After WW II was over and peace was in the land, there were many countries around the world that needed to be rebuilt. In Europe the rebuilding was called the Marshall Plan, but as the country with a large economy and not needing basic infrastructure to be built, the US and International Monetary Fund (IMF) and later the World Bank came together to lend money to countries. Ideally the premise was to stay within the free market economy. Eventually the USSR had a fund for those countries that were communist. For generations, the US and USSR were the bankers for the world, when the USSR broke up and China began to government surpluses, it rose to be the banker to other countries. In China, the plan is called the Silk Road or the Belt and Road Initiative.

In an article by Keith Bradsher of the New York Times News Service, China has emerged to provide emergency loans to debt ridden countries. New data show that China is providing ever more emergency loans to countries including Turkey, Argentina and Sir Lanka. The countries are either geopolitical significance, or have lots of natural resources.

While China is not equal to the IMF, in recent years, China has provided $240 billion in financing. In 2021, China gave $40.5 billion. The data is provided by AidData, a research institute at William and Mary University in Willamsburg, Virgina.

The IMF lent $68.6 billion in 2021.

China’s money has paid for construction of highways, bridges, hydroelectric dams and other infrastructure. US officials have accused China of engaging in debt trap diplomacy. The country is saddled with debt, but the work is carried out by Chinese companies often using Chinese engineers, Chinese workers and Chinese equipment.

China typically charges higher rates than the IMF at 4% versus 1 to 2% for financially distress countries, but both charge about the same for middle income countries at 4.8%.

Linking to dividend paying stocks, similar to businesses, when there is a gap in the market someone will cover it for both political and economic gains. Sometimes the larger profitable companies do not want the business because of economic risk factors or in the private sector companies can determine who they want as customers or do not want. When there is a gap, a company will emerge to close the gap. When there is a concern is does the second-tier company begin to take business from the top tier company. In the world of digital finance, the distinction maybe less than previous years. For your companies that you invest in, who and who is not the target market?

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

In every industry, the government has rules or regulations for each sector, it needs the regulations to both determine how the overall health of the industry is and to keep government bureaucrats working on something productive. That last statement is the typical statement from business owners who have to ensure the statistics needed by the government are done and sent to the departments. The government is interested in the overall number, not necessarily an individual business. Both political parties, Republicans tend to want less regulation and the Democrats tend to want more information, need the information to ensure government is responsive to what they feel the needs of their voters are. When things are going well, corporate interests tend to dominate; when things go badly, individuals who were harmed tend to dominate. The political parties tend to do a balancing act with enough wiggle room to offer both blame and credit for their actions in government.

In an article by Christopher Rugaber of the Associated Press, the regulators of banks noted they warned the management of the banks about their concerns but the management did nothing or changed the models to reflect their way of thinking. When that happens, the issue is for a depositor to the bank or someone who uses the services of the bank when would a reasonable person know the bank is in trouble. If the answer is when there is a public run on the bank, then the government is expected to do more than the minimum, because how would a mythical average consumer know and react? For the banks, the government quickly held hearings, in this case the Senate banking committee held hearings to determine if they should do something? The Federal Reserve top official is Michael Barr, said in light of the fact the bank regulators told management, should the Reserve have the ability to force or ensure their recommendations are followed?

The Senate banking committee were held as the Silicon Valley Bank and the Signature Bank failed and sent financial tremors in the US and across Europe. The Fed changed the rules – even though 90% of both bank’s deposits exceeded the $250,000 threshold all deposits were insured. The Fed also established a banking program to ensure banks to more easily raise cash if needed. The Fed estimated the costs to be in the $20 billion range and hopes to recover the funds from a levy on the banking sector.

Silicon Valley Bank had $200 billion on deposit, then depositors move $42 billion on Thursday and $100 billion on Friday and at the end of Friday the bank was in receivership and sold to First Citizens Bank of South Carolina. SVB added $110 billion in deposits, $72 billion in loans and 17 branches across the US.

Martin Gruenberg, Chairman of the FDIC said, the top 10 depositors at SVB held $13.3 billion in their accounts.

Linking to dividend paying stocks, when you buy these types of companies, the Presidents of the companies are used to going to Washington and testifying before committees. Often times there is limited press because it is routine up dates. When something goes wrong, Washington politicians call the Presidents in to show they can ask questions of the Presidents. The real work is done in the committee work where the balancing act of what the rules and regulations should be and what is acceptable politically. For the companies you have investments in Senate and House committees can often give you more information and help you determine if you want to hold the stock or seek alternatives.

