On this Remembrance Day, we think about the young men and women who joined the military and fought for a war their country believed was very important. Most of the people are young because all militaries are dependent on young people to do extra ordinary tasks in time of war. Shoot real bullets at someone else who shoots real bullets at you. Thankfully the medical corps are very good at keeping people alive and the rehab centers have much better artificial limbs for people to continue to live long and productive lives.

If a country wishes not to engage in sending young men to battle, sanctions are the next best step. When Russia invaded Ukraine, the west including Europe and the US imposed sanctions on Russia hoping to send the economy into a recession.

In an article by Maina Stevis-Gridneff of The New York Times News Service, she wrote the European Union has named 1,236 people and 155 companies for sanctions, freezing their assets and blocking their access to trade in the EU. The EU has banned the trade of products in nearly 1,000 categories and hundreds of subcategories. Russia is one of the world’s largest exporters of oil and gas and the EU has a near total ban on oil.

There are some products that have not made it to the list including diamonds, nuclear power and some Russian oil deliveries.

Russian diamonds go to the diamond hub city of Antwerp, Belgium. The trade of rough Russian diamonds is worth $2.4 billion. The Bellllgian government says it would co-operate if diamonds made the list, but somehow when the European Commission meets, diamonds are not on the list.

Nuclear energy is more complex because power plants in France, Hungary, Slovakia, Finland and other countries depend on nuclear imports and the trade is worth $300 million.

Oil tankers move oil, and they are registered in every tax haven country around the world. One of the lobbying groups is mounted by Greek diplomats to allow Greek owned tankers to transport Russian oil to non-European destinations. According to Marine Traffic, a shipping data platform, more than half of the vessels transporting oil are Greek-owned. The movement of oil through Greek ships is one of Russia’s largest revenue streams.

Linking to dividend paying stocks, all countries around the world have diplomats who besides doing immigration concerns and tourists visas help out their country’s interests including corporate concerns. When a country does business in another country, the diplomats help the corporate interests lobby the government for assistance and remove barriers to business as corporate interests’ merger into a country’s interest. When that happens, companies have the government as a partner and as long as they abide by the law of the country, the partnership works well. It is good to have the government as a partner.

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

Every technology invented will have some great attributes or wide-ranging uses for non-military uses. The same technology can be used for military purposes. A case in point is drones and the use of them. It is very common for domestic pipeline companies to use drones to investigate their pipelines, if something happens, the drones can make it to the scene first and actions can be taken at the control center and on the ground. Drones are in use for construction buildings for engineers to investigate how things are going and you can imagine hundreds of other uses. In the Russia-Ukraine conflict we have seen drones carrying missiles cause damage to both sides. The use of technology to hamper the ground game of humans.

In an article by Mark Lewis of the Associated Press, there are great amounts of oil and gas under the North Sea and on the Norwegian side, Norway has offshore platforms to pump out oil and gas to Europe. (there are very interesting videos on You Tube about putting pipelines from the platforms to the collection stations to be sent to Europe). Recently Norwegian oil and gas workers have been seeing drones buzzing overhead. Officials believe there are not the competition but sent from Moscow as a stark warning.

Norway has taken the top exporter of oil and gas to Europe away from Russia and this has meant Norway’s Prime Minister Jonas Gahr Store has sent the navy and fighter planes to the scene, he has also asked co-operation of the navies of Europe to help out. Norway is investigating who was controlling the drones and for what purposes.

Norway has about 15,000 miles of pipeline that bring Norway’s oil and gas to Britain and Europe.

Linking to dividend paying stocks, when you invest in companies you are hoping they follow the law of the land and make profits to pay dividends. If the investment does that, you can hold on to your stocks for years. Most of the infrastructure which companies build is built on the goodwill of the people of the country, and it is important that goodwill remains high. For some industry that typically function out of the spotlight, their abilities ensure the government’s interest is always a high priority to ensure the continual functioning of the infrastructure. It is good to have the government as a partner.

