All companies both big and medium sized will decide if they want to grow, both organically or by purchasing another company. In this fashion the larger companies tend to get bigger if their acquisitions work out. Somctimes the perfect deal on paper works, sometimes it does not for a variety of reasons. One of the advantages large companies have or supposed to have is they have access to lawyers and lobbyists in all the countries the company operates in. However people are people in every country and they have biases and they see the advantages and disadvantages of the bigger company. A good example is Microsoft wishing to buying Activision Blizzard.

In an article by Kelvin Chan of the Associated Press, the $68.7 billion deal is stalled because the British Competition and Markets Authority (CMA) came out with a statement the deal will stifle competition and hurt gamers. The bureau found the deal would strength Microsoft’s position in the growing cloud gaming market. In the cloud gaming market, gamers stream games on mobile phones and handheld devices they already own. This could result in higher prices, fewer choices and less innovation.

Microsoft’s deputy general counsek, Rima Alaily, said the company is committed to offering effective and easily enforceable solutions that address the CMA’s concerns.

This means the British antitrust investigation is set to drag out for a few more months. Microsoft was hoping the British CMA would have a favorable outcome and they would use the outcome at the US Federal Trade Commission (FTC) hearings.

William Kovacic, a former FTC Chair and now a law professor at George Washington University, noted the good news was the British did not prohibit the deal leaves a opening for further discussion.

Linking to dividend paying stocks, one of the reasons why people buy the companies is the companies have a moat, which can tend to limit competition and the ability to raise prices or keep up margins. As a consumer agencies, these elements are not the best in the world, but as an investor you like them. The gaming industry is bigger than the movie industry, which means Microsoft will have to continue to come up with very popular games and in a few years change pricing strategies.

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

We all have biases and that is fine, but there are some that as an investor you do not think about too often. The bias is we have is linked to shop local. Whatever you location is, you will tend to shop in the vicinity because it is convenient, and it makes reasonable sense to do so. After you determine where you live, you tend to figure out the logistics to make it work and ideally it is best place for you. There are reasons why you live where you live. In the investing world, the biggest stock market in the US is the New York Stock Exchange or the Nasdaq. There are other stock markets, but as an investor you want to own shares in New York. As you become a seasoned investor, you may look to other stock exchanges such as in Chicago, Philadelphia and Boston, but the bias is towards New York.

In an article by Jamie McGeever of Reuters, the US slice of the multitrillion dollar global equity market is 41% total share. According to figures from the World Federation of Exchanges (WFE), US equity market cap accounted for 41% of the world total just below the previous year of 42%. Since 2000, the US market has averaged 38.3%.

According to Raina Oberoi, global head of equity solutions research at MSCI, the market cap proportions and valuations alone do not signal bubbles, but they can be warning signs.

WFE data showed global market cap end at $100 trillion down from a peak of $125 trillion a year earlier.

Mark Haefele, global wealth management chief investment officer at UBS, believes US stocks are 40% more expensive than European and emerging market stocks. The S&P 500 index is trading at 17.7 times earnings while the MSCI Europe is trading at 12.5 times earnings.

Linking to dividend paying stocks, if you are buying for the dividend and expect to hold a medium to long term, then it does not matter whether the stock is overvalued or undervalued when you buy. It is wonderful when you buy a stock and it moves and stays in positive territory in a short period of time, but stocks go up and down. There are always opportunities somewhere, but that does not mean you need to chase every opportunity. It is okay to have biases, just understand what they are and what that can limit you. The reality is every stock exchange performs the same manner, however, is it easy and convenient for you to follow the markets. We all have biases and that is not necessary a bad thing, do you know yours in regards to investing?

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

In the world of investing and almost every other industry, new products are needed and pushed to investors to continue to invest in the different stocks. It seems there are many trends, some stick and some do not, no one really knows what will stick and what will not. At the moment, the letters AI are the buzzword and companies have used different levels of AI for generations. What is happening is AI is becoming mainstream to normal operations of technology uses. A couple months ago Chat GPT was released and there was excitement of what it can do and what does that mean in the future. The reality is the big tech companies have been spending on AI for a long time, but it was in house rather than for the general public.

AI will change and enhance customer service to ensure customers want and pay for the goods and services they desire. In the coming months all companies will be telling their customers who they use AI.

For Microsoft, the reality of search is over 90% is done through Google, Microsoft has less than 5% market share.

In an article by Jeffery Dastin of Reuters, Microsoft unveiled enhancements to its search engine called Bing and the Edge browser. Microsoft will be using OpenAI and will use that operating system.

Microsoft is starting with laptop but soon with bringing the technology to the smartphone. Microsoft has the number three market share in the Cloud behind Amazon and Google and will bring OpenAI to it.

Gartner analyst believes the partnership with OpenAI is more relevant for business customers and consumers will have to wait for a few months, but something could be disruptive.

Linking to dividend paying stocks, all companies have to pay attention to the trends which flow through the marketplace and the trends with are or should be longer lasting. It is important to ask what improvements is AI making for the customer and the company?

