The Best Week of the Year
What a difference a week can make. Just one week ago, the market was reeling. The S&P 500 concluded the third straight month of declines after falling into correction territory a few days earlier. But then stocks turned around and had the best week of the year with the S&P 500 rallying nearly 6% for the week.
The main reason is interest rates. I had mentioned in earlier updates that the benchmark 10-year Treasury yield had been flirting with the psychologically important 5% level, and even touched it one day. It looked like an inflection point where either rates would move lower, indicating a peak which would be very bullish, or rates could rise above 5% into new territory, which would be bearish.
Rates moved significantly lower last week, all the way down to about 4.5%. And stocks exploded higher. The Fed at last week’s meeting kept rates unchanged and indicated that they could be completely done raising them. Then there was a weaker-than-expected jobs report, indicating a cooling economy that will put downward pressure on rates.
Stocks rose across the board with strong rallies in technology stocks and defensive stocks that have been clobbered in recent months. The market is also in a historically strong performing time of the year as well. This could be the beginning of a sustained rally or a brief fluke. We’ll see what happens this week.
The economy is strong, with 4.9% GDP growth in the third quarter. At the same time, it looks like interest rates may have peaked. The “soft landing” scenario is very much alive, as it appears we can get through this Fed rate hiking cycle with minimum economic pain.
This should be an important week. If stocks can sustain this rally this could be the beginning of a more serious rally. But it could prove last week a fluke if stocks roll over. We’ll see what happens this week.
Past Month Activity
October 20
HES October 20 $155 calls at $9.00 - Expired
Hess Corporation stock (HES) - Called
INTC October 20 $35 calls at $3.78 – Expired
October 24
Purchased Marathon Petroleum Corporation (MPC) - $149.45
Portfolio Recap
AbbVie Inc. (ABBV)
Yield: 4.4%
The drug maker has shrinking revenue and earnings this year because its blockbuster Humira drug is facing biosimilar competition in the U.S. But this has long been expected and the company’s new drugs and pipeline are well on pace to make the company a solid earnings grower in the years ahead. Its two new biosimilar drugs, Rinvoq and Skyrizi, grew sales by more than 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. BUY
Digital Realty Trust (DLR)
Yield: 3.7%
This data center REIT had been in a funk but has turned around and moved 15% higher in the last couple of weeks and closed on Friday not far from the 52-week high. First, Digital reported impressive earnings that pleased investors. Then the market got a lot better, and technology and interest rate-sensitive stocks rallied. The long-term prognosis is solid because voracious AI spending upgrades should provide another growth catalyst. BUY
Intel Corp, (INTC)
Yield: 1.3%
A strong earnings report and a much better market environment have turned INTC around in recent weeks. The stock is up 17% in a little over a week. Earnings indicate that Intel’s turnaround in well on track. It has promising new chips coming out in high growth areas and its foundry business could be huge. The company also expressed confidence that the other chip makers could not significantly compete for Intel’s chip dominance anytime soon. The future still looks bright. BUY
Marathon Petroleum Corp, (MPC)
Yield: 2.3%
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 30% return. While the environment can vary from quarter to quarter, it should remain an overall profitable environment for refiners over the next several years. Plus, it appears that the economy should remain solid for the next couple of quarters. BUY
NextEra Energy, Inc. (NEE)
Yield: 3.1%
Better times have finally arrived for this previously beleaguered clean energy utility stock. NextEra reported earnings that beat estimates and grew 10.6% from last year’s quarter. NEE spiked over 8% the week of the report. NEE has also made a very convincing move off the low. It’s now up 26% from the low made about a month ago. Management also reiterated previous growth projections and said the company expects to deliver earnings near the top of the expected range through 2026. The selling was way overdone. Hopefully, the momentum continues. HOLD
Realty Income Corp. (O)
Yield: 6.0%
