Ominous News From the 'RV Capital of the World'

What's a casual $300 billion anyway?... Fed press conference eve... A balance-sheet boost while fighting inflation... A look at the 'RV indicator'... Ominous news from the 'RV capital of the world'... The good and the bad... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] What's a casual $300 billion anyway?... Fed press conference eve... A balance-sheet boost while fighting inflation... A look at the 'RV indicator'... Ominous news from the 'RV capital of the world'... The good and the bad... --------------------------------------------------------------- We've got one eye on the banks and the Fed... There are a lot of storylines heading into tomorrow's Federal Reserve policy announcement and post-meeting press conference. Consider this one, which arrived in our inbox from subscriber Will K. today... In the past year, we have seen both a reduction in the Fed's balance sheet AND higher rates. What is the likely consequence of a Fed that has started adding back to its balance sheet all while continuing to increase interest rates? Well, this is a big, important question... For those who missed it amid the Fed's recent bank rescues and an effort to squelch more runs on deposits, the central bank's balance sheet spiked by a casual $300 billion in the past 10 days... Our Stansberry NewsWire editor C. Scott Garliss shared [a must-read post]( this morning, which includes this chart of the Fed's balance sheet over the past year. You can see the bank trimmed from a high near $9 trillion down to around $8.4 trillion. Then came the rescue efforts that, in part, allowed banks to tap more cash through (another) new Fed lending facility... As you can see, this essentially erased the past four months of balance-sheet "trimming" that the Fed has been working on since the start of 2022 in its effort to fight inflation. Evidently, that inflation fight doesn't matter as much anymore... As the Fed said itself last Sunday night, amid the fallout from the run on Silicon Valley Bank... The Federal Reserve is prepared to address any liquidity pressures that may arise. [Be sure to read Scott's analysis for much more detail](. He explains what the Fed actually did... why its balance sheet has grown again... why it might need to stay there... and what all of it might mean for the stock market moving ahead. You can bet this exact thing will be a topic of discussion tomorrow... The Fed will publish its new policy decisions and economic projections at 2 p.m. Eastern time, and Fed Chair Jerome Powell will address reporters a half hour later. We'll have a report on everything that happens there in tomorrow evening's Digest. But I (Corey McLaughlin) digress from Will K.'s specific question... I believe the likely consequence of the Fed suddenly adding back to its balance sheet amid the recent bank panics could mean higher-than-expected inflation over the longer run – it's essentially an economic-stimulus measure. But it may also be a short-term boost for stock prices. Here's more from Scott's post today, which backs up my impression. As the chart shows, when the Fed's balance sheet grew during the pandemic recovery, it was good for stocks. And the opposite has been true the over the past 14 months or so... The balance sheet more than doubled from $4 trillion at the start of the COVID-19 pandemic in February 2020 to a recent peak of $9 trillion in April 2022. Over that time, the S&P 500 rallied 58.4%, or 24.7% on an annualized basis. And a similar thing happened during the great financial crisis. From September 2008 to January 2015, the Fed's balance sheet swelled from $900 billion to more than $4.5 trillion. During the same period, the S&P 500 rose 102.4%, or 11.9% annually. We'll have more on all things Fed tomorrow. But I want to bring your attention to a different sort of economic indicator... It got our attention when we looked into it, thanks to another subscriber's reminder and urging... We've got another eye on the 'RV indicator'... Paid-up subscriber Joe G. recently wrote in with this idea worth sharing and checking in on... If you want to see where the economy is heading, look no further than the unemployment rate in Elkhart County, Indiana. In the past, as the unemployment rate goes higher the economy goes lower. Due to Elkhart County having a large manufacturing base through the Recreational Vehicle business, it is usually the first to go into a recession and the first to come out of a recession. Just my thoughts after living there for 64 years. Thank you. Thank you, Joe. I love looking at economic indicators like this from the real world. Sales of recreational vehicles ("RVs") have long been seen as a leading indicator of the health of the American consumer. There is a good argument to be made that it is an overused indicator, like if analysts make too much of a short-term dip in RV sales, for instance... But you bring up a great point, Joe, about looking at the unemployment rate where many RVs are made. First off, for context for everyone, Elkhart County in Indiana produces about 50% of the RVs on the road today, according to county officials, and the region is responsible for upwards of 80% of global RV production, given Americans' preference for using them more than anyone else. Elkhart County is home to factories for publicly traded companies like Thor Industries (THO) and Winnebago Industries (WGO), along with privately owned or family-operated businesses like The RV Factory, Gulf Stream, and more. According to Elkhart's visitors bureau... How did it all begin? Wilbur Schult, a dynamic promoter and retailer, bought Elkhart's Sportsman Trailer Company from Milo Miller in 1936. Schult was such a promoter that by 1939, he was the largest manufacturer in the industry and Elkhart was beginning to attract lots of suppliers and more manufacturers. In addition, Elkhart's major highways and railroad transportation links and central location to large metropolitan markets made it accessible for easy shipment of goods. By the late 1940's, when things began to boom again after the war, industry magazines began calling Elkhart the "Trailer Capital of the World". Eighty or so years later, it's still the RV capital of the world. Today, you can tour many of the RV factories and even visit the [RV/MH ("Manufactured Housing") Hall of Fame]( located in the county. Now that I've shared some local history and free tourism information, let's take Joe's advice and look at the unemployment