If you think about how countries around the world spend money on defense, you will quickly notice that the US with an $800 billion dollar budget is far and away the highest. Then comes China and Russia. There is a reason for that. after WW II, the US government would not allow Germany and Japan and other countries in the Axis to spend more than 1% of GDP on defense so a repeat from WWI and WWII would not happen. The world had great peace for many years. The cold war developed and the US and Russia spent great amount on defense, this meant the rise of large defense contractors which exist in the US.

President Trump was elected and he wants to change things. One of the things he wants to change is the being policeman to the world and that can be good if he cuts the $800 billion defense budget to balance his own budget. However, the reality is US defense contractors have been the favored military companies around the world, will that change? Most of the money the US sent to Ukraine has come through defense contractors products.

In an article by Jim Tankersley, Jeanna Smialek and Melissa Eddy of the New York Times News Service, Europe is looking at spending hundreds of billions of dollars in their own backyard or on European miliary companies.

There is a growing consensus that new military spending is likely to offer some boost to European economies in the near term as military companies ramp up production.

French President Emmanuel Macron is pushing allies to buy French missile-defense systems instead of American ones. Portugal which previously bought American jets is looking at European jets.

The US recently unveiled a $234 billion loan meant to finance shared military development that will prioritize European made products. The loan says 65% of the products must come from member countries. European defense industries employ 600,000 workers which is less than the 3 million employed by automakers.

Defense officials caution this will not happen overnight and will take a few years to ramp up. There is an issue with standardization for example Ukraine has been sent 17 kinds of howitzers not all which use the same type of shell.

However, in WWII, we saw domestic production change to wartime production in reasonably quick timeframe. It will not take years, but a year or two and then sales from the US will fall.

Linking to dividend paying stocks, if you owned defense companies in your portfolio, it terms of making money they have been good for governments like to spend money on defense. Which companies can change and nothing in the defense industry ever seems to go down in price. Perhaps you want to begin to diversify your holdings to include European companies or at least as long as the US is no longer going to be the policeman of the world.

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

Every time you turn on your computer or open your smartphone, there is an expectation that whatever you are doing is reasonably secure. There are things you are supposed to do if you go to the coffee shop and do things, but for the majority, the reality is with the greater access to WiFi, the average person opens up and is ready to go. This means the programs the people use must do most of the heavy lifting so people can use their devices.

In an article by Deborah Mary Sophia and Krystal Hu of Reuters, Alphabet (google) offered $32 billion to Wiz as it doubles down on cybersecurity. The reality is more and more companies are cloud based businesses and the competition includes Amazon’s AWS, Microsoft’s Azure, Oracle Cloud, IBM Cloud and Salesforce.

Last year Alphabet offered $23 billion but was rejected by the Israeli startup. The company was valued at $12 billion in a private funding round in 2024 and had $500 million in annual recurring revenues. The company was showing a continual growth pattern. The company was formed in 2020, and an early investor was Index Ventures which held 11% of the company which will be worth about $3.5 billion.

The CEO of Google Cloud Thomas Kurian kept in touch with the Wiz people and came back with a higher offer. The deal is set to close in 2026. When President Trump was elected, Wall Street felt the new administration would be more favorable to mergers and acquisitions and we will see. Mr. Kurian believes it to be the case.

The cloud generated more than $40 billion in revenues in 2024 and major customers include Morgan Stanley, BMW and LVMH.

Linking to dividend paying stocks, most companies do not do everything inhouse, some do, but it is rare. The reality is the large companies use many suppliers and as long as the company is successful, then they will be relying on suppliers. If you like the company, then look at their suppliers and see where the recurring revenues are and that can be a good opportunity for you to own them as well.

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

In all industries there are conferences which the major players gather, and people discuss the future and hopefully some deals are made. In addition, if you are in the industry and want a job or examine the future the conferences are a great place to start. The conferences typically happen during the spring because in the northern half of the country, there was snow and ice. The spring is when the snow and ice melt, the weather gets warmer and outdoor activities resume in full. Every industry has multiple conventions but there tends to be a higher profile one.

