Blake Young just ran through today’s economic data, and every single number came in ugly. Final GDP printed at 0.5%. Personal income went negative. Unemployment claims rose.
Yet U.S. equities rallied.
That disconnect tells you everything about where we are right now. The market is trading on ceasefire optimism while the hard data deteriorates underneath it.
Blake flagged wholesale inventories climbing to 0.8%, meaning manufacturers and wholesalers are sitting on product they cannot sell. Personal spending is sliding alongside falling income. The 10-year and 30-year bond auctions both saw lower demand at higher rates.
The math points one direction. Slowing growth, sticky inflation, and weakening consumers add up to stagflation.
Blake’s response is to rotate into utilities as a fixed income substitute. The entire sector was green today, breaking out of a widening pattern while the broader market celebrates on borrowed optimism. He walked through six specific setups in tonight’s video:
- Dominion Energy is paying a 4.16% dividend and has a potential $3 move to $67, setting up a 9% total return in a conservative position.
- NRG is breaking out through $167 with a stop at $160 and upside targets of $176 to $190, offering 11 to 12% upside to retest highs.
- PEG is breaking out with a buy target near $83 and room to run to $88 or $90, a potential $6 move on top of a 3.18% yield.
- NextEra just made a new 52-week high and triggered a buy signal with a target of $97 to $98.
- Duke is breaking out and could reach $138 if it clears previous resistance.
- Southern Company is showing increasing momentum on Bollinger Bands with a path to $101 and then $103.
Blake also flagged basic materials as the sector most likely to crack under slowing growth and high inventories. He expects a 10% drop in the next couple of weeks.
Utilities earnings season starts soon, but Blake noted these stocks rarely see the violent reactions that other sectors experience. The dividends pay you to wait.