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

When companies and individuals have money, lots of money they have the ability to do something with it. Sometimes it is invested into companies which lose money or value, but the owner believed in the existing value was a bargain. Business is like that, there are typically very good reasons why some businesses are not worth over the long term what they are going for. Fortunately, we live in a country where people are free to spend their money the way they want to.

In an article by Kate Conger and Ryan Mac of the New York Times News Service, Elon Musk says Twitter is now worth $20 billion, down from the $44 billion he paid in October. Although Mr. Musk is one of the wealthiest people in the world, he paid a combination of cash and bonds or debt. In his email Mr. Musk said at one point, the company was 4 months from running out of money. The mass layoffs and cost cutting was necessary to avoid bankruptcy and streamline operations.

In addition, Twitter lost money because advertisers moved their advertising dollars to other platforms in the social media world. Twitter compares well with Snap. The market capitalization of Snap is $18 billion with 375 million daily users, while Twitter is $20 billion and has 237.8 million daily users.

Linking to dividend paying stocks, all companies which are profitable buy and sell companies or involved in mergers and acquisitions to add to the company’s ability to service its customers. Not all mergers work out, some lose money for example in the world of tech, people switched from potential revenues to valuing actual revenues. In the above case Mr. Musk believes or says Twitter could be worth $250 billion, he sees value that no one else does. In public companies, the value has to be seen by shareholders from all their perspectives which is why selling short is seen as not believing the potential for the next year. For you investments, when the company does a takeover or merger do you see the value?

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

Every once in a while, the younger generation embraces something that the older generation (typically the parents’ age) does not quite understand. The classic example is music and rock and roll. The parents never really understood the music, but the examples quickly follow into other media such as books and movies and now phone content. If you think about vampire movies, they have been around, but generally came out around Halloween, but for a few years the movies and shows were popular all year around. On the smart phone, every year the quality of the camera and the ease of uploading video content is easier with each new phone. The ease means there are apps which take advantage of the upgrades including TikTok. With everything that is popular, there are doubting Thomas or conspiracy theories which may or may not be correct. At the moment., there is a political party which embraces conspiracy theories or gives the theories a platform in Washington.

In an article by Halleuya Hadero and Farnoush Amiri of the Associated Press, US lawmakers grilled the CEO of TikTok over data security and harmful content. The conspiracy theory behind TikTok is the company is owned by ByteDance. While ByteDance was originally owned by Chinese based companies its ownership now includes institutional companies such as Caryle Group.

CEO Shou Zi Chew noted over 150 million Americans use TikTok and the company is currently switching the data to servers maintained and owned by software giant Oracle.

Emile El Nems an analyst at Moody’s Investor Service, said a ban on TikTok would benefit rivals YouTube, Instagram and Snap sending more advertising dollars to American big tech companies.

David Kennedy, a former government intelligencer officer who runs the cybersecurity company TrustedSec, agreed on restricting TikTok access on government issued phones, but a nationwide ban might be too extreme. Some of the biggest tech companies such as Tesla, Microsoft and Apple have operations in China, what would they do?

Linking to dividend paying stocks, all companies are dependent on actions taken by government whether in Washington, the state level or the local level to ensure they have business as usual. For the companies it means the ability to provide their services or products to customers and the only issue is supply chain concerns. Governments are influenced by a wide variety of voices, think of P&G and a group thought one of their symbols meant more than it actually did. Political parties appeal to a base of voters and sometimes the lawmakers pander to them, although no action is really taken. It does put the spotlight on the management of the company, and they need to spend their time in the spotlight rather than allocating resources of the company. How they answer will mean how the company responds for the next quarter.

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

In every industry, the new challenges people to stay current and offer something that people want or desire or think they want and desire. The challenge for the management group is to ensure its shareholders they are aware of the new thing and the company is active adding to its products and services. If the company can show it has the new thing, then its customers can stay loyal, the shareholders are happy the company is being innovative, and results will be rewarded in the future. At the present moment, the new thing is AI because of OpenAI released ChatGPT. Many companies have been using AI for a number of years, but it was in the background. OpenAI brought the ability to use AI to forefront and very soon it will be a standard feature.

The biggest and most profitable technology company in the world is Alphabet which includes Google, the world’s most used search engine. We know the big technology companies were spending research dollars on AI for the past decade, but there was no consumer application or readily available consumer application, then came OpenAI, what was Google to do?

In an article by Nico Grant and Cade Metz of the New York Times News Service, Google stepped off the sidelines and released its version of AI called Bard. Google noted the rollout will take some time, users in the United States and the UK will have access to it first. Bard has been in the works since 2015.

