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Income Advisor
Conservative investing. Double-digit income.

December 5, 2023

The market had a great November. But the rally petered out.

Wall Street always overdoes it. It took the good news about peak interest rates to another level and started pricing in Fed rate cuts early next year. The market pulled back on Monday because the Fed dismissed that notion.

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Things Are Good, but Not That Good

The market had a great November. But the rally petered out.

Wall Street always overdoes it. It took the good news about peak interest rates to another level and started pricing in Fed rate cuts early next year. The market pulled back on Monday because the Fed dismissed that notion.

I always thought the rate cut thing was a pipedream. It’s not the first time in this cycle that Wall Street priced rate cuts into the market, only to have to price them out again later. The fact is that the Fed is going to be a lot stingier with rate cuts this time around than in past cycles because of inflation.

Sure, if the economy stumbles toward recession or close to it next year, the Fed will probably cut rates. But the sour economy would likely more than offset the benefit of rate cuts to stock prices, And the market seems to be pricing in rate cuts even with a soft landing. That won’t happen.

Inflation is historically a very sticky problem. It tends to come roaring back if you take your foot off its neck too soon. That’s what happened several times in the 1970s when the Fed eased too early. The Fed is aware of this and doesn’t want this inflation to be a problem for the rest of the decade, especially since the problem is partly of their own making.

The market is still good, but it’s not that good. The likelihood that rates have peaked, and the still-solid economy are huge benefits. The problem of rising inflation and interest rates that had pulled this market down is largely gone. That’s still a benefit even if the Fed doesn’t cut interest rates next year.

The bountiful November has presented an excellent opportunity to sell covered calls while stocks are near the highs. Recent calls sold on Intel (INTC) and Digital Realty Trust (DLR) should prove timely.

Past Month Activity

November 22nd
SOLD DLR January 19th $135 calls at $6.00

November 28th
SOLD Tractor Supply Company (TSCO) - $199.92

November 29th
SOLD INTC January 19th $42.50 calls at $3.50

December 5th
NextEra Energy, Inc. (NEE) - Rating change “HOLD” to “BUY”

Portfolio Recap

AbbVie Inc. (ABBV)
Yield: 4.3%
The biopharmaceutical company had a nice pop, up over 5% in the last few days. The stock is up because AbbVie announced it is buying biotech company ImmunoGen (IMGN) for $10.1 billion in cash in a deal slated to close early next year. ImmunoGen is a cancer therapy specialist that fits nicely with AbbVie’s pipeline. AbbVie is paying double the current share price, but the market expects the acquisition to give AbbVie a further leg up with its already robust pipeline.

Its two new biosimilar drugs Rinvoq and Skyrizi grew sales over 50% in the last quarter and the company expects these drugs alone to eventually surpass Humira’s peak sales. The stock sells at a low valuation and investors sense that it might turn the Humira corner sooner ahead of a very bright future. The stock may seem like it’s dead money but once we get through this year, things can improve dramatically. BUY

Digital Realty Trust (DLR)
Yield: 3.5%
This data center REIT just made another new high last Friday. Despite the fact that REITS have been terrible this year, DLR has now returned over 40% YTD. It looks like REITs have bottomed out and are on their way higher as interest rates have likely peaked. Digital also has the additional catalyst of increasing AI spending and is getting a boost from the AI craze. DLR tends to pull back after a surge higher and the calls were sold when it hit a new high. HOLD

Intel Corp, (INTC)
Yield: 1.1%
As expected, INTC is pulling back after the recent surge. The chip maker recently hit a 17-month high and was up over 27% in a month and about 70% YTD. Earnings indicate that Intel’s turnaround is well on track. It has promising new chips coming out in high-growth areas and its foundry business could be huge. The stock got dirt cheap, and investors are increasingly willing to bet on the company’s future. I believe in the company’s future. But the stock is likely to take a breather. That’s why calls were targeted near the high. BUY

Marathon Petroleum Corp, (MPC)
Yield: 2.2%
This newly added oil refiner has blown away the performance of its peers and the overall market for several years. Even though the energy sector is negative YTD, MPC has managed a better than 32% return. While the environment can vary from quarter to quarter, it should remain an overall profitable environment for refiners over the next several years. It’s good to have something in the portfolio that benefits in case the economy continues to be stronger than expected. BUY

Rating change “HOLD” to “BUY”

