Most of us believe that technology is going to help produce a better world and hopefully for us large profits along the way. When we think about technology we often think of changes that happen, and it will benefit us. As long as most of us benefit, we think that is great. However, sometimes new technology creates disruption for others.

In an article by Keith Bradsher of the New York Times News Service, CATL the world’s largest supplier of batteries for electric cars said it had made breakthroughs that will allow it to produce batteries cheaper, lighter, faster to recharge, more resistance to cold and greater driving range.

Most of the changes are a couple years away from being widely available in new cars which would make them competitive in price and performance as gasoline-powered models.

CATL produces 1/3 of the world’s electric car batteries and supplies 16 carmakers including GM and Tesla. Its main rival are BYD which makes 1/6th of the world’s EV batteries which is used by BYD, Korean and Japanese battery makers.

CATL noted batteries typically represent 1/3 of the cost of EVs.

CATL is using technology to make sodium-ion batteries which keep their charge in colder weather. If you examine a map of China, the northern part gets cold. The good news for the US is the world’s largest deposit of soda ash is in southwestern Wyoming.

Linking to dividend paying stocks, for a number of years, gasoline powered vehicles had clear advantages over EVs particularly in long distance driving. As the cost falls and the ability to drive further, the relative advantage of gasoline power falls or becomes closer to even, if that happens what will an average driver in the US do? Buy EV or buy gasoline power? You will have to decide. How will the big 3 adapt?

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

In every industry, when something happens to one of the owners, it can put the company into play or someone wants to offer. There are wonderful assets in every industry, often times the founders expect to leave the company to their families, and the legacy continues. There are thousands of reasons why that might happen, but the possibility does open up.

In an article by Gleb Bryanski of Reuters, the company called ERG or Eurasian Resources Group once produced 1/5 of the world’s gallium, a rare earth material used in microchips and included on the US list of critical materials. (an idea might to examine the list and pick the best companies on the list and know that the US government has an interest in them). ERG stopped production of the gallium after China increased its output of the metal in 2012. In December of last year, China banned gallium exports to the US as part of the trade war.

In 2013, ERG was taken private in a $4.5 billion buyout by its 3 founders who owned 20% each as well ad the government of Kazakhstan owning 40%. In February, one of the ERG’s founder and Board Chairman, Alexander Mashkevich passed away leaving only one founder among its current shareholders.

James Cameron, once a Board Chair of Petropavlovsk has offered $5 billion for ERG. The Luxembourg based producer of copper, cobalt, aluminum and iron ore and has formed a task force to explore rare earth and rare metals in Kazakhstan. Recently Kazakhstan’s government geologist have found a deposit will 20 million metric tons. Mr. Cameron is working with Goldman Sachs and the letter he sent to the ERG Board said the financing will come from his own funds, other investors in the US and possibly Australia and the Middle East.

Linking to dividend paying stocks, while everyone hopes to find a company that can last a long time and be passed on your heirs, it is often harder than you think. Reviewing the Forbes or Fortune top companies from 20 years back to now, you will see changes. If you own the ones that are still at the top, that is good. Most people also own companies that have faded and are need of a shakeup. Sometimes the shakeup is new ownership and that is why you need to do your homework to ensure the reasons why you own the company are still valid and profitable to you.

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

Often governments turn to the biggest players in the industry for advice because whatever government policy that is done, there will be a cost and large players have the ability to analyze the potential costs to them. Then the company can decide to hold prices or try to raise them in order to maintain their margins. One would think the President of the US with access to some of the biggest companies in the world for advice, would have done that. Perhaps he did, but perhaps he outlined what companies thought he would do and did something else.

In an article by Niall McGee, the largest aluminum producer in the US is Alcoa Corp. The company discovered aluminum and at the time quickly became more of the largest holders of bauxite reserves (the raw material}. In addition to bauxite, the process in very energy dependent or the need for long term inexpensive hydro is needed. Fortunately for Alcoa, a spot was discovered to be perfect in Quebec and the Canadian government essentially gave away the hydro rights to the company which ensured inexpensive energy inputs. A number of years later, with Alcoa controlling more than 90% of the market, the company was broken up by the US government and the Canadian division became Alcan.

