BECKLEY— Today’s news has been rather rough. I expect this will go on for some time until it get’s worse. As many companies have made adjustments for this market the “financial” news may not be as bad. The average person on main street still has to contend with the following:
Applications fell by 21,000 to 530,000 in the week ended Sept. 19, from a revised 551,000 the week before, Labor Department data showed today in Washington.
This continues the “good news” trend of only half a million people loosing their jobs each and every month (Why it’s “good news” don’t ask me!). But we also this month have the following added problem:
Resales of U.S. homes dropped 2.7% in August to a seasonally adjusted annual rate of 5.10 million.
Along with the rapid printing of money that has been accompanied by all this and the wasteful government spending it won’t be long until one sees signs of inflation from all this governmental forced inflation to hold deflation at bay. What to do? I have an idea! As our dollars get worth less why not invest in a company who benefits from that slide. For example, a company that has financial statements that read like the following:
Our reported results could be adversely affected by currency exchange rates and currency devaluations could impair our competitiveness.
We conduct our business primarily in local currency and, for purposes of financial reporting, the local currency results are translated into U.S. dollars based on average exchange rates prevailing during a reporting period. During times of a strengthening U.S. dollar, our reported net revenues and operating income will be reduced because the local currency will translate into fewer U.S. dollars. During periods of local economic crises, foreign currencies may be devalued significantly against the U.S. dollar, reducing our margins. Actions to recover margins may result in lower volume and a weaker competitive position.
— Management Discussion in Latest Financial Statements
It seems like they might be thinking the same thing as they have just increased their dividend, which I like as a holder of their stock. One of my concerns though is the following:
The repatriation of our foreign earnings and change in the earnings mix may increase our effective tax rate. Because we are a U.S. holding company, our most significant source of funds will be distributions from our non-U.S. subsidiaries. These distributions may result in a residual U.S. tax cost. It may be advantageous to us in certain circumstances to significantly increase the amount of such distributions, which could result in a material increase in our overall tax rate in the years such distributions take place.
—Philip Morris International’s Financial Statement Management Notes
Personally, I think it might not be a bad decisions for Philip Morris International to seek a change in corporate headquarters to a country that is more favorable in their tax treatment as America isn’t the freedom loving, no tax without representation, capitalist ideal it once was. I just don’t see the benefit in their $500 million they pay in U.S. taxes as they are just a holding company for what is basically all foreign operations. Perhaps, this is one of the reasons Altria spun them off and something I wouldn’t be surprised to learn is already being discussed in board meetings. I could use another solid boost in the stocks value and that $500 million in taxes could go straight to dividends in my Roth IRA where the government will never see a penny of it and for which I can then use to the actual benefit of myself and my family!
On a side note PM has more debt then I usually like at $11 billion. However, with $6 billion in earnings and $7 billion in positive cash flow I can live with the debt. Especially since last year they repurchased $6 billion of their own stock. They’re going to do the same this year (i.e. it is a two year repurchase plan) although I don’t know how much it will be. That in addition to their acquisitions (rights to sell Chesterfields in Hong Kong) I can live with going outside my no debt rule. As for competitive advantage it’s Marlboro cigarettes and as a former smoker I know there isn’t a much better competitive advantage than that in the market place.
CORRECTION: The $7 billion in cash flow was an error. It’s $7 billion in “operating cash flow” which to me is more important then their investing and financing cash flows as those are easier to manipulate financially. Although for disclosure purposes their net cash flow was $30 million obviously balanced by well managed (IMHO) investing and financing activities.
TennesseePaul
Stephen VanNuys
Brooklyn Daniel
The Freedom Thinker
So whatever happened to the economic relief promised if Congress only rushed through trillions of dollars in “stimulus” money, bailouts to major corporations and banks, funds for auto buyers, etc.? Wasn’t all of this supposed to put America back to work?
Perhaps if I wasn’t such a self-centered, racist wingnut of the right I might be able to discern the benefits of all of the hard work that our President has put in on my behalf.
I can agree with what you are saying. I would expect that if someone’s hand is in my pocket every month taking what they want, I would expect and hope that they will at least give me an opportunity to profit from it.
Although, living on hand out’s is not how the rich become rich. Every stimulus package comes with it’s own opportunity. Companies that recieve investment, sectors that recieve research funding, and it’s up to us to see the opportunity and then position ourselves.
By study of the Elliot Wave, the economy is about to head south. It’s up to you to see how you can profit from it. Empty high street offices? What can you sell that will still be bought? Major indices dropping? Open a spread betting account and make money on the way the down.
I’m trying to take action to position myself. Even left a job as a consultant at IBM. Now is the time.Create Your Future!
It’s ultimately up to us. Take action, not tomorrow, but today!
[...] September 25, 2009 by The Freedom Thinker BECKLEY—Debt plus China’s drive for power (an excellent article by the way) equals the dollars inevitable downfall. [...]
are you serious?
Yes, I was serious!
I’ve actually had about 10% of my portfolio here over the last year and have enjoyed the 4%+ dividend yield! While watching the stock appreciate by 10%+.
I think this stock has only started it’s rise real inflation is only at 8.5% now wait tell inflation kicks into high gear and this stock is going to sing and dance in my opinion.
Think you must connect the dots. “Debt” probably means the production of “Monopoly” money to cover debt expense. Causing deflation in the Dollar.
That Monopoly money is also going to those countries that the States borrowed from. We know China has the largest reserve of US Dollars in the world. Can’t remember exactly, but think it was to the tune of 3 trillion dollars! Not only is china making money from the US at the moment in the form of debt expense. It also has a vital commodity to the US market. Cheap goods! China grows in strength, US weakens.
[...] takes claim for potentially creating or saving 640,000+ jobs. This is almost as many jobs as were lost in August. So, 158 billion and Obama has maybe slowed things for one full month! Those are expensive [...]
[...] capital of the world. The solution I think is international stocks such as companies like Phillip Morris International that are diversified out of the dollar and will perform well and even better with inflation are [...]
[...] 15, 2010 by The Freedom Thinker BECKLEY — I read some great financial news as one of my core stocks reported their results last week. In the face of the horrible economic conditions in the market [...]
[...] is one to do? A year ago the American Missive had a recommendation on how to beat the oncoming inflation. If the Missive’s idea was researched and one followed that research to it’s own [...]
[...] published investment recommendation was on 9/24/2009. These recommendations were published at the American Missive. I recommended Philip Morris International. This is the first recommended investment and it [...]