In an article by Jeffery Jones of Reuters, the high profile convention for the oil and gas industry is called the CERAWeek by S&P Global in Houston, Texas. Legions of oil, gas and electricity executives are in the meeting halls of the convention. This year’s convention was seen as more important because of President Trump’s motto of Drill Baby Drill. To many of the industry it means, the lack of government regulations should mean greater freedom for the industry. What will they do with it?

In the AI data center boom, the demand for electricity is a good thing for the oil and gas industry because many of the data centers demand will be met with natural gas powering the power plants.

In addition, the LNG or liquefied natural gas plants to sell natural gas outside the US is in full operation mode.

US Energy Secretary Chris Wright was in the meetings and said he was honored to play a role in reversing what I believe has been very poor direction in energy policy. Secretary Wright was a former fracking executive, said that there was no way wind, solar and battery power could replace the many uses of natural gas which fuels 43% of US electricity. (one might notice in Trump 2.0 few are talking about increasing coal to make electricity, mainly because of the price differences).

Rystad Energy issued a report that highlights natural gas as immediate critical fuel for data centers which need almost 100% up-time. The inventory of planned US gas-generation projects has ballooned from 6 gigawatts to 17.4 gigawatts.

Longer term, the desire is to examine nuclear power, but the timelines to have functional nuclear power plants is much longer than natural gas plants.

Jeff Currie, chief strategy officer of energy pathways at Caryle and former commodities chief at Goldman Sachs, believes energy is in transition. In the 1970’s it was energy security, then climate became a driver. The security-driven energy transition moves faster than the climate one. The balance of energy is security over affordability over the environment. If they become out of balance you end up similar to Germany. The German shift has 59% renewable but the cost has been higher energy prices for consumers and businesses.

Linking to dividend paying stocks, the basic in all commodities is the balance over security -affordability – the environment. What do you want to pay and what are you willing to give up? There are fewer simple answers, in the past it was growth or not to grow and generally society picked growth. It is expected, society is more complex with many more voices to be heard and essentially every group does similar actions. Governments play a role in the short term to allow for a decision to be made but sales need to be made at a profit and those supply and demand curves you learnt in high school do not really change.

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

In every market there are ebbs and flows of normal market conditions, but once prices rise all producers need to produce more because there is more money to be made, then there is a surplus and prices fall. In every market as long as it is reasonably healthy, there is expected demand that should be needed, then there is government incentives to do more. For example, the previous Biden government passed the Infrastructure Act to repair and replace bridges and roads and other things needed for cement, steels and asphalt. This would tend to push up demand for the products as the ability to do the work comes forth. The Infrastructure Act has helped steel prices rise, which is good for the industry.

President Trump has imposed tariffs on steel and aluminum, which he said he would and thinks it would be a good idea. With all ideas, there are some positives and negatives.

One side effect is what should the non-domestic exporters do? In an article by Heekyong Yang and Byron Kaye of Reuters, two South Korean steelmakers are considering investment options in the US, while Europe’s steel mills warn of a flood of surplus metals.

The 2 companies are POSCO and Hyundai Steel. A steel maker needs a base of customers to support it operations, however Hyundai Steel is considering a plant in southeast US. POSCO is looking at both India and the US for upstream steel processes.

In Europe, the expectation is if the US market is closed off, steel that would be sent to the US would go to Europe. The biggest steel maker in Europe is Thyssenkrupp Steel, and they said it would not be good for Europe in the long term. Another Germany steel maker, Salzgitter said protective measures in Europe would be needed immediately.

Luxembourg-based Aperam called for talks because neither the company nor its US customers would benefit from a prolonged trade conflict.

Austria’s Voestalpine said its revenues would fall and it is having discussions about price increases.

ArcelorMittal, the world’s second largest steelmaker, has operations in the US and plans to ramp up production.