The way that it worked was Alcan made the aluminum, and the processing or manufacturing of the product was done in the US. The system has worked very well until President Trump imposed tariffs on aluminum which drives up the cost.

The CEO of Alcoa William Oplinger is appealing to President Trump to drop its tariffs on Canada because the US does not have domestic capacity to fulfill its needs, and any attempts to meet that demand would put a strain on the electricity grid.

On a conference call, CEO Oplinger said even if the US aluminum capacity could be maxed out, the country would face a shortfall of 3.6 million tonnes. To build a new smelter years as well as additional energy production. The new production would require 7 new nuclear reactors or the equivalent of 10 Hoover Dams. Who will build those?

Until the smelters are built, the most efficient aluminum supply chain is through Canada which currently supplies 70% of the US needs. Thus to support the downstream processing jobs, we need to have upstream aluminum production that can be Canada. (it is noted: the system in place means 90% of aluminum cans used in Canada are made in the US).

Alcoa is a top 10 globally producer of aluminum and the chemical compound of alumina. It is also one of the world’s biggest bauxite miners. The company operates in 28 locations and 9 countries around the world and is headquartered in Pittsburg.

Linking to dividend paying stocks, one of the reasons to invest in these companies is besides the ability to make profits and pay dividends is senior management should have connections into government to ensure policies tend to affect them the least. The companies ensure analysis into all aspects of their operations is comprehensive and constantly worried about alternatives. One would think policy makers would want to reach out to the senior management before enacting policies which hurt them, because they have to be reported in financial press when the companies are negatively affected. People will question the administration is this the outcome you were expecting?

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

One of the justifications for the trade war between the US and China is the dependence of China of the US consumer market. Some of the biggest retail stores carry many items from China or originated in China. Sometimes the pieces are made in China and put together in the US and can be called an American product. However, for China the US represents 12% of the items they export.

In an article by Eric Reguly of the Globe and Mail, as President Trump escalated his trade war with every country around the world, all countries are looking at alternatives. One of the biggest alternatives is the EU or European Union of countries.

President Xi Jinping met with Spanish Prime Minister Pedro Sanchez.

President Trump met with Italian Prime Minister Giorgia Meloni.

President Xi Jinping urged the EU to embrace a fair international trade environment and jointly resist unilateral and intimidating practices.

One of the elements the Chinese could do is order more Airbus from the EU as opposed to buy Boeing. Boeing is the biggest contributor to export sales.

The EU has long considered China a strategic, economic and political rival.

China has been making investments in some EU countries such as Hungary. Billions of dollars are flowing into the country particularly in auto plants and battery production facilities.

Italy has been trying to reduce the equity stake held by China’s Sinochem in Italy’s Pirelli, one of the world’s biggest tire manufacturers and exclusive supplier to Formula 1 cars. The government of Italy considers Pirelli a strategic asset and national industrial treasure.

Linking to dividend paying stocks, in large businesses because they are large tend to be viewed by their host country as very important which results in many partnerships and relationships, Some are easily figure out, others not so much. For example why was Sinochem allowed to buy a 37% stake in a national treasure? It is complicated and about money, Pirelli needed it. What does that mean for the future – it is complicated and about money.

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

Every industry tends to evolve from making things at low cost and low margins to making things with higher costs and higher margins. As the industry the demands for the employees change from human interaction to machine interactions to technological interactions. The first stage humans are needed at a lower wage rate, the second stage workers are paid more and the final stage are the highest paid workers, and somewhere a competitor somewhere is beginning stage one.

In an article by Alex Travelli and Hari Kumar of the New York Times News Service, 30 years ago China was the first stage building things at low costs. The economy and institutions of China has evolved that Apple President Tim Cook said to build the products we need, in America there are a handful of people who could do it, in China there are football fields of talented people.

The competitor is India. For the past number of years, as China has begun to focus on higher margin products, companies have looked towards Vietnam, South Asian countries and India for the lower margin products. India has a desire to be the alternative to China.