NextEra Energy, Inc. (NEE)
Yield: 3.2%
NEE has been bouncing around. But the stock is still in a strong uptrend that began in early October and it’s up over 25% from the 52-week low. The clean energy utility delivered solid earnings and management reiterated previous growth projections and said the company expects to deliver earnings near the top of the expected range through 2026. This stock is still very oversold, especially considering interest rates have likely peaked. The stock has likely bottomed out and is now in a positive trend. BUY

Realty Income Corp. (O)
Yield: 5.5%
This has been one of the longest periods of sustained lousy performance for this legendary income REIT in a long time. But the future prognosis should be a whole lot better. O sells at one of the cheapest valuations ever. Peak interest rates should be a huge benefit for the REIT sector that could prompt a sustained rally. And its retail staple properties, and new data center acquisitions, should produce reliable revenue in just about any economy. The legendary income REIT has made a convincing 22% move off the bottom. BUY

Qualcomm Corp. (QCOM)
Yield: 2.5%
The struggling chipmaker stock got a 27% bump in a little over a month. While the overall tech sector rallied on falling interest rates, Qualcomm was also helped by the earnings report. Qualcomm is introducing new AI chips for PCs and smartphones that could be big sellers next year. Also, strong smartphone sales in China are indicating that phone sales have already bottomed. QCOM is still lagging the overall tech sector this year as it doesn’t benefit as immediately from AI as some other companies, and it is still working through a lull in smartphone demand. It’s looking like 2024 could be a profitable year. BUY

The Williams Companies, Inc. (WMB)
Yield: 4.9%
The natural gas pipeline company reported strong earnings growth earlier this month. And it is now within pennies of the 52-week high. It also delivered good news in terms of acquisitions and expansions. It pays a well-supported 4.9% yield (with 2.38 times cash flow coverage) in a business with steady demand even in tough times. Its recent acquisitions and expansions ensure more solid growth going forward all the way out to 2028. This should be a solid holding in any environment. BUY

Xcel Energy Inc. (XEL)
Yield: 3.4%
This clean energy utility stock has been trending higher since the beginning of last month. The low may be in. XEL had a convincing 13% move off the low. But, like NEE, XEL came under pressure last week as analysts expressed concern about the solar energy business amid the current high interest rates. But this is one of the best utility stocks to own and the recent debauchery may prove to be very temporary. XEL still sells near the lowest levels of the past several years and now has positive momentum. BUY

Existing Call Trades

Sell DLR January 19th $135 calls at $6.00 or better

Both technology and REITs have been strong performers over the last month. DLR has certainly benefited and hit a new high last Friday. But the stock may be peaking in the near term, and the current price offers a window in which to lock in a high income from call premiums. The current call price is more than the $6 target price. It’s a good time to sell these calls if you haven’t done so already.

Sell INTC January 19th $42.50 calls at $3.50 or better

It took a while, but the target call price was reached last week. INTC had pulled back a little after the calls were targeted. But the order was left because it would likely take just one good day for the stock to reach the targeted price, which is exactly what happened last Wednesday. The future looks bright but there is a good chance the stock got ahead of itself in the near term. We got a huge income from the premium while the stock was riding high.


Open RecommendationsTicker SymbolEntry DateEntry PriceRecent PriceBuy at or Under PriceYieldTotal Return
Qualcomm Inc. QCOM5/5/21$134.65$129.67$130.002.47%2.34%
Intel CorporationINTC7/27/22$40.18$43.74$35.001.14%14.04%
The Williams Companies WMB8/24/22$35.58$37.28$38.004.80%12.29%
NextEra Energy, Inc.NEE4/25/23$77.50$59.17NA3.16%-22.33%
Realty Income Corp. O6/27/23$60.19$54.60$62.005.63%-6.69%
Digital Realty TrustDLR7/18/23$117.31$138.61$125.003.52%19.28%
AbbVie Inc.ABBV7/25/23$141.63$143.41$150.004.32%2.27%
Xcel Energy Inc.XEL8/22/23$57.95$61.43$65.003.39%6.94%
Marathon Petroleum Corp.MPC10/24/23$149.45$151.42$155.002.18%2.44%

