In retail there are a number of different segments to in and they all have different strategies to appeal to their base customer. If a product is appealing to a wide range of people product placement in movies and TV are important. If a product appeals to high end customers, it has to be exclusive or feel exclusive. If the product is aimed at young people, music is a key.

In an article by Ben Sisario of the New York Times News Service, Universal Music Group whose artists include Taylor Swift, Drake, U2 and Ariana Grande pulled its music from TikTok.

The company said TikTok was offering unsatisfactory payment for its music, allowing its platform to be flooded with AI-generated recordings that diluted the royalty pool for real, human musicians.

Recordings from Universal were deleted from TikTok’s library and Universal videos were muted. TikTok put notes saying the sound is not available or sound removed due to copyright restrictions.

TikTok said Universal was greedy and chosen to walk away from a platform with over a billion users that serves as a free promotional and discover vehicle for their talent.

How advertisers are reacting, will depend how long the dispute will last.

Linking to dividend paying stocks, in order to sell their goods and products all companies need a distribution system and for some companies the systems rarely change. For other companies depending buys their goods and services, change is a constant. With your investments, you need to know how the process works and how the bottlenecks are typically straightened out.

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

Often times you will hear or have read about a company, and somewhere in your brain you store the information. Then you will see it more and it slowly comes to the forefront for you to decide what to do with your investments. Once you own an investment you can hold it or do nothing, but you need reinforcement to hold onto it or seek alternatives. One company you will know is Amazon and for many years, it spent more money than it made or was in a growth phase. Over the past 3 years it has changed to more areas of profitablity.

In an article from Reuters, Amazon.com Inc beat 4th quarter estimates as new generative AI features in its cloud and e-commerce businesses spurred robust growth during the holiday season.

AWS or Amazon Web Services is the world’s largest cloud services provider. The division posted revenues of $24.2 billion up 13% which was in line with expectations of the analysts. (the cloud services of Microsoft and Google and 2nd and 3rd).

Amazon recently made an investment in AI company called Anthropic which is chat-bot maker. The products will be used in the cloud.

Most people know Amazon because it is the 2nd largest shipper of goods behind the US Post Office and Amazon has changed strategy to build smaller fulfilment centers with the top 10,000 items closer to customers. In this fashion, the last mile delivery is either the same day or next day. During the key Black Friday and Cyber Monday days, customers worldwide bought over 1 billion items from Amazon.

If you buy regularly through Amazon, the average person will have a Prime membership because of the free shipping. Prime membership is a key strategic asset for Amazon. Generally, anyone with a Prime membership will have a reasonable income, which means as a group they are valuable to advertisers. Amazon has the 3rd largest advertising revenues behind Google and Meta. Not every company uses Amazon, but the service Buy with Prime enables subscribers to receive same day or next day delivery for merchants not on Prime.

In addition, with Prime membership comes other features such as Prime Video. Similar to Netflix, Amazon introduce a higher fee for no ads which is expected to bring in $3 to $4 billion in revenues.

Linking to dividend paying stocks, all these companies have assets that generate excess income to earn profits. In the case of Amazon, it has taken years of spending money to be in a position to realize the ability to make profits, but it will be a juggernaut similar to Microsoft and Google. Meta recently declared a 50 cent dividend will this force the other big tech companies to do the same? Doing your homework on how the assets increase revenues to generate profits to eventually pay dividends is the key.

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

All markets are partly a belief system, people tend to believe that prices eventually will go up. Prices may not go everyday, but overtime prices go up. The belief system encourages people to buy and sell the goods and products. In all markets there are quality or the best goods and there are some that should be discounted. When prices decline on a regular basis no one is quite sure what to do.

In an article by Daisuke Wakabayashi and Claire Fu of the New York Times News Service, the unwavering belief of Chinese homebuyers that real estate is a cannot lose investment, meant that real estate was 25% of the Chinese economy. The problem is for the past 2 years, real estate development firms have massive debts and sales of new homes have dropped considerably as well as prices continue to fall.

The sharp loss of faith in property, which similar to America, is the main store of wealth for families, what should the government do? The biggest developer, Evergrande Developments is being liquidated as it has $300 billion in debt.

According to Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at Natixis, the market has not touched bottom and there is still a long way to go.

