Up and Down with no Clear Direction
The market had a great start to the year and then slumped in February. March started off with the best week in a month for the S&P 500. What’s next?
There will be a lot of information coming out this month that could determine whether the market rallies or slumps from here. This week, the Fed speaks and the February jobs report comes out. These events could give investors a better idea of how aggressive the Fed will remain.
Later this month there is a Fed rate decision and February inflation. All that should tell investors if the Fed will be more aggressive than currently expected or not. A more aggressive perception will likely induce a market slump while an “as-expected” or better verdict will likely fuel a further rally. We’ll see.
It all hinges on inflation, and maybe the economy if it gets bad. Continued falling inflation and a Fed indication it is near the end of the hiking cycle would likely produce a significant rally. But lingering inflation and Fed hawkishness could send the market lower. Also, a recession could be a problem as well.
But we could get more confusion and mixed signals. In that case, the market will probably bounce around with no significant trending direction. And that seems like the most likely scenario at this point, at least in the near term.
In markets like this income is at a premium. Dividends continue to roll in regardless of the direction of the market. Call premiums turbocharge that income and can enable us to generate impressive returns even if the headlines and the market don’t cooperate.
Trades This Month
February 17th
O February 17th $62.50 calls at $3.00 – Expired
Realty Income (O) – Called
February 21st
Sell QCOM March 31st $130 calls at $7.00 or better
March 7th
Sell QCOM March 31st $130 calls at $7.00 – Remove
Portfolio Recap
Brookfield Infrastructure Corporation (BIPC)
Yield: 3.5%
The infrastructure juggernaut has been very bouncy over the last two years. It was hit along with everything else by covid as its transportation assets suffered. Lately, it has been hurt by the strong dollar and higher interest rates as the company does a lot of business overseas and has a relatively high credit balance. The stock is well below the 52-week high made last April but it still has very resilient earnings, a great track record, and a safe dividend. BUY
Global Ship Lease, Inc. (GSL)
Yield: 7.3%
The container shipping company reported solid earnings last week that the market liked. Revenue was up 7.5% and earnings per share jumped 16.3% versus last year’s quarter. The stock moved over 8% higher in the last week and has returned over 28% YTD. The stock is at its highest level since last June. The longer-term supply/demand dynamic is positive for container shipping and the stocks may be in a longer-term bull market. Plus, the opening of China could also be a positive catalyst for shipping activity and rates in the near term. GSL still sells at a cheap valuation with a safe dividend and things are looking up. HOLD
Intel Corp, (INTC)
Yield: 2.0%
This beleaguered stock has stayed relatively steady since announcing the 66% dividend cut. That implies that perhaps the stock has already bottomed out and the most likely future trend for the stock price is higher. The price is so low already there wasn’t much left to punish. Intel is still a powerful industry player and its recent attempts to catch up to its competitors should succeed to a least some degree over time. Meanwhile, the stock sells at a fire-sale price at just about book value. The portfolio will hold on for now. HOLD
Medical Properties Trust, Inc. (MPW)
Yield: 11.5%
After rallying on good news from a recent troubled tenant, MPW plunged 17% in the last month after the market didn’t like its fourth-quarter earnings report. While the company did beat expectations on both the top and bottom lines, investors didn’t like some of the information that came out of the report.
It’s tough to say specifically what spooked investors most or if it was just the negative totality. The company typically raises the first quarter dividend, but it didn’t this time. They also indicated that higher interest rates will significantly slow the pace of acquisitions this year. And finally, they said that one of the issues with a tenant will take 12 to 18 months before MPT is made whole. The lack of growth is already reflected in the stock that sells at just 6 times cash flow. The stock will be closely monitored from here and held in the portfolio for now. HOLD
Realty Income Corp. (O)
Yield: 4.8%
The legendary income REIT reported solid earnings last week. It grew profits by 9.2% year over year, added $9 billion in new properties for the year, and reported the highest occupancy rate in the last 20 years at 99%. But the stock didn’t do much. O has been trending slowly higher since October and recently eclipsed the elusive 65 per share level. This is a popular and defensive income stock that should hold its own with inflation and in the event of a recession. HOLD
Star Bulk Carriers Corp. (SBLK)
Yield: 21.2%
Like GSL, SBLK has been impressive lately. It’s up over 9% in the last month and has returned 26% YTD. The reason is likely a positive effect of more Chinese traffic as the country opens again. Lower shipping rates and a slower global economy have already been factored into the stock and it is likely still the early innings of a multiyear positive cycle for shipping. The shipping company stock has a good longer-term prognosis and strong momentum in the short term. Hopefully, there’s more left in the current uptrend. HOLD
Qualcomm Corp. (QCOM)
Yield: 2.4%
A stellar January was followed by a lousy February. QCOM soared about 29% in January and the price reached the highest level since the summer. But the stock pulled back about 8% in February. QCOM is tied to the fortunes of the market and the tech sector in the near term. And the sector weakened after a strong start to the year as inflation appears to be hanging around. At some point this year, the market should start sniffing out the recovery. And QCOM can make up for lost time fast when it moves. HOLD
Visa Inc. (V)
Yield: 0.8%
The payments processing company stock has been thriving. After an impressive -3.4% return in last year’s bear market, V delivered strong returns in the earlier part of the year. It pulled back somewhat in February but now appears to be moving back toward the recent high. Even if the recent cyclical rally ends, V should continue to hold up relatively well and showed a preview of how well it will react when the market finally turns for good. It’s well worth holding through the uncertainty into the next recovery. HOLD
The Williams Companies, Inc.