Google announced that AI was coming to applications such as Docs and Sheets, which businesses have to pay to use. The underlying technology will also be on sale to companies and software companies who wish to build their own chatbots or power new apps.

Linking to dividend paying stocks, when companies are profitable and paying dividends, they are doing good things, however Wall Street looks forward or what will the company do in the future? One method to do this is how does the company react to what is new? Is the company working on the new to incorporate in their operations? how does it manage its change, and does it adapt and change? If you see the company adapting, then that is good thing and one more reason to continue to own the stock or do nothing. If you do see the company adapting to what you think is important, it is time to seek alternatives.

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

Banks are the life bloods of an economy and credit makes the economy run. On individual basis credit is both good and bad, too much and you are in trouble, but some helps make your lifestyle better for the moment. For companies, credit is very useful and is used on a normal basis in the operations of the company. Only if the company goes too much debt and it becomes too expensive, then credit is not so good. Banks because of their importance in the community and state and national level become very important for the government. Depending on the size of the bank, for the largest 6 banks in the US they are semi declared as too big too fail. The same principle applies across the world.

In Switzerland the largest 2 banks are UBS and Credit Suisse, of the two, UBS is better run. Credit Suisse as a tendency for the past number of years to be the banker of choice of companies losing billions of dollars. When there is a crisis, the international banking community thinks how is Credit Suisse involved?. Credit Suisse has some very profitable divisions and was 10% owned by a Saudi Arabian agency.

Given the banking crisis since SVB in the US, Credit Suisse has been in trouble as the international banking community began to withdraw money from the bank. The Swiss government stepped in to merge the two biggest banks in the country, but there were conditions. One of the issues was the hand of the Saudi agency was asked if he was going to buy more equity? he said no, because we already own 10%. The line no was heard around the world, the other part a few days later, if an investor owns more than 10% equity, different rules apply to the investor.

In normal circumstances bond holders have greater security than stockholders in bankruptcy or Chapter 11, but for some bondholders the regulators changed the normal method.

In a podcast by Patrick Doyle on You Tube, since the 2008 banking crisis, one of the tools in the central banks’ toolkits are bonds called addition tier 1 bank debt. Banks will have issued multiple types of equity and bonds in their operations, and some are classified as Tier 1 debt, some of the debt is Tier 2 and list goes on. The more Tier 1 debt, the better capitalized the bank. Credit Suisse had $17 billion in additional Tier 1 debt with its holders including Pimco (one of the largest holders of bonds in the world or should be sophisticated investors) and Asian funds. The additional Tier 1 was carrying a 9% interest rate and that should have sent alarm bells that if anything went wrong with the bank, the bonds were supposed to convert to shares or an equity position which would help the balance sheet. At the time of the issue, experts were thinking that the additional Tier 1 bonds would take the place of preferred shares.

Linking to dividend paying stocks, when things are going well few are concerned with the what if something goes wrong? how am I protected? when the tables turn and something goes wrong, they those who believe in the normal course of events suggest lawsuits with come. They may, but in the case above the language was written if the regulators wished to wipe out the bondholders they could. Ideally your investments go up and you are above your share purchase price which means if the shares fluctuate it is ok as long as the company can pay a dividend. When the company cannot pay, as much as you like the stock it is time to find alternatives, let the company sort itself out and then revisit it later.

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

At one time, whenever a disaster happened, both sides rushed to published newspapers or magazines to get their stories into the public. Then came TV and newscasts which lead to news documentary shows and TV news programs that investigated the stories. With the internet came social media and everyone could have a swap including those from a far. There are really good reasons why social media is wonderful and lots of reasons why you need to be careful with what you read

In an article by David Klepper of the Associated Press, there was a 36-car derailment near East Palestine, Ohio. The train was carrying toxic chemicals and they were released into the air and water which lead to concerns because similar to most toxic chemicals, the results do not show up overnight. The chemicals which go into the water will eventually cause problems but most of them take time – the easiest to see will be problems in pregnant women. The women will miscarry and have a host of other problems because of the chemical affecting the newborn and giving life process.

The disaster means social media will be abuzz with news and because governments and the train corporation reacted slower than expected others will step in to air their views. Some will be accurate, be of concern and some of the news will be junk. In this case, anonymous pro-Russian accounts started spreading misleading claims and anti-American propaganda about the the derailment on Twitter.

The pro-Russian tweets suggested Biden was helping Ukraine but not its own citizens.

Organizations such as Reset, a London based non-profit that studies social media’s impact on democracy and Zignal Labs which conducted a study for the Associated Press came to the same conclusion. Millions of mentions were done on Facebook and Twitter.

