When you think about the economy, what do you think about? If you said manufacturing, tech services, schools, civil servants, you would not be wrong, but the real answer to the US economy is shopping or retail. The economy depends on people buying things – restaurants and shopping or going out to buy something. The biggest retailers in the US are some of the biggest retailers in the world and they employ many people. The most important season in the shopping season is from Black Friday to New Year’s including Christmas and Boxing Day. If the retailers do not make their money in that season, they will not make their money in the winter months of cold. One method to gauge how the season is expected is to examine hiring expectations.

In an article by Siddharth Cavale and Uday Sampath Kumar of Reuters, the people at Reuters asked the large retailers about their hiring expectations. Walmart wishes to hire 40,000 people with 91% in the stores and 9% for the warehouses. Last year, Walmart hired 150,000 new workers with many of them full time status.

Party City is gearing up for Halloween with 20,000 seasonal staff as gatherings are expected to increase from the last few years.

Michaels Companies is expecting to hire 20,000 people, all in store.

Bain and Co expects holiday spending to be $915 billion up 7.5% from last year. To meet the demands the retail sector will add 680,000 workers compared with 700,000 last year.

Linking to dividend paying stocks, when you buy a stock you have expectations the past will repeat itself and the future will continue to be good. There are many methods to access what the future will bring and hiring expectations is one of them. How does your investments handle the busy quarter they have?

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

There is always one in the group which tends to underperform even though it has some wonderful assets. In the world of global banking, the underperforming bank for the moment is Credit Suisse which is one of the largest banks in Europe and one of Switzerland’s global systemically important banks. On the strength of the last two characteristics, investors could easily analyze the bank and determine it to be a buy and hold situation.

In an article from Reuters there is a however, the bank has been hit by a string of troubles. It had to raise capital, halt share buybacks, cut its dividend and revamp management after losing $5 billion from the Archegos collapse and failed financer Greensill. The good news is both Swiss regulator FINMA and the Bank of England in London where Credit Suisse has major operations, have noted there are no major recent developments in bad credit.

In the banking world, there is always a bank which either wants to be a leading bank or lends too much money to a group that when markets turn or cycles turn down, they move from profits to write downs.

Linking to dividend paying stocks, often investing in a bank is similar to investing in a utility because they are large enough in size the government seems to have their backs, if write downs are too much. If you can avoid owning the bank shares and not losing your money the other banks perform similar to utilities. Not every company in the sector is the same, there are differences and even though the business model is simple for banks – lend or give credit and receive interest and your money back, sometimes the lenders forget about receiving the money back, they love booking the loans and receiving a few interest payments for their bonus payments. Ask how are bonuses received when a lender misses payments?

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

All companies operate on a cycle and if they are in the retail environment, they will have special days or special items which encourages shoppers to go the stores. You can easily think about Prime days with Amazon, Black Fridays for Christmas season specials and a host of other items. Many companies have or market items for a particular holiday and over the years the holiday is linked to the retail item.

In an article by Michael Levenson of the New York Times News Service, around Easter you will see advertisements for chocolate bunnies. The premium chocolate bunny is made by Lindt, a Swiss chocolatier. The bunny comes in a gold foil with a red ribbon and Lindt spends a great deal of money to encourage people to upgrade and buy their bunny.

Success brings copies or similar looking items and in Germany, the discount chain Lidl stocks bunnies in a gold foil to sell chocolate bunnies. The Lindt people did not like the copying of their bunnies and went to the Swiss Federal Supreme Court to make their case. The Court agreed with Lindt and told the German company to destroy the chocolate bunnies in stock, which Lidl responded we do have any because it is a seasonal item.

Lindt sells over 160 million gold bunnies a year and other companies including Godiva, noted they try to ensure the chocolate bunnies do not look like the Lindt bunnies. The Lidl bunnies had a yellow or green ribbon rather than the red one. Lindt is a global manufacturer of chocolates and has many lawyers protecting what it believes are its trademarks.

Linking to dividend paying stocks, all successful companies have teams of lawyers to ensure the brand they sell is not copied by everyone else. Lawsuits are normal part of operations and if they are not suing, there is something wrong. Individually you are not likely to be regularly sued, but successful companies are and how well they protect their trademarks is important to understand.

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

We all live in a particular region and once you are established the normal reaction is to use the local goods and services and begin to believe they have your best interests at heart. If you live in the New York City area, one of your suppliers is Con Edison. The Edison part of the name is from Thomas Edison who invented the light bulb. Companies in the utilities business will use whatever power source which is less expensive over the long run. All methods to generate electricity have high capital costs (which helps keeps competitors away) but once the building is in operation the costs to operate fall drastically. Examples are hydro plant on a river, a nuclear plant, building solar and wind facilities. In terms of coal plants once they became expensive, companies switched to oil, then natural gas.

Con Edison had a large green energy power generation aspect to their business, including highlights on the webpage. In an article by Christopher Steitz and Tomas Escritt of Reuters, Con Edison has decided to sell the division to Germany’s largest power producer. The deal is for $6.8 billion and will vault RWE from solar being 3% of their US portfolio to 40% and become the 4th largest renewable player in the US behind NextEra.