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

If you think about countries that amassed great wealth from oil and gas, likely your first answers would tend to be those in the middle east – Saudi Arabia, Qatar and the other countries. Later you would ask yourself where the great oil fields in the world and you might consider Siberia’s oil fields which allows Russia to do what it wants. Another great oil field is under the North Sea which has benefited the UK and Norway. The politicians in Norway set up a fund for generations or a Sovereign Wealth Fund and it is now over one trillion dollars. The fund owns stocks in 9,000 companies in 70 countries and unlike other countries, the fund is still growing. In other countries, funds were set up but politicians like to spend, and they built infrastructure and when the economy went into its normal cycles, paid down debt in the downturns which rarely allows the fund to grow. Norway has been disciplined enough to spend 3% of the fund and there are calls to lower it to 2.5%.

In an article by Paul Waldie of the Globe and Mail, Norway has a problem, it is one of the largest generators of electricity in Europe through hydro, but due to decisions made years ago, hydro rates are going in Norway. For generations, hydro rates were at cost or very inexpensive for the average household.

Most of the people in Norway live in the southern portion of the country, where normal rainfall patterns have changed and while they are not dealing with California type situations, Norway’s reservoirs have decreased by 20% cutting power generation at the hydroelectric plants. In the northern part of the country, all is normal, but that output is designed to be sold to Europe. The market is deregulated which means the hydro is sold to the highest bidder. The hydro wires that bring the electricity to Europe are not connected to the southern Norway grid.

The government of Norway has offered subsidies to people, but electricity prices are higher than before.

Linking to dividend paying stocks, when a company is profitable there are more demands on it and saying no is there only method to stay profitable. It is difficult to say no all the time and profitable companies have to pick the causes they give and how much. Companies which make a profit hear about deals all the time, most of them are not deals and management has learnt to say no. As a dividend investor, often times what you do not invest in saves you money and over time makes you even more. For your investments, do have ideas what your senior management said no to?

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

If you examine the largest mining companies in the world, there is often an Australian property or properties involved. The island has some of the largest mineral deposits in the world and to mine them, large operations were built up.

In an article by Emma Graney, one of the biggest exports of Australia was and is coal. According to Geoscience Australia, the country has the 3rd largest coal reserves in the world and more than 11 billion tonnes has been mined since the late 1700’s. One of Australia’s biggest customers is China.

Coal was used to produce about 60% of the country’s electricity in 2017 but has been decreasing because natural gas is less expensive and now wind and solar are expanding.

There are interesting videos on the mining of coal and iron ore in Australia and the scale is large. Coal is often found under the ground and huge open pits are dug to take the coal from the ground. What should happen to the open pits once the mineral or in this coal is not profitable to be mined? It is age out question and if you ever been to areas where there are mines you likely have seen open pit mining.

In Ms. Graney’s article she highlights a transformation that has gone right. The Premier Coal company operated a huge mine and closed the mine in 1997. The mine located south of Perth in the town of Collie had been mining coal since the late 1800’s. The coal company had diverted part of the river to gain access to coal. The closing plans called for keeping the diversion channel. The mine site eventually filled up with water, overflowed the levee but a study said the water quality of the lake would continue to improve as the river water flowed through it.

In December 2020, Premier Mark McGowan opened a $5.2 million campground and boating site and the area is now known for its tourism. The issue will always it took years to rehab the land.

Linking to dividend paying stocks, it all industries there are supply chains and as consumers you often only worry about the last two – buying from the store and does the product work? In reality, supply chains go all the way back to the minerals the product is made out of and there are many concerns when the ore is no longer profitable, who should do something to the land to make it look the way it did before? There is no good answer except government funds are needed and time has to be on your side.

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

It is not unusual for companies to form partnerships and if one ever gets into trouble, the other company can help them out of the trouble. At some point, after the trouble company is back on its feet, it will want to run its own affairs without the partner’s influence. The changing relationship means the controlling company has to both want to and have a desire to step back, if they do not then the relationship can go south or not work as expected. There was a good example in the news.

In an article by Maki Shiraki and Gilles Guillaume of Reuters, 2 decades ago, Nissan was in financial problems and needed help, Renault bailed them out and the Nissan people needed to receive approval from the Renault people to made decisions. It helped that Carlos Ghosn was the Chair of Renault and approved the deal. When Mr. Ghosn left Renault and operations changed at Nissan, the Nissan people wanted control back.

It took 4 months of intense talks but the relationship between Nissan and Renault will be changing as Renault will reduce its stake in Nissan to 15% from 43%. The 28% will go into a French trust which overtime will be sold.

Nissan and Renault will have a 15% cross share holding that will allow Nissan to exercise its voting rights which previously it was unable to do.

Nissan sells more vehicles than Renault, and the new agreement will allow Nissan to focus on the US, China and emerging markets.

Nissan and Renault have pledged to pool more resources into key projects in Latin Ameica, India and Europe involving marketing, vehicles and technologies.

