Where I'm pounding the table right now; Dreadful earnings at Trump Media & Technology Group; Addressing a misperception about inflation; Two measures for protecting young people from social media

1) A story on the front page of today's Wall Street Journal highlights one of the sectors I'm most bullish on right now: utilities.

Yes, you read that right... utilities.

Sure, the sector might not seem that exciting. But the demand for power – driven by data centers for artificial intelligence ("AI") – is going through the roof. And I don't see it slowing anytime soon.

Here's the new WSJ story I'm talking about: The Unlikely Stocks That Became a Hot Bet on AI. Excerpt:

The climb in shares of power companies is in part a rebound from a bleak 2023. But their move upward also reflects the growing belief that the U.S. economy can power through higher interest rates and turn the hype around artificial intelligence into reality.

Data in recent weeks has shown job growth cooling and inflation resuming its gradual slowdown, without any alarming deterioration in economic conditions. That has turned power generators, which are set to supply a wave of increasingly energy-hungry data centers needed for AI, into a bank-shot bet on the projected tech boom.

The S&P 500's typically staid utility sector has advanced 18% over the past three months, while the second-place information-technology industry has climbed 11%.

I'm so bullish on a specific corner of this sector that I just finished a brand-new video presentation on the opportunity I'm seeing right now.

And it all has to do with a technology rolling out across the U.S. that's expected to generate more wealth than cars, smartphones, and PCs – combined.

In fact, famed tech billionaires like Bill Gates, Jeff Bezos, and Peter Thiel are now investing hundreds of millions of dollars into getting it off the ground.

Plus, even Congress recently approved billions of dollars for a massive rollout of this technology.

Get all the details – including how you can take advantage of this incredible opportunity – by clicking here.

2) Meanwhile, at the other end of the spectrum...

My least-favorite stock, Trump Media & Technology Group (DJT), tumbled 9% yesterday after the company reported dreadful first-quarter earnings.

I have never seen an earnings release without an income statement – instead, buried deep in the press release, was this line: "TMTG earned $770,500 in revenue in the first quarter."

Not $770.5 million – $770.5 thousand.

There are plenty of YouTube, Instagram, and TikTok "influencers" generate exponentially more revenue. Kylie Jenner, for instance, has reportedly been paid $1.8 million for a single post on Instagram.

With almost no revenue and plenty of expenses, the company reported adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA") of negative $12 million and net income of negative $328 million, mostly due to "$311.0 million in non-cash expenses arising from the conversion of promissory notes, and the associated elimination of prior liabilities."

It is truly a mystery to me why this stock is trading around $44 as of yesterday's close, which would give the company a market cap of about $7.8 billion.

Avoid DJT at all costs.

3) Every time I write about inflation and say that it's "benign," "under control," and "ceased to be an issue," a handful of readers e-mail me to say I'm wrong because prices are much higher than they were a few years ago.

To understand the difference between what they're saying and what I'm saying, let's take a look at this chart from the St. Louis Federal Reserve of the cost of groceries:

The blue line shows that the year-over-year change in prices – inflation – spiked for a year starting in mid-2021, and then declined just as sharply starting in mid-2022. In recent months, the price of groceries has only risen about 1% relative to the prices a year ago – great news for all of us.

But because of the burst of inflation, the current level (as opposed to the rate of change) of grocery prices is 25% higher than it was several years ago. This is what my readers are seeing and e-mailing me about.

Their observation is correct... but it's not as relevant from an investment perspective.

The Fed focuses on the rate of change (i.e., inflation), which is why it hiked rates so quickly (albeit belatedly) starting in early 2022 – a major reason why stocks had such a tough year. Once inflation cooled, the Fed stopped raising rates – and stocks took off.

Looking forward, as I've written many times, I continue to believe that a strong economy will keep overall inflation between 3% and 4%. This would keep the Fed on the sidelines, neither raising nor cutting rates.

That means stock prices will be driven primarily by corporate earnings, which I expect will remain robust – hence, my constructive outlook for the markets.

4) I continue to worry about the global epidemic of anxiety and depression – especially among youth, which I'm convinced is tied to the rise of social media. (I'll give a hat tip on this to my friend and NYU marketing professor Scott Galloway, who has been leading the charge in this area.)

I have three daughters, so this is an important topic for me. And I frequently read about new ways in which our youth are at risk. And here's an example I saw from just the past week...

This article in the WSJ documents the rise in teenagers who are sexually harassed (or worse) on the job: The Surge in Young Workers Has a Dark Side: Sexual Harassment of Teens on the Job. Excerpt:

About a quarter of young workers experience sexual harassment on the job, according to a 2023 study, with some of them as young as 14 years old.

Employers are relying more on young workers to fill jobs amid a tight labor market, and have lobbied state legislators to loosen age restrictions on the hours and types of jobs teenagers can take on. In April this year, 5.8 million 16- to 19-year-olds were working, the highest April count since 2009. That number surges in the summer when teens flock to jobs waiting tables, working the counters at fast-food restaurants and staffing cash registers at retail stores.

For more on the huge problem of anxiety and depression, here are two slides I presented at Guy Spier's VALUEx conference in Switzerland last year:

So what should parents and schools do to combat this and protect our youth?

I think overprotection is the wrong answer – keeping kids cooped up at home is a sure route to isolation and depression.

In-person interactions are the key to building social skills and friendships that are the root of human happiness.

The problem is that social media is increasingly replacing face-to-face relationships, so parents need to monitor and minimize their children's use of social media – and an assist from the government could help.

And K-12 schools should ban phones entirely, requiring students to leave them in their lockers during the school day.

These two measures would be a good start...

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.