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

At one time Standard Oil control by John D Rockefeller controlled the oil markets of the world. It was the biggest, it had interests in oil drilling, oil and gas pipelines, refineries, and where ever in the world where oil could be found Standard was there. Eventually, the company was broken up to 7 different companies and over the years, Standard Oil became Exxon which is headquarter in Houston, Texas. Exxon continued to have operations around the world although in many countries it is a joint venture with the government or government favored company.

As the world knows, Russia is a major oil and gas producer and was selling 40% of Europe’s needs. Russia also provides China with oil and gas, which is why China remains friendly with Russia. When Russia invaded the Ukraine, Europe and America put sanctions on Russia and forced many companies to stop doing operations in Russia. It takes time to stop operations, unless the company is willing to take millions or billions in write downs of its operations. Exxon has been in Russia for decades and over the years have invested heavily in bringing oil for the Siberia. The winters are long, the summers short and the land is often more bog or waterlogged, but there is lots of oil.

In an article by Sabrina Valle of Reuters, Exxon announced it is out of Russia because President Putin expropriated its properties after 7 months of discussions over an orderly transfer of its 30% stake in an oil project. The 30% stake was valued at $4 billion. Exxon’s partners in the oil field were Rosneft, India’s ONGC and Japan’s SODECO.

Exxon took a $3.4 billion write down in April and a $600 million write-down in the 3rd quarter. On October 7, President Putin seized Exxon’s shares and transferred them to a government-controlled company. The other partners under the order can increase their ownership stake.

Linking to dividend paying stocks, companies that operate outside of the US will run into countries that operate differently. There are remedies when a government expropriates which include courts and lawyers and government pressure, but they take time and sometimes it means new leadership in the country. (in Cuba, companies whose properties were expropriated are still waiting, but companies can wait a long time). The companies will move on to other venues in the world for their operations or they have flexibility.

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

Every quarter the biggest banks in the country report on how they are doing. With the big banks their operations encompass all sectors of the economy, and it is important to see how they see the economy in action. More importantly they control access to credit, if you have credit and wish to use it to buy income performing assets or personal assets, in the grand scheme of things the big banks will know. The big banks can raise your interest costs on your credit and if you still want to buy you need to pay back greater amounts in interest.

In an article by Ken Sweet of the Associated Press, the big banks reported how they see the economy and they are preparing for a recession or more people and companies not being able to pay back their loans. The method the banks do this is increasing or decreasing the loan reserves. JPMorgan added $1 billion to loan loss reserves, while Citigroup and Wells Fargo added $400 million. It is noted at the height of the pandemic JPMorgan was putting $10 billion in reserves. If money goes into reserves, it is not lent out into the economy. When reserves come out, the banks invite their clients to use the money.

Jamie Dimon the CEO of JPMorgan describe the current situation as odd, reflecting delinquencies are low and consumer spending remains strong despite the inflationary headwinds. He did predict the extra saving US households socked away during the pandemic would likely be exhausted by mid 2023 if inflation is not under control. (when many gatherings were shut down, people did not spend on hospitality and travel, now they can).

Linking to dividend paying stocks, for your investments it is important to understand the basics of the industry and then you can make decisions. For banking it is loan loss provisions – the bank lends money do people and companies pay the money back. There are other factors but there are some basics for every industry. If you see the basics are covered, then you are going to be okay and do not have to do anything. If the basics are giving headwinds, then there is more research to be done.

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

Markets move in cycles and stocks go up and down are something everyone hears, often in one ear and out the other. We all want the stocks we buy to go up and when they do, we become a Wall Street champ. However, many people do not sell and ride the company they fell in love with all the way down and soon you are the Wall Street chump for not selling. There are multiple reasons why the selling did not occur, for the 2 lessons of cycles and prices go up and down are not hard to understand, it is the execution of those simple words.

