1. Exchange Rates and The Value of Dividends Paid by a Foreign Company: Last year, I bought and sold FXC, the ETF for the Canadian Dollar. I have not re-initiated that position due to my larger than normal position in dividend paying Canadian companies. As the value of the Canadian dollar rises against the U.S. dollar, the value of those dividend paid in Canadian currencies rises for a U.S. citizen, as those payments buy more U.S. dollars when converted from the stronger Canadian currency to the weaker dollar. So ownership of dividend paying Canadian companies already exposes me to the potential benefits and detriments of the Canadian currency. I did the following calculation, based on the currency calculator at YF, to illustrate this point. I assumed the investor owns 2000 shares of a Canadian stock that pays 30 Canadian cents per share before the 15% withholding tax. This would yield as of yesterday around $.2895 U.S. for 30 cents Canadian or $579 for those 2000 shares. On March 9th, the Canadian dollar was weaker against the U.S. dollar and that 30 cent Canadian dividend would have bought only $.2315 U.S . The same dividend would have then been worth $463. I will buy foreign dividend stocks in a taxable account due to the foreign tax credit issue.
2. Intel (owned): Intel reported impressive numbers for the third quarter, handily beating the consensus estimates for revenues, earnings and margins. Intel earned 33 cents on 9.4 million in revenues. Gross margin was 57.6%. For the fourth quarter, Intel is currently estimated revenue at 10.1 billion, plus or minus 400 million and a gross margin of 62%. The consensus according to YF before today for the 4th quarter was revenues at 9.51 billion.
While the 3rd quarter beat the consensus forecast of 28 cents in earnings, earnings and revenue did decline from the comparable quarter last year when Intel earned 35 cents on revenues of 10.217 billion.
Recently, I have been listening to a number of analysts who were bearish on Intel, many of whom have appeared on Fast Money CNBC.com. When I re-entered my Intel position at $14.46 and $15.25 , Barron's was featuring a money manager who called Intel his favorite short. Dynamic Asset Allocation Trumping Trading Rules Bought 50 PYT/ Eric Savitz on Intel It is far better to make up your own mind. The knuckleheads who find a natural home in the financial industry would have had the individual investor on the sidelines with Intel at $14, when simple common sense would have led most people to understand that $14 or $15 was a good entry point for a long term position or even a shorter term trade spanning a few months. Hopefully, those who witnessed the real financial acumen of the Wall Street "wizards" and Masters of Disaster, financial gurus and money mangers over the past few years would now realize that there is no connection, and never has been, between good judgment, ability, and compensation levels. I have managed my own money for my entire life, and that is not about to change as long as I have a few functioning brain cells.
3. Bernstein on Zions and Huntington Banks: I noted yesterday that Bernstein initiated coverage of Zions with an outperform rating. I was also encouraged after I read a Morgan Stanley report on ZION dated October 2nd, where the analyst called it one of "our highest conviction Overweight-rated stocks" . I do not own any common shares. I do own ZBPRA, ZBPRB and ZBPRC, and I have been contemplating buying a few more shares of the series C preferred stock. I was going to wait until I had a chance to review the 3rd quarter earnings report from Zions. Bernstein also started Huntington Bank as a market perform. I own just 50 shares, recently purchased, in my Lottery Ticket category. Proctor Upgrade/Bought 50 Huntington Bank as Lottery Ticket/Sold 50 ISF at $14.65 and Bought 50 AEF at $16.82/ Pared JZH by Selling 50 at $20.2
4. ING and SCEDN: Response to Reader's Email: I was asked a question by a reader about whether I was considering buying an ING hybrid at the moment, and also asking about the three negative factors that I mentioned in connection with the floating rate, non-cumulative perpetual preferred stock SCEDN. I thought that it would be helpful to copy my email response:
6. J PMorgan Chase (own junior bond in TC form only-GJN, BUY 50 GJN/ ): The report from JPM this morning is probably more important than the one from Intel last night for the market to maintain its upward momentum. JPM beat the forecast of $.52 by earning 3.6 billion or $.82. Tier 1 capital increased to 101 billion. The Tier 1 common ratio stood at 9.2% and the Tier 1 capital ratio at 10.2% as of 9/30. Return on equity was listed at 23%. JPM added 2 billion to consumer credit reserves, bringing the firm wide total to 31.5 billion.