Linking to dividend paying stocks, one of the reasons people like their banker is access to capital, one of the reasons people do not like their banker is limited access to capital. When people feel the company is in good shape they want to access capital according to their strategy not someone else calling the shots. There is a fine line to walk. With dividend paying stocks, these are ones with access to capital because they make profits and partnering with other companies is a good thing for it. Often times those with the gold make the rules, and those without gold need to agree until they receive their own gold. In addition, recently a shareholder voting card was received in the mail to vote for or against management – if you receive one exercise your vote.

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

In 2021, the world was in a shutdown because of COVID and oil company profits were nonexistent. In 2022, the world opened up and needed oil and gas to move around and profits are now historically high. With the turnaround the biggest companies or the 7 sisters have all benefited with the biggest companies benefiting the most.

In an article by Sabrina Valle of Reuters, the biggest oil company posted a $56 billion net profit in 2022 or making $6.3 million a hour. During the COVID pandemic, Exxon Mobil made deep cuts which meant the 2022 profits were bigger.

In 2022, Exxon distributed $30 billion in cash to shareholders.

Exxon’s cash flow from operations increased to $76.8 billion up from $48.1 billion in 2021. The company typically maintains a $30 billion in cash or cash equivalents.

The company’s spending on new oil and gas projects was $22.7 billion up 37% from 2021. CEO Darren Woods said the number could rise to $25 billion.

Linking to dividend paying stocks, the oil industry has been a very good to invest in for a long time and it appears the case will continue for the next few years. One of the industries which benefit the oil and gas industry is the car companies and it will take a number of years before EVs come close to Internal Combustion sales. If everyone on your block has a EV, then the tipping point has likely passed and it is possible demand for oil and gas will drop.

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

In the 1950’s a President of GM says as GM goes so does the US. The statement has changed but GM remains the biggest vehicle company in the US. GM remains an important company, but the given the cycles of GM the statement as GM goes so does the US is not true anymore. If you want to see how the auto companies are doing, then GM should be examined.

In an article by Paul Linert and Joseph White of Reuters, GM had a good quarter and forecast stronger than expected earnings for 2023. The company expects to maintain pre-tax margins between 8 and 10%.

GM plans to build 400,000 electric vehicles, as it depends on trucks and SUVs for sales and profits.

The company expects to cut $2 billion in costs in 2023, some of the costs will be employee but they are looking at attrition or reducing new hires. GM has 167,000 employees.

GM is the number one sales leader of trucks, in terms of sales of Chevrolet and GMC trucks, GM expects to sell about 15 million trucks up from 13.9 million.

GM expects to full year operating earnings to be $10,5 billion to $12.5 billion or between $6.00 and $7.00 a share.

On capital spending, GM expects to spend between $11 billion and $13 billion in 2023, up from $9 billion in 2022.

The average selling price of a GM vehicle was $51,000

Linking to dividend paying stocks, everyone has their favorite or bell weather stocks to see how the economy is doing or could be doing. Many of the stocks tend to be age dependent as the economy moves through various cycles. An older person may take an auto company, a younger person might take a technology company, but they end up all dependent on one another. Auto companies are big technology users, and the interdependence can be easily seen. It is good to have a favorite or bell weather companies, sometimes you will own them, sometimes you will watch how they are doing. If your bell weather companies are doing well, then it can easily mean your attitude or confidence level will be higher as you wait for the next earnings season to verify your opinion.

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

In the economic texts, you will learn about supply and demand, but the next step is to learn about different demands. People tend to use demand as an all-encompassing word but in reality, there are different demand lines. There is slow growth demand, high growth demand, average demand, pent-up demand and almost everything in-between, which leads to wondering what type of demand does the company believe it has?

In an article by Aishwarya Nair and Abhijith Ganapavaram of Reuters, US airlines expect strong travel demand that drove record 4th quarter revenues to continue, but economic uncertainty and higher labor and operating costs could cloud the rosy outlooks.

Airlines are cashing in as consumers snap up tickets following a pandemic-induced slump. This is pent up demand or people were told not to fly, but then when they could, even though prices increased people flew for both personal and business travel.

American Airlines CEO Robert Isom said post-holiday bookings surged, underpinned by domestic and short-haul international flights. We expect strong demand to continue in 2023 and anticipate further improvements in demand for long-haul international travel this year. (He is talking about 2 different demand levels).

In addition to higher labor costs, there are higher costs of rents (airlines lease or rent landing slots at airports), landing fees. There is also the cost of fuel (similar to consumers buying higher mileage vehicles, so do airlines) expect to rise 1.5 to 4.5%.

Mastercard believes the pent-up demand for travel will diminish going forward.

China’s reopening may boost international travel, but demand remains uncertain and US airlines face challenges cashing in.

Linking to dividend paying stocks, owning these companies you expect them to make profits and reward their shareholders. When the CEO discusses the business, he/she will say demand, your task is what type of demand and how does that translate into profits?

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