In an article by Sinead Carew entitled Pandemic darlings’ stock saga ends in tears is about not selling if you own Peloton and Zoom. Both companies are examples of the catch a wave and on Wall Street if you catch a wave, it is a big wave. Peloton and Zoom were in the perfect place or the right time at the right place. COVID shut down gatherings, but people still needed to exercise and communicate with each other. The stocks soared as they were in a position to expand quickly. Peloton went to $171.09 in early 2021, but times changed, and you can buy Peloton for less than $10. Zoom peaked at $588.84 in October of 2020 now you can buy at around $75. Many people made and lost money on these stocks, hopefully some sold along the way.

Linking to dividend producing stocks, the reasons you want to own the stocks is over the long term the total return of capital appreciation and dividends means your wealth goes up. In the short term all stocks go up and down and the markets go in cycles. Cycles mean during the phases of the economy some stocks do better than others depending on the overall economic outlook. If you own a stock which appreciates rapidly, take some profits, otherwise you will have none. If you own dividend stocks as long as the company is profitable and pays a dividend you do not have to do anything but hold.

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

If you listened to some of the debates during the election, you would have heard some conspiracy theories. Whether it is good or not, the issue is more conspiracy theories pop up but for the corporate world they have to operate on facts, not conspiracy theories. In Europe, whenever something bad happens the Russian and Ukraine conflict is a first on the list of blame.

In an article by Marek Strzelecki and Miranda Murray of Reuters, Germany said it was receiving less oil but still had adequate supplies after Poland found a leak in the Druzhba pipeline that delivers crude from Russia to Europe. Germany believes the leak was an accident rather than sabotage.

Drone footage showed a black stain of oil from the underground pipeline spreading across farmland at the site. The refinery which supplies 90% of Berlin’s fuels said deliveries were taking place but at reduced capacity.

All potential causes of the leak are being considered a spokesman for the Polish security services.

Linking to dividend paying stocks, it used to be when things happened there was time to detail with the issue, but technology and drones allow for instant communications, the reasons will come to the forefront and companies must make a statement. Every company worries if the statement is material or not and what effect the stock price will be. People have ideas and there are plenty of them, but facts are what you invest on, leave the conspiracy theories to politicians.

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

Reading the book, A First-Class Catastrophe – the road to Black Monday by Diana B Henriques published by Henry Holt and Company, NY, 2017 and the book is about regulations, new products and the fight over who should regulate the new products.

When the stock market began it was dominated by individuals and to accommodate the individual requirements, systems were built up. They include timelines such as buying the stock took 5 days to change hands or cash is needed in the account. Throughout the decades for the most part the regulations worked. Over time, the institutions such as mutual funds, pension funds developed and became larger. The funds would have different timelines and demands on the exchange for example if you sold 50 shares in the market, the price would not change but if you begin to add zeroes to 50,000 shares and sold into the market, the price will change. If the systems are not updated to accommodate the big players, the insiders would notice and take advantage of (and they did). The larger players demand transparency and electronic trading. The exchanges need to cope with the changes.

With the rise of the large players, they needed to ensure they are protected from the ups and downs of the stock market and a whole new trading feature is developed – the financial futures. With the growth of the financial futures, it affects the markets because of use of stop loss features. If the stock market goes down, sell off X %, if the stock market goes down further, sell off X %. Who buys when the market goes down has been the big question for it turns out many institutions act like individuals when the market makes large moves upwards and downwards. Behind the scenes the exchanges fought over the regulations, how much regulations are needed and profits to be made with financial futures. The 2 exchanges are the NYSE and the Chicago Mercantile Exchange or the MERC.

One very interesting story on the Merc is the only commodity that does not trade is onions. The story is back in 1955, a farmer Vince Kosuga decided it was a good time to corner the market in onions. He bought onions across the US and hoarded them, he also teamed up with a trader in Chicago to buy futures and then puts to profit on the hoarding and at that time when people bought futures they took delivery of the good. He then flooded the market with the onions and the puts rose in value.