In addition, because the derailment moved into the political circles, the disinformation came from both pro-Russian accounts and those will American pro conservative accounts. One example is Truth Puke which is connected to conservatives in the US. Truth Puke regularly reposts Russia state media Russia Today or RT.

Linking to dividend paying stocks, when a disaster happens, the company is going to say we need time to evaluate the information and equally important to get out the facts. The issue will be other voices will fill in the space while the company offers its solutions. It is vital the company has considered what happens in a disaster, what should be done and can the company control as possible, otherwise the company will lose its narrative. For the companies you invest in, are they reasonably prepared for a disaster?

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

Whenever something goes wrong there are tendencies to throw the blame around or throw the spaghetti at the wall till it sticks. The first blame is management because people are paid to manage and when there are losses, what was management doing? In the famous scene from the Roman empire – Nero was fiddling away with Rome burnt. Management has responsibility in both good and bad times. The next blame to go around is the government through government regulations. All companies have a regulator of some type and the issue is what did they know and equally what did they do or not do given government bureaucrats are paid to do some type of regulations. Anyone who needs to fill in forms and send the information to the government believes some information is good, but the government asks for too much and lobbying groups for the industry try to lessen the flow of information. Was the lobbying for the regulations without any penalties part of the problem? or is it a combination of the above?

In an article by Jeanna Smialek of the New York Times News Service, Silicon Valley Bank’s risky practices were of the US Reserve’s radar for more than a year.

The Fed repeatedly warned the bank that it had problems. It 2021, a review found serious weakness in how the bank was handling key risks. The Fed issued 6 citations.

The bank did not fix its vulnerabilities, the Fed placed the bank under a set of restrictions that the bank could not do any mergers and acquisitions until it fixed its governance and control.

Senior leaders at the Fed went to Senior management at the bank to talk about their ability to gain access to enough cash in a crisis and possible exposure to losses as interest rates rose. It became clear to the Fed, SVB was using bad models to determine how its business would fare as interest rates rose. The models at the SVB showed higher interest rates helped the bank, this was different from reality.

To the fed, SVB had issues which were very troubling, 97% of its deposits were uninsured or above $250,000 which meant at the first sign of trouble – the depositors were likely to move their money. Most of the depositors were in the technology sector which after years of investing in potential earnings, investors wanted to see real revenues to make profits. In addition, SVB had a large long term bond portfolio which the market rate had declined as interest rates were rising.

The House Financial Services Committee meetings are scheduled for March 29 and the Fed is doing an inhouse review scheduled to be released to the public in May. Does the Fed need more authority to ensure the bank measures up to its standards?

Linking to dividend paying stocks, large corporations have a love hate relationship to regulations, they would love to have less, but sometimes more ensures competition can be stifled. Companies want to have more if they get into trouble to ensure the government helps them out of the rough times. There is a reason why the management team is involved in politics at the local, state and national levels. When you invest in a profitable company, one of their many expenses is lobbying. As an investor sometimes you like it, sometimes you prefer less. Do you know the relationship the management team has with the people it lobbies?

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

If a developed country wants to save fossil fuels, the easiest and hardest aspect is the urban environment. Buildings were built for many reasons but saving energy was the least important because fuel was relatively inexpensive. In the northeast a number of years ago, visited a friend whose house had almost no insulation from the cold. Once they renovated to put the insulation the house was livable during the winter. In the northeast, winter lasts at least 4 months and seemingly can last longer. There in lies the problem, to fix houses, renovation has to be done and to renovate means to move everything around, live through construction dust and debris and move everything back again.

In an article from Reuters, the European Parliament looked at the figure of buildings account for 40% of the European Union’s energy use. Most of that energy use is either directly by oil and gas or indirectly through the making of electricity. If buildings use less energy, the energy bills should be less and dependence on oil and gas imports will decrease.

The EU countries would need to renovate non-residential buildings to an E grade by 2027 and D by 2030. Residential buildings would follow later deadlines of E by 2030 and D by 2033.

Few disagree with the desire, how it be financed is a different issue.

Linking to dividend paying stocks, in the above case construction renovations will have to be done to ensure buildings are energy efficient. There are many companies in the renovation business but they will need supplies – in the US you could point to Home Depot and Lowes as larger suppliers. It is possible to go through which companies’ products would be needed to achieve energy efficiency and determine how they should benefit from government regulations. As long as government convene, they will pass regulations or laws which means some companies benefit, looking at regulations as a positive is one method to like regulations.

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