For owners, there was hope on the horizon. the Chinese government had massive shutdowns during the pandemic and there could be pent-up demand for new properties as restrictions eased.

Nomura Securities estimates there are still 20 million units of presold homes waiting to be sold requiring $450 billion in funding to complete. One of the many problems is since 2020, the policy makers in Beijing, worried about a housing bubble effects on the banking system, rolled out rules to curb excessive borrowing of real estate developers. Without easy access to debt, developers struggled to pay off loans and finish building properties that were sold in advance.

Xiao Yuanqi, deputy director of China’s National Financial Regulatory Administration said the country’s financial institutions had an inescapable responsibility to provide strong support to the property sector. Banks should extend loans to property developers.

Since 2021, more than 50 Chinese property firms have defaulted on debt with the 2 largest firms Evergrande and Country Garden both gone into bankruptcy.

Country Garden said presales of unfinished apartments fell from the 9th consecutive month to $1.3 billion down 69% from a year earlier. In the 2nd half of 223, presales were down 74% for a year earlier.

Larry Hu, chief China economist at Macquarie Group, said the key thing in 2024 is if and when the central government would step in and take the main responsibility to stop the contagion. Mr. Hu believes the Chinese government could act similar to the US with the TARP or Troubled Asset Relief Program which essentially means the government takes the debt off financial institutions to allow them to lend again, in the hope that prices will rebound in the future and then the assets can be sold at a profit. In the US, after the housing crisis of 2008, there was the rise of hedge funds to buy subdivisions to rent out, will that happen in China?

Linking to dividend paying stocks, when profits are to be made, no one likes government regulations, once loses are happening, companies rush to have some sort of government regulation and politicians will agree. As investors we all love the free market system, but it is not really free, we all expect and hope for the investments we make there will be an exception if the market prices fall to new lows. In every industry, the government typically wants it to do well and encourages it, but when things go down, the lobbyists will look to the government for help because of the size, the scope or the value to the economy in general. Investing in profitable companies is never a guarantee that they stay profitable for years, but that is what you hope for and if the industry they are involved with suffers a downturn, move your money to other alternatives.

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

Most of us have some sort of routine which we start the day, because that is the easiest part to manage. The time we wake up, what we have for breakfast, the commute to work and then your work begins and things change because you do not necessarily control everything. That is normal and we tend to do it because one we like it and two your can concentrate on other things. Every once in a while, the routine is changed, whether it is the time you wake up, the breakfast or the commute, but something changes and we have to adapt.

In an article by Tim Hepher and Rajesh Kumar Singh of Reuters, United Airlines has approached Airbus about buying more A311neo airplanes. What has changed is Boeing’s concerns with 737 Max 10.

United Airlines has a long history of buying planes from Boeing and has not cancelled any orders but CEO Scott Kirby has removed the order from internal plans. The history of United includes companies they merger with such as Continental Airline that were long time Boeing customers. The problem for United is there are 2 manufacturers that dominate the passenger plane industry Boeing and Airbus and both have heavy back orders on their books. However, according to trade publication Air Insight, the companies are in talks about squeezing in if an opening should occur.

The issue at Boeing is they do not know how long the latest concerns – a door fell off an Alaskan Airlines flight. All the doors need to be checked and what type of fix is needed and for the regulators to sign off on the safety.

United has 45 A350s on order to be delivered by 2030. The planes would replace Boeing 777s.

Linking to dividend paying stocks, many companies deal with single suppliers for the bulk of their products, partly due to history and partly due to mergers within the industry, however the same companies are quick to have backups or alternatives if the supplier’s reliability changes. One of the elements you are buying with a dividend producing company is the ability to pivot if necessary.

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

Most of us are local people, we live where we live and like it, as you are living in an area for a number of years you appreciate the surroundings more. Whether it is a hill or mountain in the area, a river or ocean to see water, and the list goes on. While we are personally local, the commerce around is global. Part of that is the design of supply systems, there is always another area where costs are lower or to maintain and grow margins, lower costs typically must be found. If a company can also raise prices, so much the better for the company’s revenues.