The Indian government has paid incentives to companies producing goods in strategic sectors, budgeting more that $26 billion and tried to attract companies who do not want to be only rely on China. India’s goal was to create 100 million new manufacturing jobs by 2022.

There have been some successes such as Foxconn moving the manufacturing of iPhones to India.

Yet, the role of manufacturing in India over a decade has shrunk relative to services and agriculture from 15% to 13%. China’s manufacturing is 25% of their economy.

India similar to China has been investing in infrastructure, however with manufacturing there is a need for skilled workers and many companies have a hard time finding those workers. An example is LiKraft which manufacturers lithium-ion batteries. Viram Bathla said he can buy the equipment, the plant depends on imports and skilled workers. He is playing catchup with companies that have been in business a decade longer.

Even Apple which produces iPhones in India, 20% are coming from India, they would like it to be 30%. There is still much to do.

Linking to dividend paying stocks, while President Trump’s goal of more domestic manufacturing is admirable, the reality is the infrastructure to do it does not exist. For those who believe it is a quick fix, without billions of dollars in investments and a buildup of infrastructure to support the plants, playing catchup is all that can be expected. In the meantime, some companies will announce plans but will they actually do something is the question.

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

Every country in the world likes to have growth in the economy. You will hear it in every election cycle and ideally the growth helps you or supposed to help you. Then you have to do some homework by asking how is this grow measured? What about if more oil is used?

One of the groups that monitors global oil output is OPEC or the Organization of Petroleum Exporting Countries.

In an article by Alex Lawler, Olesya Astakhova, and Vladimir Soldatkin of Reuters, OPEC cut the world wide economic forecast from 3.1% to 3.0% and next year’s expected growth from 3.2% to 3.1%.

The reason for the cuts is tariffs imposed by President Trump and the data it had received. OPEC said, trade concerns would contribute to volatility but kept the forecasts steady.

OPEC’s view is still at the higher end of industry forecasts and it expects the use of oil to continue to rise for years to come. Another agency called the International Energy Agency believes oil use will peak this decade as the world switches to cleaner energy.

One of the countries which has exceeded its quota is Kazakhstan where production rose to 1.852 million barrels per day which is over its quota of 1.468 million barrels per day.

Linking to dividend paying stocks, every week and every month there are statistics coming from agencies both governmental and nongovernmental. Somewhere in the reports you have to determine which do you believe is correct. Logically there should be a cause and effect, for example tariffs on a particular good should mean higher costs which should mean higher prices which should mean a seeking of alternatives. The issue is always when does should meet reality, how much leeway is in the system, what are the reports telling you? When you have an answer, you can then determine whether you should hold or seek alternatives.

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

In every industry there is opportunity. That is a wonderful saying and sometimes it is hard to see, but in the luxury market it is often easier to see. The luxury market has high margins and the companies ensure that there are few sales. If a retail company carries the brands and goes bankrupt, there are not sales on the luxury brands. The luxury brands is also dominated by high advertising budgets for people to aspire to wear the brands and be seen wearing the brands, while others know what the brand means. It takes a great deal of luck, skill and consistency to have a luxury brand.

In an article by Elisa Anzolin of Reuters, two of the biggest names in Italian fashion are uniting and expecting higher revenues, the brands are Prada and Versace which is owned by Capri Holdings.

Versace is known for its bold, baroque-style prints while Prada is known for its minimalist styles. This tends to mean there is little overlap in terms of creativity and customer base.

Capri Holdings reason for selling Versace to focus on turning around Michael Kors brand. Capri Holdings also has brands such as Coach and Kate Spade.

Prada CEO Andrea Guerra told analysts, the acquisition is a long-term project for Prada and aimed at expanding revenues rather than cost savings.

Linking to dividend paying stocks, in all industries there are opportunities for companies to grow, to keep moving forward because there are many alternatives in the marketplace and they all have shoots to pop up, whether they take root and grow stalks is a different equation, but it is possible. When you own dividend paying stocks, the dividends can be reinvested in where you see opportunities and having patience over the long-term.