Yield: 6.0%
After outperforming the market and its peers in the selloff this fall, WMB has been very disappointing since. It’s been underperforming both its peers and the overall market, down over 6% YTD. It has a business that should well endure recession or inflation or both. The problem is that it is more leveraged to natural gas prices than some of its peers, which have crashed of late. However, those prices are likely to spring back in the months ahead as the selling has been overdone amidst solid demand. BUY
Active Covered Call Trades
Sell V March 17th $220 calls at $12.00
This might be a close one. Options expire in about 10 days and V is currently trading 7 per share above the strike price. Much will depend on the direction of the overall market in the near term as to whether shares get called. I do like the stock longer term. But regardless of what happens, we will have secured a high income while the stock was riding high.
Sell QCOM March 31st $130 calls at $7.00 or better – Remove
The stock pulled back after these calls were targeted and has not recovered in a way nearly sufficient to fetch the targeted call price. That’s okay, there will be more opportunities down the road with another price and expiration date.
CIA STOCK PORTFOLIO | |||||||
| Open Recommendations | Ticker Symbol | Entry Date | Entry Price | Recent Price | Buy at or Under Price | Yield | Total Return |
| Qualcomm Inc. | QCOM | 5/5/21 | $134.65 | $123.60 | NA | 2.43% | -4.41% |
| Visa Inc. | V | 12/22/21 | $217.96 | $223.77 | NA | 0.82% | 3.66% |
| Global Ship Lease, Inc. | GSL | 2/23/22 | $24.96 | $21.07 | NA | 7.30% | -8.69% |
| Star Buld Carriers Corp. | SBLK | 6/1/22 | $33.30 | $23.73 | NA | 21.21% | -12.55% |
| Intel Corporation | INTC | 7/27/22 | $40.18 | $26.40 | NA | 1.97% | -31.91% |
| The Williams Companies | WMB | 8/24/22 | $35.58 | $30.97 | $38.00 | 5.98% | -10.66% |
| Brookfield Infrastructure Cp. | BIPC | 11/9/22 | $42.43 | $43.92 | $46.00 | 3.52% | 5.24% |
| Medical Properties Trust | MPW | 1/24/23 | $13.22 | $10.53 | $15.00 | 11.52% | -20.35% |
| EXISTING CALL TRADES | |||||||
| Open Recommendations | Ticker Symbol | Intial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| V Mar 17 $220 call | V230317C00215000 | Sell | 1/24/23 | $12.00 | $5.95 | $12.00 | 5.51% |
| QCOM Mar 31 $130 call | QCOM230331C00130000 | Sell pending | $2.07 | $7.00 | 5.20% | ||
| as of close on 3/03/2023 | |||||||
| SOLD STOCKS | |||||||
| Security | Ticker Symbol | Action | Entry Date | Entry Price | Sale Date | Sale Price | Total Return |
| Innovative Industrial Props. | IIPR | Called | 6/2/20 | $87.82 | 9/18/20 | $100.00 | 15.08% |
| Qualcomm | QCOM | Called | 6/24/20 | $89.14 | 9/18/20 | $95.00 | 7.30% |
| U.S. Bancorp | USB | Called | 7/22/20 | $36.26 | 9/18/20 | $38 | 3.42% |
| Brookfield Infras. Ptnrs. | BIP | Called | 6/24/20 | $41.92 | 10/16/20 | $45 | 8.49% |