RWE is financing its purchase through a $2.43 bullion convertible bond with Qatar Investment Authority (QIA) eventually allowing QIA to become a 9.1% shareholder in RWE. QIA is a major shareholder in VW, Deutsche Bank and Porsche.

Con Edison was going to issue $850 million in new shares this year, but that is off the table.

Linking to dividend paying stocks, the business model is what is important when you buy or consider buying into utilities. The high capital costs limits competitors and with a regulatory monopoly, the company can generate electricity for years to come and make a profit to pay for dividends. Oil rich investment companies such as QIA understand they may derive their profits from the oil industry, but they need diversification into renewables or utility like companies. It is good for the average investor too.

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

In mid September, the Prime Minister of the United Kingdom changed from Boris Johnson to Liz Truss. The new Prime Minister decided to make a change on taxation and to show she was in charge of the economy. It is normal for new leaders to put their stamp on the administration for they will have both talking points and signs of change for the better in the house of public opinion.

Prime Minister Truss’ plans including cutting taxation and increasing public borrowing. In normal times the markets may have rolled their eyes and continued with the normal business. However in the past few years because of the pandemic, governments around the world including the one in Britain have borrowed massive amounts of money (for reasonable reasons) but financial markets are more interested in how debt will go down. The result of the plan or mini budget was the borrowing costs went up.

In the world of pension funds over many years derivatives have built up to try to protect the pension funds from losing money no matter how the markets perform. One of the methods to protect the total fund is liability-driven investments (LDI) which is a hedging type of strategy.

In an article by Carolyn Cohn, Tommy Wilkes, and Carolina Mandl of Reuters, the LDI market has grown and has $2,47 trillion – which is more than 2/3’s the size of the British economy. The issue is because of higher borrowing costs, the government bonds or gilts needed to be sold to meet margin calls as the LDIs positions needed collateral or where underwater derivative positions where the value is less than on a fund’s books.

The Bank of England (BoE) stepped into the market with about $100 billion to buy long term gilts or government bonds. The central bank pledge to do whatever it took to bring financial stability. The financial markets achieved a level of stability and margin calls stopped for the pension fund industry.

Britain’s central bank is now in the unenviable position of having postponed its plans to sell bonds, resulting in monetary loosening, and at the same time tightening it with higher interest rates.

Orla Garvey, a fixed income manager at Federated Hermes, noted this leaves the long gilts vulnerable.

Linking to dividend paying stocks, all politicians can do what they feel is necessary and investors will react, if they react negatively, they will quickly raise cash in their portfolios. If they do nothing, then the politicians have managed to do it right. Over the course of the pandemic, we have seen governments use the central bankers in a more proactive manner and that is both good and bad. For every organization, eventually debt has to be paid, however sometimes emergencies happen. Ideally as in the case of Britain, the Prime Minister has taken some of the measures of the budget off from being implemented and believes in stability of financial markets. When this happens the financial markets of investors rule and the future outlook is better.

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

Everyone on Wall Street has a system, sometimes it works sometimes it does not. However, if it works more than somebody else money moves into that space till it does not work that often. One system that everyone believes works is access to inside information that is material to the company. Depending on what the company does, as an individual you can watch companies in their daily actions if their strategic plans are working or not working, but to move the stock something has to be called material. Most people believe members of Congress who have many closed-door meetings with company CEOs and then can trade stocks on the information have information that could be material.

In an article by Larry MacDonald, 2 new etfs going through the regulatory bodies would track the stock picks of US Congress members and their families. The funds would be called Unusual Whales Subversive Democratic Trading ETF and the Unusual Whales Subversive Republican Trading ETF.

There are subscription websites including capitaltrades.com, housestockwatcher.com.

We also know as campaigns become more expensive every year, the people who are running are wealthier every year which means many have stock portfolios. One Georgia Senator spent about a hour of his day monitoring his portfolio.

Congress members have to report their trading every 45 days, but failure to do so has a token penalty.

In a book, one of the more successful Senators in the 50’s used to give shares to ensure votes. That should not be allowed now, do not know if it is.

There is a bill before the Congress to ban stock trading and ensure members of Congress either use blind trusts or buy mutual funds or ETFs, which would seem much more reasonable that the system which exists.

Linking to dividend paying stocks, every once there is a new system to beat the market and we all want to beat the market and become wealthier. Unfortunately, the best method is to use the power of compound interest over the long term and your will be wealthier. Dividends and capital appreciation work well as a tried-and-true system.

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

In late September, the CEOs of the 6 largest banks in the US went before a Senate committee and because they see and are at the top of the biggest credit giving companies or banking giants, what they say is important. We often believe that CEOs will tend not to details at what happens at the branch level, because they are concerned with the macro picture and allocation of resources. For example, the CEOs were asked lending to areas of the country where redlining occurred in the past, most of them used, we allocated hundreds of millions of dollars for banking products. The Senators asked non macro questions and the answer as expected was we will get back to you. However, it was good to hear what the bankers said.

