs will be the area’s largest drilling and hydraulic fracturing operation on 640,000 acres.

The good news is oil is being produced, the bad news is pipelines to ship the oil to the refineries lag behind. The use of rail helps but is more expensive. The price of oil lead to companies laying off workers, now they need field workers and truck drivers. On Wall Street, when oil prices were closer to $100 a barrel, it was easy to make money with prices of $60 to $70 it is good but not great.

More the giants of the oil industry Exxon Mobil has 275,000 acres in New Mexico and over the next 5 years expects to spend $50 billion on oil and gas production.

Linking to dividend producing stocks, it is hard not to have either the pipelines or oil companies in your portfolio. As long as there are wells which are tremendously profitable they are a long term hold.

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

In all companies there is both good news and bad news circulating around them, most of us want to hear the good news aspect. The company had a good quarter, there are headwinds, but the management team is dealing with it and the company should be able to progress in the correct manner. Every once is a while, the bad news seemingly is more important, for example Tesla. The company has been a high flying one and is founder Elon Musk has been the leader in electric cars, solar panels, and rocket ships – there is a wonderful story. In a column by Brandon Kochkodin  of Bloomberg News, Tesla stock is taking in on the chin for trailing expectations and facing new investigations.

In all high flying stories, there are short sellers who expect the stock to fall but if the company meets or beats expectations, a company such as Tesla can be worth more than GM in stock market valuation. Recently Tesla has been not beating expectations as production of cars falls below – they were suppose to make 2,500 Model 3 (the $30,000 electric vehicle) a week, production is running at below 1,000 or 975. This can be due to a number of factors – one is shoppers with great intentions are not buyers or it could be due to logistics in running a complex production line. We do not know at the momemt.

We do know there was an accident with a Tesla and maybe its driver assistance system Autopilot was on. If it was on and the driver did not watch – these are early adopters and maybe the driver was silly. It could have been a regular vehicle accident which happens to every make of car and truck.

One of the measures to examine the vehicle company is the bond market because all manufacturers must sell bonds to produce their products. If the company is doing well and the interest and principal are almost a guarantee the bonds trade at or above par. When there is worry, interest rates go up and prices for the company’s bonds go down. Tesla is in this situation. The 5.3% bonds are trading at 87.50 for a yield of 7.5%. If you love Tesla that is a great deal, if not that could be a warning sign.

Tesla spends about $4 billion a year on its operations, while they have a year’s operation in cash or equivalents, some time during the year they will need more money. If sales are up and production is moving – the ride can continue.

Linking to dividend paying stocks, for the most part no news until the quarterly meeting is generally good news. Every company has something which can affect its performance and you need to assure yourself whatever it is – the company can manage or has enough cash in the bank to whether the storm and continue.  One question you can ask the President is what keeps you up at night or your biggest worry?

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

In Las Vegas the Wynn Resorts dominate the skyline and coupled with Steve Wynn’s personality – he was consider Mr. Las Vegas. Then the me too movement happened and it was seen Mr. Wynn besides being a wonderful casino and hotel operator could not pass a young woman working for him without trying to have some sort of sexual relations with him. Mr. Wynn was a big funder for political parties which dropped him and he left the role of Chair and President of Wynn Resorts. The final installment was to sell his shares the buyers were T. Rowe Price and Capital Research and Management two long term shareholders bought 8 million shares between them. The surprise was Galaxy Entertainment Group bought 4.9% of Wynn Resorts.

Galaxy is controlled by Hong Kong billionaire Lui Che-Woo in an article by Christopher Palmeri, Daniela Wei and Lisa Du of Bloomberg News noted Galaxy is the largest casino operator in Macau and this transaction could affect global gambling. It also positions Galaxy in a manner to takeover Wynn down the road, if desired. Macau which is the world’s largest gambling hub is expected to unveil in the coming months how it will review and give out casinos licenses. Galaxy is building a $500 million resort in the Philippines and wants to build in Japan as the company has legalized gambling.

If Galaxy was to go for control of Wynn it would cost in the range of $8.7 billion.

Linking to dividend paying stocks, sometimes everything is good and then it changes. In the case of Wynn, Mr. Wynn was respected, often talked about his managment style including respect for all his employees (you can see some of his talks on You Tube) and was considered the go to person in Las Vegas and elsewhere. Then the sexual allegations charges happened and existing management had to deal with succession plans quickly in order to ensure the company was not running on one spot. There is no doubt Mr. Wynn will be missed, however the company has moved on and can continue to operate and have its licences renewed.

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