The national regulator of the commodity exchanges is called the Commodity Futures Trading Commission or CFTC and they banned onion trading, and it is still banned.

Linking to dividend paying stocks, when you buy a stock there are rules and regulations behind the scenes and with every rule and regulation, there will be people who want more regulation and people who want less. Within the rules and regulations are new products which meet a demand and similar to the grocery shelf where new products come and go, so do financial products come and go. It is a never-ending story and regulators are some steps behind. When the markets are up, more new products will come to the market, that is when as an investor you like to jump in and make profits, but cycles come to lose the money just as quick, and your objective is try not to lose money.

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

Every successful company builds up goodwill and the larger it becomes the more the government comes to rely on it to be successful. The company knows this, the government knows this and if the company has issues which the government wants solved, the government often directly or openly indirectly help the company. In some industries it is easier to see and in the news is a really good example.

In an article by Dominique Vidalon and Tassilo Hummel of Reuters, in France the union CGT has been striking for more money against the refineries of ExxonMobil and TotalEnergies SK. (the biggest oil company in France is called Total). The walkouts and unplanned maintenance at the refineries had more than 60% of France’s refinery capacity shutdown. This has resulted in gasoline shortages at the gas stations with over 31% of service stations having supply problems.

In France, the unions are large and have considerable sway in the political system. It is not uncommon to see massive demonstrations lead by the unions when they do not like government policy. Esso France has told the press it has offered 6.5% raises and a bonus of $4,022). The union wants 10% pay increases and the bonus. France’s Prime Minister Elisabeth Borne announced the government was prepared to take action if necessary to ensure the refineries produce gasoline and the trucks can distribute the gas throughout the country.

Linking to dividend paying stocks, when companies are successful, they make profits and can pay dividends which is good for shareholders. On the other side of the equation is some workers will feel they are not compensation as well because …. or how the pie is sliced is an issue. With successful companies, management often has the government on its side because of the size and scope of the company operations. This can be good or not so good, depending on the situation but it is the reality. Elections matter for the continuing health of the company.

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

Throughout history there are many examples of countries turning inwards or accepting people not exactly like them, it is the story of immigration policies. The story is reflected in how many see outsiders, how people see the job situation, and a wide variety of other emotions. Often countries seek a balance although weighted towards who is a natural citizen or who people think are natural citizens. Somewhere in the early 1400’s, the most outward country was China and it sent ships around the world, then a new emperor came to power and closed the country for 200 years. The world would be different had a different emperor come to power.

Japan is an island or a country made up of islands and when a country is an island, it can easily or seemingly easily close the borders. For centuries Japan was a relatively closed society, it opened up and then was beaten in WWII (along with Germany) and slowly opened up again in 1980s. When COVID stuck the world, Japan closed its borders and now 2 years afterwards it is slowly opening up.

In an article by James Griffiths of Reuters, people want to visit Japan and when Japan finally eased up its travel restrictions, searches by Hong Kongers for flights to Tokyo and Osaka soared 650 and 1,000% respectively according to travel agencies.

For Americans, going to Japan given the high dollar to yen conversion is relatively inexpensive. Sometimes a high dollar is an advantage.

Prime Minister Fumio Kishida is partly counting on the return of foreign tourists to help boost the economy. The government hopes to attract $34.5 billion in tourist spending over the next 12 months. Government data shows hotel employment down 22% between 2019 and 2021. More tourists equals more employment in the hospitality trades.

The tourists expected to come to Japan will likely coming from Hong Kong, South Korea and Taiwan. The source of 30% of visitors and 40% of total inbound consumption is China, but China still has many restrictions on travel. In 2019 a record 31.8 million tourists visited Japan.

Linking to dividend paying stocks, we all have some notion to be inward or outwards because it can mean no change or little change. It can mean people not respecting the unwritten rules which allow people to gather. There are many variations, but for the company to maintain and grow profits it has to be somewhat open for change, are your investments open?

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