Australia’s BlueScope produces 3 million tonnes of steel a year at its plant in Delta, Ohio says with higher steel prices, it will be good. In 2022, it spent $700 million to increase production with the help of the State of Ohio and local economic development agencies.

Late last year, Japan’s Nippon Steel wanted to buy US Steel, but was only allowed an investment.

The largest steel maker in the world is China Baowu Group with made 13,284 million tonnes of steel, then ArcelorMittal with 6,889 followed by China’s Ansteel Group with 5,565, Nippon Steel of 4,437 and Shagang Group of China 4.4145 and HBIS of China 4,100. The US companies are Nucor Corp with 2,060, Cleveland-Cliffs 1,680 and US Steel 1,449.

Linking to dividend paying stocks, with all government policies there are advantages and disadvantages and some unintended consequences. Tariffs may sound good, but all industries have their complexities which is why companies like stability.

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

In all businesses, it is desirable to have the goodwill of senior members of the government. The reason is government controls many levers of influence and budgets that can ensure the government helps the company both directly and indirectly. The downside of being too close to one side of the government is all those who do not support the government may not be customers.

In an article by Chris Megerian of the Associated Press, there was something a little different than normal. President Trump had 4 Tesla vehicles on the front lawn of the White House and bought 2 cars from Elon Musk. In the past, companies have shown their products at the White House, but the President never directly bought anything.

The reason for the show of support for Tesla was the owner Elon Musk has been running DOGE, either directly or highly indirectly, to try to find waste, abuse and fraud in government spending. For political parties it is easy to find waste – both parties have things they favor over the other party, so one party’s good is another party’s waste. Abuse is close to the waste, but fraud means to convict someone in court, or the burden is much higher. However, most people believe in government there is some waste, abuse and fraud in the files as people like the government for some things and not others.

Linking to dividend paying stocks, all profitable companies will have interactions with the government, mostly to ensure the government’s regulations do not hurt them and hopefully protects them from competition or make it harder for the competition. If the company has the goodwill of the politicians, then the multiple agencies that interact with the company will tend to work together and not target the company. Working with the government is a good thing.

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

When Joe Biden was President, he was able to navigate the House and Congress to have a number of large bills passed. The bills included the Infrastructure Act and CHIPS Act.

In an article by Tripp Mickle and Ana Swanson of the New York Times News Service, the CHIPS Act was to give money to semiconductor companies to make chips in the US. The bill offered $50 billion in federal subsidies to the industry, and $36 billion has been approved to Samsung Electronics, Intel, Micron Technology, TSMC (Taiwan Semiconductor Manufacturing Company). The plants are going up in Arizonia, New York and Ohio.

All politicians say they want semiconductor chips to be made in the US as the majority are made in Taiwan, Korea, Singapore, and Japan. There are multiple reasons why this is the case, but it started in the 1980’s. The politicians began pushing for more chips to be made in the US during COVID which because of high demand caused a shortage of chips.

At the joint address to Congress, President Trump attacked the CHIPS Act as bad and he said to Speaker Johnson he should get rid of it. What does that mean?

Chip company executives are worried that funding could be clawed back, are calling lawyers to ask what wiggle room the administration has to terminate signed contracts.

Senator Todd Young, who championed CHIPS, said he reached out to the White House to seek clarity.

In March, President Trump met with the CEO of TMSC C.C, Wei to announced plans for a $100 billion expansion of their Phoenix site as Apple and Nvidia committed to buying more American made chips, part of the expansion was based on the CHIPs Act which the President wants to stop.

Linking to dividend paying stocks, all companies have the ability to take advantage of grants and low interest loans or subsidies for business. They are offered because businesses have choices and they do not automatically have to invest in their present location. As an investor you want to have choices, what to do with your dividends – buy more, buy something else, build up cash and the list goes on.