| Starbucks Corp. | SBUX | Called | 8/26/20 | $82.41 | 10/16/20 | $88 | 6.18% |
| Visa Corporation | V | Called | 9/22/20 | $200.56 | 11/20/20 | $200 | 0.00% |
| AbbVie Inc. | ABBV | Called | 6/2/20 | $91.04 | 12/31/20 | $100 | 12.43% |
| Enterprise Prod. Prtnrs. | EPD | Called | 6/24/20 | $18.14 | 1/15/21 | $20 | 15.16% |
| Altria Group | MO | Called | 6/2/20 | $39.66 | 1/15/21 | $40 | 7.31% |
| U.S. Bancorp | USB | Called | 11/25/20 | $44.68 | 1/15/21 | $45 | 1.66% |
| B&G Foods Inc, | BGS | Called | 10/28/20 | $26.79 | 2/19/21 | $28 | 4.42% |
| Valero Energy Inc. | VLO | Called | 8/26/20 | $53.70 | 3/26/21 | $60 | 11.73% |
| Chevron Corp. | CVX | Called | 12/23/20 | $85.69 | 4/1/21 | $96 | 12.95% |
| KKR & Co. | KKR | Called | 3/24/21 | $47.98 | 6/18/21 | $55 | 14.92% |
| Digital Realty Trust | DLR | Called | 1/27/21 | $149.17 | 7/16/21 | $155 | 5.50% |
| NextEra Energy, Inc. | NEE | Called | 2/24/21 | $73.76 | 9/17/21 | $80 | 10.00% |
| Brookfield Infras. Ptnrs. | BIP | Called | 1/13/21 | $50.63 | 10/15/21 | $55 | 11.65% |
| AGNC Investment Corp | AGNC | Sold | 1/13/21 | $15.52 | 1/19/22 | $15 | 5.92% |
| ONEOK, Inc. | OKE | Called | 5/26/21 | $52.51 | 2/18/22 | $60 | 19.62% |
| KKR & Co. | KKR | Sold | 8/25/21 | $64.52 | 2/23/22 | $58 | -9.73% |
| Valero Energy Inc. | VLO | Called | 11/17/21 | $73.45 | 2/25/22 | $83 | 15.53% |
| U.S Bancorp | USB | Sold | 3/24/21 | $53.47 | 4/13/22 | $51 | -1.59% |
| Enterprise Product Ptnrs | EPD | Called | 3/17/21 | $23.21 | 4/14.2022 | $24 | 11.25% |
| FS KKR Capital Corp. | FSK | Called | 10/27/21 | $22.01 | 4/14/22 | $23 | 13.58% |
| Xcel Energy Inc. | XEL | Called | 10/12/21 | $63.00 | 5/20/22 | $70 | 12.66% |
| Innovative Industrial Props. | IIPR | Sold | 3/23/22 | $196.31 | 7/20/22 | $93 | -51.23% |
| One Liberty Properties | OLP | Sold | 7/28/21 | $30.37 | 8/24/22 | $25 | -12.94% |
| ONEOK, Inc. | OKE | Called | 5/25/22 | $65.14 | 1/20/23 | $65 | 2.66% |
| Xcel Energy, Inc. | XEL | Called | 10/26/22 | $62.57 | 1/20//2023 | $65 | 4.67% |
| Realty Income Corp. | O | Called | 9/28/22 | $60.37 | 2/17/23 | $63 | 5.41% |
| EXPIRED OPTIONS | |||||||
| Security | In/out money | Sell Date | Sell Price | Exp. Date | $ return | Total % Return | |
| IIPR Jul 17 $95 call | out-of money | 6/3/20 | $3.00 | 7/17/20 | $3.00 | 3.40% | |
| MO Jul 31 $42 call | out-of-money | 6/17/20 | $1.60 | 7/31/20 | $1.60 | 4.03% | |
| ABBV Sep 18 $100 call | out-of-money | 7/15/20 | $4.60 | 9/18/20 | $4.60 | 5.05% | |
| IIPR Sep 18 $100 call | in-the-money | 7/22/20 | $5.00 | 9/18/20 | $5.00 | 5.69% | |
| QCOM Sep 18 $95 call | in-the-money | 6/24/20 | $4.30 | 9/18/20 | $4.30 | 4.82% | |
| USB Sep 18 $37.50 call | in-the-money | 7/22/20 | $2.00 | 9/18/20 | $2.00 | 5.52% | |
| BIP Oct 16 $45 call | in-the-money | 9/2/20 | $1.95 | 10/16/20 | $1.95 | 4.65% | |
| SBUX Oct 16 $87.50 call | in-the-money | 10/16/20 | $3.30 | 10/16/20 | $3.30 | 4.00% | |
