A Critical Week
This is a very important week that should determine the near-term direction of the market.
While the market digests the JPMorgan (JPM) buyout of First Republic Bank (FRC), the largest bank failure since the financial crisis, it looks ahead to a packed week. There’s a Fed meeting on Wednesday, where the Central Bank is widely expected to raise the Fed Funds rate by 0.25%. But the Chairman’s comments afterward will probably have a bigger impact on the market.
There are also important earnings from companies like Apple (AAPL), AMD (AMD), and Ford (F). Plus, the jobs report is due out and will likely provide valuable insight as to whether the economy is slowing, or inflationary pressures are continuing. There may be a lot more clarity as to the state of inflation and interest rates as well as the economy by the end of the week.
It’s also important to note that stock prices may be at a crossroads. The S&P has rallied 20% from the October low and is up 8.5% YTD. If this is just another bear market rally, it’s probably about out of gas. If the market is happy with this week’s news, the rally may continue. But if it isn’t, look out.
It still makes sense to play it safe at this juncture. Companies that can grow earnings in a slowing economy and inflation should be solid. It also makes sense to sell covered calls on positions that have moved to the top of the recent range. A breakout rally is possible, but I wouldn’t count on it at this point.
Trades This Month
April 11th
SOLD OKE May 19th $65 calls at $2.70
April 18th
SOLD V June 2nd $230 calls at $10.50
April 25th
Purchased NextEra Energy (NEE) - $77.82
Portfolio Recap
Brookfield Infrastructure Corporation (BIPC)
Yield: 3.4%
The infrastructure juggernaut has been bouncing around to nowhere since the end of 2020. The stock had been held back more recently by a strong dollar and higher lending rates, but those things have been receding and BIPC has been acting better. It recently hit the highest price level since last fall until pulling back again, but it’s still up 10% YTD. The stock is now right around the midpoint of its 52-week price range and should be a solid holding amid inflation and/or recession. Brookfield reports first-quarter earnings this week and the stock could get a lift. BUY
Global Ship Lease, Inc. (GSL)
Yield: 7.8%
The container shipping company is solid with growing earnings and revenues despite the fact that shipping rates have plunged since the supply chain crisis of a couple of years ago. But the stock is still a cyclical international company, and the stock price is at the mercy of the market’s treatment of such sectors in the near term. The rate environment is improving as China has reopened and the longer-term supply/demand dynamic for shippers is solid, and the sector is likely in a secular bull market. It’s encouraging that the stock has returned over 17% YTD. But GSL will likely not have a high and sustainable upside move until the overall market recovers. HOLD
Intel Corp, (INTC)
Yield: 1.6%
The chipmaker reported earnings last week that cleared a very low bar and beat expectations. The main problem is weak PC sales in a struggling economy and most chipmakers have cut their forecasts amid weakening demand. But there are signs that the ambitious turnaround strategy may be working, and far better results are around the corner. The recent earlier-than-expected release of their new data center chip indicated production issues are behind and bodes well for planned chip launches going forward. After an awful 2022 where INTC plunged nearly 50%, it appears that the worst is over and things should continue to improve. The stock is up 18% YTD and has broken out to the highest price level since last summer. HOLD
NextEra Energy, Inc. (NEE)
Yield: 2.4%
This combination regulated and clean energy utility stock has bounced around over the past two years and is currently at the lower end of that range. It has been trending higher since the beginning of March as the risk of recession has grown and defensive stocks have outperformed. NEE is still well positioned as a defensive stock with growth in a highly uncertain market where a recession is becoming more likely. BUY
ONEOK, Inc. (OKE)
Yield: 5.8%
After pulling back in March, OKE is up 15% in less than a month. The market turbulence following the bank failures has prompted a flight to safety. Midstream energy companies have benefited from that flight as well as some investor optimism about a sooner end to Fed rate hikes. OKE continues to post strong earnings and is well-suited to endure inflation and/or recession. The stock has already popped back above 65 per share and may be poised to move still higher. The company reports earnings on Tuesday. BUY
Star Bulk Carriers Corp. (SBLK)
Yield: 17.8%
Like GSL, SBLK has gotten new life this year. SBLK moved up a lot in February despite it being a tough month for the overall market. The shipping company pulled back in March, which is not unusual for this stock after a surge. It is benefiting from 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 returned about 13% YTD. HOLD
Qualcomm Corp. (QCOM)
Yield: 2.8%
The chip company stock recently raised the quarterly dividend to 0.80 per share from 0.75. This is a great long-term stock of a company with a huge share of mobile 5G chips and strong exposure to some of the fastest-growing areas in technology. But QCOM is also vulnerable to the overall technology sector in the near term. It is likely that a tech recovery should come sooner than an overall market recovery as interest rates and inflation recede in a slowing economy. Earnings will be reported on Tuesday and chipmakers have not been positive so far this earnings season. But QCOM has already moved down a lot since hitting a recent high of nearly 140 per share at the beginning of February. HOLD
Visa Inc. (V)
Yield: 0.8%
V has been hanging very tough near the high point of the recent range. The payments processing company once again exceeded expectations on earnings. Visa grew earnings per share by 17% and revenues grew double digits versus last year’s quarter. And this is what the company does in a bear market with the economy slowing. It can really take off when the market recovers for good. V should be higher by the end of the year but there is a strong chance it pulls back somewhat after moving to recent highs. HOLD
The Williams Companies, Inc.
