I'm sorry, I don't want to keep talking about the virus that's impacting the Global Economy and life on Earth as we know it but it IS out there every day and it is the #1 Macro Concern on the planet – no matter how much you choose to ignore it. Today Jay Butler, the CDC’s deputy director for infectious diseases, said Covid-19 cases are growing “really in all parts of the country,” with particularly high transmission in the Midwest. “Unfortunately, we are seeing a distressing trend here in the United States. Smaller, more intimate gatherings of family, friends and neighbors may be driving transmission as well, especially as they move indoors.”
I can testify to that as I was at the Breakers Hotel in Florida this weekend and there was a wedding in the courtyard and there were about 500 people, none of whom were wearing masks and they were having a buffet AND they were all gathered in the half of the courtyard where the food was, rather than spreading out. And they were hugging and kissing and talking in small circles – MADNESS!!!
And these are wealthy people (the hotel is very expensive) so you'd think at least SOME of them have had educations and would be aware of the risks. I felt bad for the bride, who will aways remember her wedding as a super-spreader event that leads to the deaths of dozens of guests and their families, but I felt more bad for the hotel staff – who were the only people wearing masks and gloves which offered little protection from this germ-fest.
“I recognize that we are all getting tired of the impact Covid-19 has had on our lives,” Butler said. “We’re tired of wearing masks, but it continues to be as important as it has ever been and I would say even more important than ever as we move into the fall season.”
The U.S. still has the worst outbreak in the world, with more than 8.2 million cases and at least 221,122 deaths, according to Hopkins data. Health officials and infectious disease experts fear the situation could become dire as flu season begins and hospitals risk reaching capacity. Butler did say he does expect there to be a vaccine soon, perhaps by the end of the year and the states have already submitted their distribution plans.
Pfizer (PFE) and Moderna (MRNA) are still the leading contenders in the vaccine race and PFE is still cheap for whatever reason at $37.08 – it was a Top Trade Alert back on September 28th at $36, so here's a chance to get in in case you missed it. As I noted at the time, the vaccine won't be a big profit initially for PFE - it will likely be sold at cost – but the company is a great overall value play and, if the vaccine is needed annually like a flu shot, then the revenues will be there for many years to come.
Yesterday, in our Live Trading Webinar, we talked about some other stocks that were still cheap at the moment. T was a Top Trade Alert the same day as PFE and it's a lot cheaper now than it was then (a nice way to say we called it wrong) at $26.72 on the day of their earnings. This is idiotically low and earnings were just OK but the stock is popping to $28 because, as I said in the Webinar, just because a stock is being sold off by idiots doesn't mean it's not a bargain. Things like earnings tend to balance that out but here's another Top Trade you can still pick up at a good price.
If T is making money, I bet China Mobile (CHL) is making money as they have 950M subscribers and AT&T has around 100M yet T is valued 50% more than CHL, which is trading at 7.6x earnings. We already have CHL stock in our Dividend Portfolio, because it pays $1.97 (6%) per $32.65 share and we have 1,000 shares so we're going to promise to double down at $30 by selling 10 2023 $30 puts for $5.50. That would net us into 1,000 more shares at $24.50.
You can just sell the puts for $5,500 to initiate a long position but, in our Long-Term Portfolio, we're going to also buy 30 of the 2023 $27.50 ($6)/35 ($3) bull call spreads for net $3 ($9,000) and that will put us in the $22,500 spread for net $3,500 and we're sure to be able to make that up selling a few calls along the way. The ordinary margin on the short puts is $1,444 so it's a super-efficient play as well. If all goes well and CHL is over $35 in Jan, 2023, then the profit on the spread will be $19,000 (542%).
See, there are still things to buy, even in a pandemic economy…