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

One of the world’s greatest economic success story is China. The success of China has been to uplift millions of people from essentially subsistent farming or they had the ability to grow food to meet their needs most of the time, but little money to spend towards the middle income levels. When China became the manufacturing center of the world, the country had a lack of infrastructure, which is why the best trains and highways in the world are in China. The manufacturing needed workers and people left farms or rural areas to work in the factories which allowed them to cover the basic needs. As people moved to manufacturing the next generation started working in services and the Chinese economy has evolved to greater services and all the institutions behind that. The institutions include universities and colleges which will continue to evolve the economy.

In an article by Vivian Wang of the New York Times News Service, when President Trump imposed sky high tariffs on China, the government believed domestic spending will help in get through the breakdown of trade. That is easier said that done.

Domestic consumption in China was anemic even before the tariffs. The post pandemic economic recovery has been lackluster, factories have been shuttered, and youth unemployment is high. Home prices, the bedrock of many middle-class Chinese families’ wealth have plummeted.

The problem is for most of the workers, it is first generation wealth, and it takes a couple generations before the middle-income group feels they can afford to spend during all economic cycles. In the meantime, people’s spending habits are changing, they are making targeted, cost-effective choices.

The government has used incentives such as trading in for new cars and electronics. It did lift sales.

During a long holiday weekend for China’s Tomb Sweeping Festival, travelers made 126 million domestic trips and spent $8 billion on food and hospitality, according to official data. This was up 6% from the previous year.

The bigger problem for Chinese consumption is not rising prices, but the fact that people are not spending to begin with. Many Chinese companies have been entangled in damaging price wars as Chinese consumers demand lower prices.

One of the reasons why Chinese spending is low, is China has a low social safety net. If you are sick, there are high bills to pay. People also have a hard time accessing education and medical care in the cities. If you retire, there are few pensions.

Linking to dividend paying stocks, all economies evolve over the years, ideally, they evolve to something like US where there are supports throughout life. Taking away the supports means less spending in the economy and more saving for a rainy day. The savings is good for individuals, not so great for the economy as a whole. When you buy stocks, you are hopefully targeting those in the sweet spot of the economy who can and will buy the products and services of the company throughout many economic cycles.

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

During April and May many companies have Annual Meetings which allows shareholders to hear from the senior leadership of the company, vote for the financials of the past year, select an auditor, and any other items management would like to see. Very often if the company made money, shareholders vote with management. One of the reasons shareholders often vote with management is does the company meet expectations or exceed them? With improvement in AI and computing, some companies forecast should be very easy. Others reasonably easy and most given a reasonable stable government and economy, the numbers should come in what Wall Street expects. The last part is what is not happening with President Trump and deciding to throw out global supply systems, to replace it with??

In an article by Chris Hannay of Reuters, companies such as Delta Air Lines Inc and Walmart Inc said they could not offer financial forecasts as they navigate through the fog of a trade war.

Delta CEO Ed Bastian said given the lack of economic clarity, it is premature at this time to provide an updated full-year outlook.

Walmart CEO Doug McMillon said it could not provide guidance on operating income for the quarter because of factors that included tariffs. The situation was fluid. Mr. McMillon said that 2/3s of what Walmart sells is made, grown or assembled in the US. Although assembled often means the parts come from outside the US. In the meantime, Walmart will take it one day at a time.

A side note is in the retail world, advertising campaigns are planned 6 months plus in advance, and ordering is done 3 weeks in advance. If sales go better than expected it is relatively easy to get more stuff. Not being able to plan, says a great deal or they will tend to order the minimum.

Another factor in the retail world is Goldman Sachs has a forecast there was a 60% chance that tariffs would drive the US economy into negative territory. After the tariffs were paused, Goldman decreased it to 45%. One must remember, 60% of the economy is based on consumer spending, throwing uncertainity means more people save or cut back or do less shopping and more browsing which tends to be a self-fulling prophecy that negative growth will happen.

Linking to dividend paying stocks, ideally these are companies that have either a near monopoly or are so ingrained into the economy or law that consumers will continue to buy their products. For example, the law says to drive a car you need to have insurance. Some insurance companies are better than others. Utilities are a near monopoly, there is always alternatives, but most people use the local utility. Ideally, many of your investments have the stability that allows for uncertainty even if comes from the White House.

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