A Republican Senator asked given owning a stock gives voting rights, and many people have indirect holdings (ie through a mutual fund or elf, institutions vote for the shareholders). Some of the institutions have been asking for companies’ desire to work for climate change. The Republican Senator asked if this was “woke” and if something some should be done against it? Similar to most CEOs they like to have many options on the table and half agreed.

In an article by Victoria Klesty of Reuters, the largest wealth fund in the world, Norway’s $1.2 trillion fund or it owns roughly 1.3% of the world’s stocks particularly large capitalization ones. The fund said it would push companies it invests it to cut their greenhouse emissions to net zero by 2050 in line with the Paris Agreement.

The Norway wealth fund invests money from the oil and gas reserves in the North Sea, under the new plan, the fund will prioritize dialogue with the 174 companies that are the biggest emitters of greenhouse gases and account for 70% of the fund’s emissions via its shareholdings.

According to fund CEO Nicolai Tangen, the fund owns holdings in 9.300 companies and the fund will be doing frequent follow-ups to ensure the companies are doing what they said they will do. The easiest way to deal with the problems is to sell the shares, but the fund wishes to work with the list and would not release the list. (one can expect that from a fund that invests in revenues from oil and gas, some of the companies are in similar industries).

As of mid-September, 10% of the companies in fund’s portfolio had credible plans representing 38% of the value of the fund. (Some of those companies are big tech).

Linking to dividend paying stocks, most investors vote with management when they vote their shares, it is relatively easy to do (the proxy vote is easy to use) and as shareholders as long as the company is making profits which translates to dividends, they are fulfilling their prime objective. It is good to ask questions of management for management does prepare for the meetings and they hope a few will be asked. When stockholders demand companies do something, they do it by the ballot box and when management does not receive over 90% of the votes (sometimes closer to 100%) they need to pay attention.

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

When the stock market goes up everyone wants to have money in the stock market, when the market goes down, what to do? Values have declined are they better to buy now or hold cash? Cash does not go down, but if inflation is running well above interest rates from banks, what should you do?

In an article by Lewis Krauskopf of Reuters, that’s made cash more attractive hideout for investors seeking shelter from market gyrations.

Fund managers increased their cash balances to 6.1% in September, the highest level in more that 2 decades a survey from BofA Global Research showed.

Assets in money market funds are $4.44 trillion not far from their peak of $4.67 trillion in May of 2020 according to Refinitiv Lipper.

Paul Note of Kingsview Investment Management said the portfolios he manages has 10 to 15% cash as opposed to the normal less than 5%.

The Crane 100 Money Fund Index, an average of the 100 largest taxable money market funds has an average yield of 2.8% up from 0.02% at the start of the year and the highest level since June 2019.

Linking to dividend paying stocks, as individual investors often you wonder if you had institutional type money what would you be doing? It turns out the same as individual. As an individual you can have a long-term holding as your total return of capital appreciation and dividends helps makes you wealthy.

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

Most people when they go to the supermarket tend to buy bananas because they are good for you and the price tends to be low. For a number of years, bananas were considered by the supermarkets as a loss leader, or the company kept the price low for people to buy as they saved money on that purchase, perhaps they would not notice they were paying more for other products. There is a science and an art to supermarket pricing for consumers will remember the prices of items they pick up frequently. Supermarkets have teams of people dedicated to where every product goes, in the supermarket world they are called plan-a-grams.

Bananas have a long history since they were brought to America in the 1870’s and evolved to United Fruit which gave the term banana republics to the countries where they are grown. United Fruit paid dividends for decades however it was broken up by the Federal Government and now the big 3 are Dole, Del Monte and Chiquita-Fyffes which control over 80% of the banana sales.

In an article by Matt Lundy, one of the reasons many people buy bananas is they perish within a few weeks of harvest. Most of us eat the type called the Cavendish. The bananas are grown in Latin America, but Ecuador in South America has emerged as the world’s largest exporter according to the Food and Agriculture Organization of the United Nations. The banana is a tropical fruit but grow year around meaning you can buy them anytime you go to the supermarket.

Decades ago, as producers were vying for market share, they started offering longer contracts to their buyers. Now, most of North America supply is sold under rolling one-year contracts, with a fixed price per box. (Bananas come in a box to ensure the bananas are not bruised and can be sold as premium. Even though the Big 3 control 80% of the market, the smaller producers would and do offer lower prices which the supermarkets are very good at ensuring the buyers keep the suppliers fighting one another for sales.

At the moment there is a glut of supply or oversupply, however with bananas having no seasonal variation in consumption, producers have little leverage to push up prices. There are signs of a shift, not much, but signs when Johan Linden, the chief operating officer of Dole told analysts that demand for bananas was increasing. Shoppers are cutting back on other fruits and buying more bananas as they are inexpensive. Can prices rise as costs to producers rise?

Linking to dividend paying stocks, from 1900 to the 1940’s, United Fruit was a stock to be held in a dividend portfolio. Companies that deal in commodities try to keep production costs low and margins healthy and if that happens profits are declared, and dividends paid. Everyone knows some prices of something, often times in the supermarket it is the banana. We look at the price and project it to the rest of the company and that can be a good thing. It is important to do other homework before investing but knowing a price can be a great starting point.

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