Utilities are running higher today and banks are down big. Do you know why? Of course you don’t.
These industries are very sensitive to rates. Now that bonds are rallying and rates are dropping, banks are down due to flattening yield curve and utilities are up because they are attracting yield hungry investors.
Very simple coward trade here: If you believe rates are heading lower again, fade the shit out of oil–because the dollar will likely strengthen. Also, get long bonds via TLT and your utility of choice. One of my favorites is ETR.
Historically speaking, utilities hold their butter during the arduous summer months, unlike many high growth sectors.
Naturally, I think this is a stupid trade. However, if you were heading out to summer in europe or somewhere exotic, unable to get to a telephone pole in order to connect to the internets, buying utilities here is not a bad idea. You could do a lot worse.
As for me, I’ve decided to raise a little cash, heading into the close. I am not interested in being beholden to any one stock, no matter the appeal.