Existing Call Trades

Open RecommendationsTicker SymbolIntial ActionEntry DateEntry PriceRecent Price Sell To Price or betterTotal Return
DLR Jan 19th $135 callDLR240119C00130000Sell 11/22/23$6.00$6.68$6.005.11%
INTC Jan 19th $42.50 callINTC240119C00042500Sell11/29/23$3.50$2.71$3.508.71%
as of close on 12/01/2023


xTicker Symbol ActionEntry DateEntry PriceSale DateSale PriceTotal Return
Innovative Industrial Props.IIPRCalled6/2/20$87.829/18/20$100.0015.08%
U.S. BancorpUSBCalled 7/22/20$36.269/18/20$383.42%
Brookfield Infras. Ptnrs.BIPCalled6/24/20$41.9210/16/20$458.49%
Starbucks Corp.SBUXCalled8/26/20$82.4110/16/20$886.18%
Visa CorporationVCalled 9/22/20$200.5611/20/20$2000.00%
AbbVie Inc.ABBVCalled6/2/20$91.0412/31/20$10012.43%
Enterprise Prod. Prtnrs.EPDCalled6/24/20$18.141/15/21$2015.16%
Altria GroupMOCalled 6/2/20$39.661/15/21$407.31%
U.S. BancorpUSBCalled 11/25/20$44.681/15/21$451.66%
B&G Foods Inc,BGSCalled10/28/20$26.792/19/21$284.42%
Valero Energy Inc.VLOCalled8/26/20$53.703/26/21$6011.73%
Chevron Corp.CVXCalled12/23/20$85.694/1/21$9612.95%
KKR & Co.KKRCalled3/24/21$47.986/18/21$5514.92%
Digital Realty TrustDLRCalled1/27/21$149.177/16/21$1555.50%
NextEra Energy, Inc.NEECalled2/24/21$73.769/17/21$8010.00%
Brookfield Infras. Ptnrs.BIPCalled1/13/21$50.6310/15/21$5511.65%
AGNC Investment CorpAGNCSold1/13/21$15.521/19/22$155.92%
ONEOK, Inc.OKECalled5/26/21$52.512/18/22$6019.62%
KKR & Co.KKRSold8/25/21$64.522/23/22$58-9.73%
Valero Energy Inc.VLOCalled11/17/21$73.452/25/22$8315.53%
U.S BancorpUSBSold3/24/21$53.474/13/22$51-1.59%
Enterprise Product Ptnrs EPDCalled3/17/21$23.214/14.2022$2411.25%
FS KKR Capital Corp. FSKCalled10/27/21$22.014/14/22$2313.58%
Xcel Energy Inc. XELCalled10/12/21$63.005/20/22$7012.66%
Innovative Industrial Props.IIPRSold3/23/22$196.317/20/22$93-51.23%
One Liberty PropertiesOLPSold7/28/21$30.378/24/22$25-12.94%
ONEOK, Inc.OKECalled5/25/22$65.141/20/23$652.66%
Xcel Energy, Inc.XELCalled10/26/22$62.571/20/23$654.67%
Realty Income Corp. OCalled9/28/22$60.372/17/23$635.41%
Medical Properties TrustMPWSold1/24/23$13.223/21/23$8-38.00%
Brookfield Infrastructure Cp.BIPCCalled11/9/22$42.437/21/23$458.72%
Star Bulk Carriers Corp.SBLKSold6/1/22$33.308/8/23$18-31.38%
Visa Inc.VCalled12/22/21$217.168/18/23$2359.16%
Global Ship Lease, Inc.GSLSold2/23/22$24.968/29/23$19-13.82%
ONEOK, Inc.OKECalled3/28/23$60.989/15/23$659.72%
Hess CorporationHESCalled6/6/23$132.2510/20/23$15517.87%
Tractor Supply CompanyTSCOSold9/26/23$203.0311/28/23$200-1.02%