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

At the moment, one of the biggest demands is data centers. The big tech companies of Amazon, Alphabet, Microsoft all have announced they will continue to spend billions of dollars on chips and data centers to bring AI to everyday items. While the capital expenditures or capex spending is very good, one of the requirements for data centers is relatively low cost electricity and lots of it.

In an article by Marc Levy of the Associated Press, there are many actors in the demand sphere including big tech arranging its own power projects.

Todd Snitchler, President and CEO of Electric Power Supply Association, which represents independent power plant owners, agrees there is big spike in demand.

President Trump has passed legislation that makes it easier to use fossil fuels in power plants either oil, gas or LNG. The other side is the states.

The people that greenlight power plants are largely state regulators and regional grid operators. Governors are doing their bit by seeking action to make it easier and faster to build power plants.

States including Pennsylvania want to fast track the approval process and dangle hundreds of millions of dollars in tax breaks for projects providing electricity to the grid.

Indiana, Michigan and Louisiana are exploring ideas to attract nuclear power.

With every increase in demand, comes many projects out of the woodwork, some which are beneficial to the consumer, some which need taxpayer dollars to justify and others that would have been built to satisfy demand anyways and receive additional tax breaks.

Linking to dividend paying stocks, in many dividend stock portfolios are utility companies because they are regulated which tends to ensure projects get built to meet demand; every year prices rise at or above inflation and given everyone needs electricity, the companies make a profit and continue to pay dividends.

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

A number of years ago, one of my aunts said we should boycott Nestle because of their dumping practices in Africa in regard to children’s baby formula. With all retail companies, there is likely one division or another that someone does not like their policies. However, with a conglomerate, there are plenty of other people that do like the company. Every company which has a retail presence at one time or other will have people that do not like it for some reason or another. Many times, the reasons are valid, but there are enough other customers, so boycotts are difficult.

In the last 15 years, most of the world has heard about Elon Musk with his brands of Tesla, X formerly Twitter and Space X. The companies have been leaders in design and innovation and many people around the world have a good rating for Mr. Musk. Then Elon became involved with President Trump’s administration. From the outside looking at the methods Mr. Musk has used it seems chaotic at best and producing few results. It is noted Mr. Musk has successfully navigated US government grants for his companies, however, how the apparatus of government works he seems to have overlooked that part.

In an article by Eric Reguly of Reuters, the fact that Mr. Musk has associated himself with President Trump’s policies and many seem chaotic, particularly across the board tariffs on the US’s neighbors. The rationale is that President Trump is using tariffs for over purposes, although it is very hard to figure what those purposes are and if the purposes could be done in a different manner. The public does seems not to like Tesla at the moment.

The critical aspect for Telsa is do the people who can afford to buy and actually buy the cars, are they mad at Mr. Musk? If they are, sales drop.

According to analysts such as Dan Ives of Wedbush Securities, the reason why you want to own Tesla stock is the future of the driver less cars. If you believe that soon all taxi or uber services will be driver less, then Telsa is one of the world’s leaders and growth will be coming very soon. If you think driver less cars are still into the future, then the company has problems.

In terms of sales, China is the world’s largest car market and Tesla used to be a leader. According to the China’s Passenger Car Association, Telsa’s sales in February fell 49% from a year earlier to 30,688 vehicles. It tells you the luxury market in China is beginning to be dominated by Chinese carmakers such as BYD. If Chinese luxury EV cars come into the US, Telsa’s sales are likely to fall.

In Europe, sales are down by 45% and the company’s share of the car market dropped from 1.8% to 1%. In Germany, where Tesla has a plant to make cars, the German Association of Automotive Industry said sales are down 76%. In France they are down 26% and in Norway where the highest EV penetration is located, sales fell 50%.

Linking to dividend paying stocks, some of these companies have a global reach to the public and there are reasons why active members of the senior levels take low profiles in the media. They take a high profile behind the scenes, but the focus is on the brand and selling it. There are many reasons why people may not like a brand, it is important to keep those to a minimum or they will affect sales which affects profits which affects dividends.

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