Yield: 5.9%
WMB has been a struggling stock this year because of natural gas prices, which have crashed. Although the company is not highly levered to energy prices, it is affected by turbulence in its industry. Prices have fallen largely because of the unusually warm winter temperatures throughout the country and the world. Demand for the fuel has been far less than anticipated and stockpiles have built up. But it is a temporary problem for a fuel source that should own the next decade. Williams reports earnings this week, and the company’s quarterly results have been solid. Maybe earnings can get it moving again. BUY
Existing Call Trades
Sell OKE May 19th $65 calls at $2.70 or better
OKE has moved about 9% higher since being added to the portfolio. The stock should have the right stuff for inflation and/or recession, but it has been very bouncy. The portfolio has already sold four calls on this same stock on earlier occasions, and it can provide an excellent vehicle for high income going forward as well. The stock has spiked in price in a very uncertain market, and it made sense to seize the opportunity to sell a call.
Sell V June 2nd $230 calls at $10.50 or better
Visa is looking good after the impressive earnings report. It is still hovering above the 130 per share strike price. But this is a make-or-break week for the market. If the market sells lower in the next month, it will probably take V with it, at least to some extent. It is still a good trade to bank a call premium when a stock is at the high end of the recent range in an uncertain market.
| 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 | $116.80 | NA | 2.81% | -9.67% |
| Visa Inc. | V | 12/22/21 | $217.96 | $232.73 | NA | 0.77% | 7.81% |
| Global Ship Lease, Inc. | GSL | 2/23/22 | $24.96 | $19.14 | NA | 7.84% | -17.05% |
| Star Buld Carriers Corp. | SBLK | 6/1/22 | $33.30 | $21.11 | NA | 17.76% | -22.20% |
| Intel Corporation | INTC | 7/27/22 | $40.18 | $31.06 | NA | 1.61% | -19.89% |
| The Williams Companies | WMB | 8/24/22 | $35.58 | $30.26 | $38.00 | 5.92% | -11.36% |
| Brookfield Infrastructure Cp. | BIPC | 11/9/22 | $42.43 | $42.60 | $46.00 | 3.58% | 2.08% |
| ONEOK Inc. | OKE | 3/28/23 | $60.98 | $65.41 | $63.00 | 5.84% | 8.83% |
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $76.63 | $85.00 | 2.44% | -1.53% |
| EXISTING CALL TRADES | |||||||
| Open Recommendations | Ticker Symbol | Intial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| OKE $65 May 19th call | OKE230519C00065000 | Sell | 4/11/23 | $2.70 | $2.00 | $2.70 | 4.43% |
| V $230 June 2nd call | V 230602C00230000 | Sell | 4/21/23 | $10.50 | $6.90 | $10.50 | 4.82% |
| as of close on 4/28/2023 | |||||||
| 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% |
| Medical Properties Trust | MPW | Sold | 1/24/23 | $13.22 | 3/21/23 | $8 | -38.00% |
| 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% | |
| V Mar 17th $220 call | out-of-money | 1/24/23 | $12.00 | 3/17/203 | $12.00 | 5.51% | |