SecurityIn/out moneySell DateSell PriceExp. Date$ returnTotal % Return
IIPR Jul 17 $95 callout-of money6/3/20$3.007/17/20$3.003.40%
MO Jul 31 $42 callout-of-money6/17/20$1.607/31/20$1.604.03%
ABBV Sep 18 $100 callout-of-money7/15/20$4.609/18/20$4.605.05%
IIPR Sep 18 $100 callin-the-money7/22/20$5.009/18/20$5.005.69%
QCOM Sep 18 $95 callin-the-money6/24/20$4.309/18/20$4.304.82%
USB Sep 18 $37.50 callin-the-money7/22/20$2.009/18/20$2.005.52%
BIP Oct 16 $45 callin-the-money9/2/20$1.9510/16/20$1.954.65%
SBUX Oct 16 $87.50 callin-the-money10/16/20$3.3010/16/20$3.304.00%
V Nov 20 $200 callin-the-money9/22/20$10.0011/20/20$10.004.99%
ABBV Dec 31 $100 callin-the-money11/18/20$3.3012/31/20$3.303.62%
EPD Jan 15 $20 callin-the-money11/23/20$0.801/15/21$0.804.41%
MO Jan 15 $40 callin-the-money11/25/20$1.901/15/21$1.904.79%
USB Jan 15 $45 callin-the-money11/25/20$2.001/15/21$2.004.48%
BGS Feb 19 $27.50 callin-the-money12/11/20$2.402/19/21$2.408.96%
VLO Mar 26 $60 callin-the-money2/10/21$6.503/26/21$6.5012.10%
CVX Apr 1 $95.50 callin-the-money2/19/21$4.304/1/21$4.305.02%
AGNC Jun 18 $17 callout-of-money4/13/21$0.506/18/21$0.503.21%
KKR Jun 18 $55 callin-the-money4/28/21$3.006/18/21$3.006.25%
USB Jun 16 $57.50 callout-of-money4/28/21$2.806/18/21$2.805.24%
DLR Jul 16 $155 callin-the-money6/16/21$8.007/16/21$8.005.36%
AGNC Aug 20 $17 callout-of-money6/23/21$0.508/20/21$0.503.00%
OKE Aug 20 $57.50 callout-of-money6/23/21$3.508/20/21$3.506.67%
NEE Sep 17 $80 callin-the-money8/11/21$3.509/17/21$3.504.75%
BIP Oct 15 $55 callin-the-money9/01/21$2.0010/15/21$2.003.95%
USB Nov 19 $60 callout-of-money9/24/21$2.3011/19/21$2.304.30%
OKE Nov 26 $65 callout-of-money10/20/21$2.2511/26/21$2.254.28%
KKR Dec 17 $75 callout-of-money10/26/21$3.5012/17/21$3.505.42%
QCOM Jan 21 $185 Callout-of-money11/30/21$9.651/21/22$9.657.17%
OLP Feb 18 $35 Callout-of-money11/19/21$1.502/18/22$1.504.94%
OKE Feb 18 $60 Callin-the-money1/5/22$2.752/18/22$2.755.24%
USB Feb 25 $61 callout-of-money1/13/22$2.502/25/22$2.504.68%
VLO Feb 25 $83 callin-the-money1/18/22$4.202/25/22$4.206.13%
EPD Apr 14th $24 callin-the-money3/2/22$1.254/14/22$1.255.69%
FSK Apr 14th $22.50 callin-the-money3/10/22$0.904/14/22$0.904.09%
XEL May 20th $70 callin-the-money3/30/22$3.005/20/22$3.004.76%
SBLK July 15th $134 callout-of-money6/1/22$1.607/15/22$1.604.80%
OKE Oct 21st $65 callout-of-money8/24/22$3.4010/21/22$3.405.22%
OKE Jan 20th $65 callIn-the-money11/25/22$3.701/20/23$3.705.68%
XEL Jan 20th $65 callin-the-money11/25/22$5.001/20/23$5.007.99%
O Feb 17th $62.50 callin-the-money12/28/22$3.002/17/23$3.004.97%
QCOM Sep 16th $145 callout-of-money7/20/22$11.759/16/22$11.758.73%
V Mar 17th $220 callout-of-money1/24/23$12.003/17/23$12.005.51%
OKE May 19th $65 callout-of-money4/11/23$2.705/19/23$2.704.43%
V Jun 2 $230 callout-of-money4/21/23$10.506/2/23$10.504.82%
BIPC $45 July 21st callin-the-money5/23/23$3.257/21/23$3.257.66%
V $235 Aug 18th callin-the-money7/11/23$9.008/18/23$9.004.13%
GSL $20 Aug 18th callout-of-money7/11/23$1.258/18/23$1.255.00%
OKE $65 Sep 15 callin-the-money9/15/23$3.207/25/23$3.204.92%
INTC $35 Oct 20th callout-of-money9/8/23$3.7810/20/23$3.789.41%
HES $155 Oct 20th callin-the-money9/8/23$9.0010/20/23$9.006.81%