Blake Young pulled up a Fed report today that has flagged every recession since 1992. It is flashing right now.
He calls it the Labor Market Conditions Index. The Kansas City Fed publishes it. You can pull the same chart straight from FRED.
The pattern is clean. Every time this index corrects more than half a percent from its peak, it falls at least 2% and crashes through zero.
A recession has followed every single time.
Here is the part that stopped me. The index peaked in May 2022 at 1.46%.
It dropped by that same amount and fell below 0.9 in May 2023. That was the signal.
History said a recession should follow. Three years later, the market keeps selling off.
Labor conditions keep sliding toward negative. The recession still has not shown up.
Blake does not read this signal in isolation. He stacks the weak labor data on top of crude.
Oil crested $93.50 today. Blake sees it pushing through 95 with a real shot above 100.
Higher crude drains expendable income and kills demand. That pressures an already fragile tape.
The labor market is thinning out underneath it. Over 500,000 people have left the workforce.
Job postings now sit at pre-COVID collapse levels. Fewer jobs mean more people without work no matter the sector.
Money is leaving equities and hiding in safety. Energy led today because crude ran hot.
Utilities turned green right alongside it. Blake likes them for one reason.
They pay dividends that match or beat bonds. Bonds broke down again today.
Here is what Blake broke down in today’s session:
The S&P sits on the 738 level. A close below opens a fast path to 727, the monthly monkey bar 50% mark, possibly within a week.
Oil crested $93.50 today. Blake sees 95 next and a real shot above 100.
The labor market has shed over 500,000 people from the workforce while job postings hold at pre-COVID collapse levels.
NextEra (NEE) sets up for a 10% move from 90 back toward 98, with a 2.77% yield stacked on top. Sell the puts for 2.9% or buy the stock outright.
Blake is not chasing this drop. He wants safety with income while the labor and oil story plays out.
Utilities and healthcare are his defensive plays. He is tracking NextEra, Dominion (D), and Exelon (EXC) for the cleaner entry.
Video Length: 00:10:20
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