| V Nov 20 $200 call | in-the-money | 9/22/20 | $10.00 | 11/20/20 | $10.00 | 4.99% | |
| ABBV Dec 31 $100 call | in-the-money | 11/18/20 | $3.30 | 12/31/20 | $3.30 | 3.62% | |
| EPD Jan 15 $20 call | in-the-money | 11/23/20 | $0.80 | 1/15/21 | $0.80 | 4.41% | |
| MO Jan 15 $40 call | in-the-money | 11/25/20 | $1.90 | 1/15/21 | $1.90 | 4.79% | |
| USB Jan 15 $45 call | in-the-money | 11/25/20 | $2.00 | 1/15/21 | $2.00 | 4.48% | |
| BGS Feb 19 $27.50 call | in-the-money | 12/11/20 | $2.40 | 2/19/21 | $2.40 | 8.96% | |
| VLO Mar 26 $60 call | in-the-money | 2/10/21 | $6.50 | 3/26/21 | $6.50 | 12.10% | |
| CVX Apr 1 $95.50 call | in-the-money | 2/19/21 | $4.30 | 4/1/21 | $4.30 | 5.02% | |
| AGNC Jun 18 $17 call | out-of-money | 4/13/21 | $0.50 | 6/18/21 | $0.50 | 3.21% | |
| KKR Jun 18 $55 call | in-the-money | 4/28/21 | $3.00 | 6/18/21 | $3.00 | 6.25% | |
| USB Jun 16 $57.50 call | out-of-money | 4/28/21 | $2.80 | 6/18/21 | $2.80 | 5.24% | |
| DLR Jul 16 $155 call | in-the-money | 6/16/21 | $8.00 | 7/16/21 | $8.00 | 5.36% | |
| AGNC Aug 20 $17 call | out-of-money | 6/23/21 | $0.50 | 8/20/21 | $0.50 | 3.00% | |
| OKE Aug 20 $57.50 call | out-of-money | 6/23/21 | $3.50 | 8/20/21 | $3.50 | 6.67% | |
| NEE Sep 17 $80 call | in-the-money | 8/11/21 | $3.50 | 9/17/21 | $3.50 | 4.75% | |
| BIP Oct 15 $55 call | in-the-money | 9./01/2021 | $2.00 | 10/15/21 | $2.00 | 3.95% | |
| USB Nov 19 $60 call | out-of-money | 9/24.2021 | $2.30 | 11/19.2021 | $2.30 | 4.30% | |
| OKE Nov 26 $65 call | out-of-money | 10/20/21 | $2.25 | 11/26/21 | $2.25 | 4.28% | |
| KKR Dec 17 $75 call | out-of-money | 10/26/21 | $3.50 | 12/17/21 | $3.50 | 5.42% | |
| QCOM Jan 21 $185 Call | out-of-money | 11/30/21 | $9.65 | 1/21/22 | $9.65 | 7.17% | |
| OLP Feb 18 $35 Call | out-of-money | 11/19/21 | $1.50 | 2/18/22 | $1.50 | 4.94% | |
| OKE Feb 18 $60 Call | in-the-money | 1/5/22 | $2.75 | 2/18/22 | $2.75 | 5.24% | |
| USB Feb 25 $61 call | out-of-money | 1/13/22 | $2.50 | 2/25/22 | $2.50 | 4.68% | |
| VLO Feb 25 $83 call | in-the-money | 1/18/22 | $4.20 | 2/25/22 | $4.20 | 6.13% | |
| EPD Apr 14th $24 call | in-the-money | 3/2/22 | $1.25 | 4/14/22 | $1.25 | 5.69% | |
| FSK Apr 14th $22.50 call | in-the-money | 3/10/22 | $0.90 | 4/14/22 | $0.90 | 4.09% | |
| XEL May 20th $70 call | in-the-money | 3/30/22 | $3.00 | 5/20/22 | $3.00 | 4.76% | |
| SBLK July 15th $134 call | out-of-money | 6/1/22 | $1.60 | 7/15/22 | $1.60 | 4.80% | |
| OKE Oct 21st $65 call | out-of-money | 8/24/22 | $3.40 | 10/21/22 | $3.40 | 5.22% | |
| OKE Jan 20th $65 call | In-the-money | 11/25/22 | $3.70 | 1/20/23 | $3.70 | 5.68% | |
| XEL Jan 20th $65 call | in-the-money | 11/25/22 | $5.00 | 1/20/23 | $5.00 | 7.99% | |
| O Feb 17th $62.50 call | in-the-money | 12/28/22 | $3.00 | 2/17/23 | $3.00 | 4.97% | |
| QCOM Sep 16th $145 call | out-of-money | 7/20.2022 | $11.75 | 9/16/22 | 11.75 | 8.73% | |