In an article by Paul Wiseman and Mae Anderson of the Associated Press, they show how global the economy actually is. The least expensive way to ship goods is by ship and with mega container ships carrying 10,000 containers, using water will always be the least expensive. The Red Sea connects to the Suez Canal which connects to Europe, it is trade route than has been used for thousands of years. On both sides of the waterway, various countries have undergone transformations of their economies and government. For a shipping company, going through the Red Sea saves the traffic around Africa. The path through the Red Sea means everyone receives their deliveries as quick as possible.

In the article, a company near Baltimore makes washable keyboards for hospitals and is named Man & Machine. The company imports parts from China and its normal route is to go to Europe and then the US. The issue is the normal passage takes about a month, with the Red Sea shut down, the secondary alternative is to through the Panama Canal, but the Canal has been affected by drought. If you think about the next alternative – truck or rail means extra costs. Will the customers wait and want to pay higher prices? Who eats the extra costs?

Tesla has a factory near Berlin, Germany, it was shutdown for 2 weeks because supplies were delayed.

Marks & Spencer is a British retail chain and has warned the new spring collection will be delayed as well as home-goods collection.

Roughly 20% of clothes imported into the US arrive via Europe going through the Suez Canal said Steve Lamar, CEO of the American Apparel and Footwear Association. The number climbs to over 40% in Europe.

A trip around Africa adds a week or 2 to the journey of the shipment and 25% of global shipping capacity was going around Africa. The cost of the container has risen from $1,500 to $5,500. The only good news, things could be worse at the height of the pandemic the cost was $15,000.

The good news is after the pandemic, global capacity rose as shippers brought more ships to the market. There is currently a state of overcapacity, which is the reason why prices have not jumped more.

In most of life, there are alternatives, it is possible to ship clothes by plane, but not furniture. The reason clothes go by plane is clothes are fashion sensitive.

Linking to dividend paying stocks, while most of our lives are local, the economy is global. The supply system is a moving part and we all depend on world peace. The good news is in business all great businesses have a plan B and plan C when something happens to the supply system. Very often they have used in the past and can tell good stories about it. In your research you might want to know how the companies uses its alternatives to maintain margins.

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

After accumulating money, many people tend to change their buying habits to more high end stores. In the large cities you can think about 5th Avenue, Magnificent Mile, Rodeo Drive and there are many others, but all in come you can spend lots of money on clothing and accessories.

In an article by Mimosa Spencer of Reuters, one of the largest luxury goods group LVMH who’s stable includes Louis Vuitton, Dior and Tiffany, sales worldwide were $35 billion in the final 3 months of 2023. The growth of 10% was just ahead of analysts’ expectation of 9%.

LVMH CEO Bernard Arnault said the highest end products are those that have the highest demand in the world. Mr. Arnault believed the trend was going to continue in 2024.

Spending in China has increased and business at Louis Vuitton from high end Chinese spenders in Europe reached 70% of the level generated in 2019, before the pandemic.

Spending by Americans and Europeans remains subdued, partially offset by Chinese tourists to Europe. Analysts expect sales to increase 5% this year.

Linking to dividend paying stocks, when your dividends have increased to the point where you can buy high end goods, you will likely be a customer for life. The dividends come to you on a monthly or quarterly basis and through any downturn the economy may or may not go through. With your dividends you can spend, reinvest or do whatever you wish, knowing the next quarter is only 3 months away.

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

In the early 2000’s, Professor Aswath Damodaran on talking about valuation, used to say people to justify a growth projection used to say China or the Chinese market can be used to justify their valuation number. In some cases, that was correct, China emerged as the number 2 economy in the world and if the company made transactions it was possible. One area that tended to be correct was in Hollywood movies, but times have changed.

In an article by Claire Fu, Brooks Barnes and Daisuke Wakabayashi of the New York Times News Service, it seems the big blockbuster movies from Hollywood can no longer depend on China. The Chinese market is still important, but if you consider Aquaman and the Lost Kingdom. The studio made $1.2 billion worldwide on the first Aquaman and China represented about 25% or $293 million. Expectations were high, marketing budgets were spent and the movie brought in $60 million in its first few weeks down from $90 million.

In 2023, no US films ranked among the top 10 highest grossing movies despite movies such as Mission: Impossible, the Fast and Furious and Spiderman franchises. In 2012, 7 of the top 10 were US Hollywood movies.

