Covanta's debt was downgraded by Moody's on Friday and that seems to be having an effect on the stock.  The report basically echoes the challenges that I've outlined in advance of Dublin ramping up and while power and metal markets remain challenging.  There's a good argument to be made that power will remain that way in perpetuity, but I think this risk is already starting to be reflected in Covanta's spot tip fees and that its municipal contracts will adjust naturally over time.  If the status quo for both remains throughout the year, a 2018 dividend increase will probably be off the table, but Covanta's initiatives in metal and ash processing still make for a good long-term outlook. 

Getting back to the credit downgrade, the situation does need monitoring, but that's just what I've been doing.  I think the quantifiable risk to the dividend equates to the risk of (widespread?) municipal defaults from Covanta's customers.  The company's concentration in the northeastern U.S. probably bodes well in such an analysis and if there were widespread municipal defaults, we might reasonably expect insurance compensation and/or federal backing.  I may ask management for some information of that sort, but I see no reason to wait on a response with CVA going ex-dividend tomorrow.

For the longer term, INTC is finally moving back toward levels where I'm willing to begin paying it some attention again.  Intel is about to see some very credible competition from AMD in PC and server markets, and this will certainly eat into margins for some single-digit number of quarters.   This was inevitable as limits to silicon-based processor manufacturing slow the continuation of Moore's Law, and the very reason why I was not willing to chase INTC into the mid thirties.  We will have wait for Skylake processors using Intel's mesh memory access to hit the market to see how well Epyc and Infinity Fabric really compete, but further erosion in INTC is certainly possible.  For those who want to dive into all the tech detail, Ars Technica has the best writeup that I've seen.  I think time is certainly better spent that way than in reading message boards, or trade rags, but to each their own. 

In any case, my executive summary is that there is no on-size-fits-all here and that old processors will often be good enough in both server and PC markets, as buyers right-size for their processing needs and power contstraints.  Furthermore, as a programmer, I can say that using the newer processors efficiently will require non-trivial configuration expertise, and in some cases even new software.  The big cloud shops will go to those lengths, but not everyone will.  Thus while some see opportunity for AMD, and it could appreciate much further under the right circumstances, I prefer to wait and see how much (or little) increased market share translates to profits, which have been a historical problem for the company.  The stock has significant shorted float (16%) but no rebate rate to speak of.  It is also being inflated by crypto-currency mining efforts, which are NOT a sustainable catalyst.

Instead, I prefer to focus on the big picture, and a future where new classes of devices more closely integrate small-scale but ubiquitous distributed processing with integrated 3D-XPoint memory and sensors.  This is the future that I see Intel and society clearly moving towards.  It will take several years to play out, but I know of no other company that is so well positioned.  The first INTC OMIB in recent memory lends some confidence in this perspective.

Careful investors may wish to wait to see the impact of competition play out.  I'll be surprised if INTC drops as low as the $27.50 price where I first added it to the pick list.  However, it remains to be seen how things will play out, and a return to interim levels that I've cited is certainly possible.  Even so, more aggressive investors might want to start shading into INTC and hedging in advance of the next dividend, in early August. 

Esekla
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