The REIT was already having a bad year when it announced the purchase of Spirit Realty Capital (SRC) for $9.3 billion. It is slated to be an all-stock transaction that Realty estimates will increase its annual adjusted funds from operations (AFFO) by 2.5%. Acquiring companies usually fall on the day of the announcement regardless of the wisdom of the deal. In the near term, it will be dilutive to existing shares as Realty will issue new shares for the buyout. It will also increase debt. However, Realty has often proven that it is adept at acquiring companies to its benefit. O has since had a sharp rally that reversed all the acquisition news loses. BUY
Tractor Supply Company (TSCO)
Yield: 2.1%
TSCO had been trending lower since the beginning of August. But it moved sharply higher last week. Earnings increased 11% over last year’s quarter and net sales were up 4.3%. But the company also slightly lowered guidance for the full year citing lower demand for seasonal products due to a weaker consumer. But the strong economic numbers and falling interest rates could reignite the stock. BUY
Qualcomm Corp. (QCOM)
Yield: 2.7%
The struggling chipmaker stock got a big 13.7% boost in the last week and a half. While the overall tech sector rallied on falling interest rates, Qualcomm was also helped by the earnings report. While results for the quarter still showed lower earnings and revenue, the future is looking increasingly bright and investors took notice. 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 the phone sales have already bottomed. It’s looking like 2024 could be a very profitable year. BUY
The Williams Companies, Inc. (WMB)
Yield: 5.0%
The midstream energy company made a new 52-week high on Friday. The stock had been trending sharply higher until the rally sputtered in early August. But it got hot again in October and, after pulling back in a turbulent market, has soared back to a new high after the market had its best week so far this year. Hopefully, the momentum will last. Williams also operates in an inflation-resistant business and revenues should remain solid even in a slow economy. Williams reports earnings on Wednesday. BUY
Xcel Energy Inc. (XEL)
Yield: 3.6%
Like other defensive, dividend-paying stocks, XEL has a great week as interest rates tumbled lower. But this 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. 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
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 | $119.52 | $130.00 | 2.68% | -6.26% |
| Intel Corporation | INTC | 7/27/22 | $40.18 | $38.14 | $35.00 | 1.31% | -0.88% |
| The Williams Companies | WMB | 8/24/22 | $35.58 | $36.08 | $38.00 | 4.96% | 8.67% |
| NextEra Energy, Inc. | NEE | 4/25/23 | $77.50 | $59.38 | NA | 3.15% | -22.68% |
| Realty Income Corp. | O | 6/27/23 | $60.19 | $50.85 | $62.00 | 6.04% | -13.51% |
| Digital Realty Trust | DLR | 7/18/23 | $117.31 | $132.93 | $125.00 | 3.67% | 14.39% |
| AbbVie Inc. | ABBV | 7/25/23 | $141.63 | $141.42 | $150.00 | 4.38% | 0.85% |
| Xcel Energy Inc. | XEL | 8/22/23 | $57.95 | $61.03 | $65.00 | 3.41% | 6.25% |
| Tractor Supply Company | TSCO | 9/26/23 | $203.03 | $199.28 | $215.00 | 2.07% | -1.85% |
| Marathon Petroleum Corp. | MPC | 10/24/23 | $149.45 | $150.78 | $155.00 | 2.19% | 1.45% |
Existing Call Trades | |||||||
| Open Recommendations | Ticker Symbol | Intial Action | Entry Date | Entry Price | Recent Price | Sell To Price or better | Total Return |
| as of close on 11/03/2023 | |||||||
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% |
| Medical Properties Trust | MPW | Sold | 1/24/23 | $13.22 | 3/21/23 | $8 | -38.00% |
| Brookfield Infrastructure Cp. | BIPC | Called | 11/9/22 | $42.43 | 7/21/23 | $45 | 8.72% |
| Star Bulk Carriers Corp. | SBLK | Sold | 6/1/22 | $33.30 | 8/8/23 | $18 | -31.38% |
| Visa Inc. | V | Called | 12/22/21 | $217.16 | 8/18/23 | $235 | 9.16% |
| Global Ship Lease, Inc. | GSL | Sold | 2/23/22 | $24.96 | 8/29/23 | $19 | -13.82% |
| ONEOK, Inc. | OKE | Called | 3/28/23 | $60.98 | 9/15/23 | $65 | 9.72% |
| Hess Corporation | HES | Called | 6/6/23 | $132.25 | 10/20/23 | $155 | 17.87% |
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% | |
| OKE May 19th $65 call | out-of-money | 4/11/23 | $2.70 | 5/19/23 | $2.70 | 4.43% | |
| V Jun 2 $230 call | out-of-money | 4/21/23 | $10.50 | 6/2/23 | $10.50 | 4.82% | |
| BIPC $45 July 21st call | in-the-money | 5/23/23 | $3.25 | 7/21/23 | $3.25 | 7.66% | |
| V $235 Aug 18th call | in-the-money | 7/11/23 | $9.00 | 8/18/23 | $9.00 | 4.13% | |
| GSL $20 Aug 18th call | out-of-money | 7/11/23 | $1.25 | 8/18/23 | $1.25 | 5.00% | |
| OKE $65 Sep 15 call | in-the-money | 9/15/23 | $3.20 | 7/25/23 | $3.20 | 4.92% | |
| INTC $35 Oct 20th call | out-of-money | 9/8/23 | $3.78 | 10/20/23 | $3.78 | 9.41% | |
| HES $155 Oct 20th call | in-the-money | 9/8/23 | $9.00 | 10/20/23 | $9.00 | 6.81% | |