Part of the reason is China produces more high-quality movies that resonate with domestic audiences. The top 2 movies were Full River Red and The Wandering Earth II.

Hollywood once viewed China as a market where they would always make money. Consumers are spending less on movies and box office sales have are below pre-pandemic levels.

Linking to dividend paying companies, all markets mature and local companies mature with the competition so the quality demanded is the quality produced. Many industries do not have wide barriers to entry and with technology, it is possible to do the same thing as the big players. The growth in capacity is a good thing in general, but sometimes companies lose market share and begin to lose margins or profitability. If the reason you are buying an investment and the seller says we can capture 1% of the Chinese market, remember the golden rule of investing – try not to lose money.

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

All companies around the globe do strategic planning as they decide to vertical or horizontally integrate their company. The companies have their core business and then decide to enhance something or capture a different piece of the market. Only after the merger goes through does the issue of how much did it add to the company is found out. There are potential savings and potential growth, but the execution of the plans is done after the merger.

In an article by Nishit Navin and Chris Thomas of Reuters, Japan’s Sony Corp scrapped plans for a $10 billion merger of its Indian unit with Zee Entertainment which would have created one of South Asian biggest TV broadcasters.

Sony submitted a brief to the Indian Stock Exchange asking for a $90 million termination fees for alleged breaches of their merger agreement and emergency interim relief by invoking arbitration. Zee denies the claims.

While neither statement said what conditions were breached, what is known is Sony did not want Zee Chief Executive Punit Goenka at the helm of the merger company because Mr. Goenka is the subject of India’s market regulator. Sony want Mr, Goenka out before the merger, Mr. Goenka wanted to leave after the merger as he denies the allegations.

If the merger had gone through Sony and Zee would have a portfolio of 90-channel plus.

Sony said the collapse of the merger would not expected to have any material impact on its estimates for the year.

Linking to dividend paying stocks, similar to many things in life, people and who they are the big factors in any merger. A company can have great assets or great potential assets, but does the other side want to work with them or is there a culture situation. Often times in startups, the culture is much different than older mature companies, but older mature companies have access to credit or potential to grow the business. People still count.

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

When you buy a share on the stock exchange, you own a piece of the company and that entitles to a number of features such as using capital gains if you sell at a profit or capital loss if you sell at a loss. For taxes, capital losses can be carried forward to lower capital gains in the future. You have a right to vote at the annual meeting for the Board of Directors, executive compensation, the auditor and ask questions at the meeting. Sometimes people who want change to policies will submit questions in advance and the company will offer advice on whether to vote for or against a proposal. If you never voted, there is often an option to vote for management’s recommendations. Some stocks are widely held or there are no controlling shareholders, but if the company makes money on a consistent matter, the odds are the institutional shareholders will vote with management, individuals will tend to vote with management.

In an article by J Edward Moreno of the New York Times, Exxon Mobil is suing 2 activist investors to prevent their proposals from coming to a vote of shareholders.

All companies have rules and regulations to submitting questions before shareholders, and generally it is time sensitive, meaning at some point the materials must be printed and mailed to shareholders so the questions need to be done before that point. The shareholders filed their questions before the deadline, but Exxon does not want to submit the questions.

Exxon has filed a suit in the US District Court for the Northern District of Texas (ExxonMobil is headquartered in Houston), accusing the shareholders of abusing the process for proposing shareholder votes because the proposal would mean the company’s existing businesses would be diminished. The shareholders want Exxon to speed up the process to become carbon neutral.

Under the securities law, Exxon says they have the ability to toss petitions that deal with matters relating to the company’s ordinary business operations. Exxon says the proposal does not seek to improve ExxonMobil’s economic performance or create shareholder value.

The company asked the SEC to offer an opinion but it was informal and subject to interpretation and for that reason it has gone to the courts.

Linking to dividend paying stocks, if a company makes money and can increase its dividend on a consistent basis most shareholders will vote for management. When the company does not make money, then all the complaints and issues with the company will surface and shareholder fights will result, likely new management will be the outcome. When a company makes profits, often shareholders will overlook the negative aspects to the company and hope overtime technology will improve outcomes.

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