data... A year ago, the unemployment rate in Elkhart County was the lowest in the nation at less than 2%. And while it has gradually risen over the past 12 months, it had stayed below the national average. Not anymore... The unemployment rate in Elkhart just spiked... The RV-manufacturing hub's unemployment jumped to 4.9% in January, the most recent data that the U.S. Bureau of Labor Statistics released last week. That's up from just 2.5% a month earlier – nearly double. After that startling rise, it's now above the national average of 3.6%. Now, the RV industry of course boomed during the pandemic as more and more people sought their freedom from COVID-19 and other things. So there's bound to be significant cooling as this turn in the business cycle arrives. However, the same can be said for the broader economy in general. Come to think of it, since so many other sectors also relied on pandemic-related trends, there actually might not be too many more relevant indicators than what's going on in the "RV Capital of the World." To this point, Thor Industries recently cut its sales and earnings outlook, pointing to slowing sales because of sagging demand it attributed to inflation. Rising interest rates have also increased the cost of financing big-ticket items like RVs. This is ominous news... This chart shows the unemployment rate in Elkhart County since 1990. The gray areas indicate "official" recessions, and you can see the new spike to near 5% in the lower right corner... The last time the unemployment rate in Elkhart County moved that dramatically higher is when it topped 30% in April 2020 amid pandemic shutdowns. Before that, the last times it increased more than 2 percentage points in a month's time were amid the Great Recession. It rose from 6.8% in June 2008 to 9.6% that July... and from 16.2% in December 2008 to 19.8% in January 2009. Back then, unemployment in Elkhart went on to peak at 20.6% in March 2009. Perhaps not coincidentally, March 2009 is the same month when the U.S. stock markets finally hit financial-crisis lows... On March 9, 2009, the benchmark S&P 500 Index closed down roughly 50% from its top in October 2007. That's the bad news... The good news is the S&P 500 then gained 60% through the end of that year as things got "less bad." So, if the unemployment spike in Elkhart is a sign of things to come ahead for the broader economy, it seems like most people could be caught off guard dramatically in the months ahead... And if you're a believer that it will matter for stock prices, things could get worse for stocks before they ultimately get better over the long run. We can't know for sure what will happen next or the precise timing... But the "RV indicator" certainly has my attention that more trouble for the economy could be ahead, or at least maybe more trouble than many observers want to believe today. Still, there are also signs that a more friendly Fed environment could be on the way, too... And that could help stocks in the shorter term. The Real Culprit Behind the Banking Crisis This week, a Stansberry Investor Hour "listener favorite" returns to the show... Kevin Duffy, a hedge-fund manager and editor of the Coffee Can Portfolio newsletter, is back. And on his mind is the spectacular, near-overnight collapse of banks... and what really caused it... [Click here]( to watch this episode of the Stansberry Investor Hour right now. And to catch all of our shows and more videos and podcasts from the Stansberry Research team, be sure to [visit our Stansberry Investor platform]( anytime. --------------------------------------------------------------- Recommended Links: [Marc Chaikin: 'This Wave of Bank Collapses Changes Everything About How to Invest in 2023']( Wall Street titan Marc Chaikin predicted February's sell-off... AND the recent run on banks way back in November. Now, he's sounding the alarm on what's coming next for the stock market... "Folks are about to do some very dangerous things with their money in the coming weeks, unless they understand what's coming next." [Click here for details (and a free recommendation)](. --------------------------------------------------------------- [It's Time to Turn the Tables on Wall Street]( The top 1% grew their wealth by $7 trillion following the 2008 crisis... and made $1.7 million for every $1 YOU made during COVID-19. Now, it's playing out all over again. [See their next move here](. --------------------------------------------------------------- New 52-week highs (as of 3/20/23): Broadcom (AVGO), inTEST (INTT), and Torex Gold Resources (TORXF). In today's mailbag, more feedback on [the upheaval in several banks](... and some kudos for Retirement Millionaire editor Dr. David "Doc" Eifrig's advice that we shared [in last Thursday's Digest](... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "Lots of discussion about [bank runs], but no has bothered to discuss the fact that banks are still paying a fraction of a percentage on savings accounts. Meantime, you can get significantly higher rates from short term T-bills and brokerage money market funds. Is there any wonder why depositors would be pulling funds out? "Again, it appears banks are making bad decisions by not paying their depositors market rates, and losing them to other options. "Failure is the way you flush bad decisions from the market. If the government does not allow that to happen, these bad decisions will just keep happening." – Paid-up subscriber John J. "Thank you for sharing Doc's Advice on aerobic exercise to help with stress. This is one of the few times you have shared this kind of info. This is very important at this time the way the market has been this last year. This advice in my opinion will help your health in the long run..." – Stansberry Alliance member Lowell D. All the best, Corey McLaughlin Baltimore, Maryland March 21, 2023 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 982.4% Retirement Millionaire Doc MSFT Microsoft 02/10/12 844.9% Stansberry's Investment Advisory Porter ADP Automatic Data 10/09/08 776.7% Extreme Value Ferris ETH/USD Ethereum 02/21/20 607.6% Stansberry Innovations Report Wade HSY Hershey 12/07/07 589.0% Stansberry's Investment Advisory Porter WRB W.R. Berkley 03/16/12 543.5% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 433.8% Retirement Millionaire Doc AFG American Financial 10/12/12 406.0% Stansberry's Investment Advisory Porter ALS-T Altius Minerals 02/16/09 333.6% Extreme Value Ferris FSMEX Fidelity Sel Med 09/03/08 303.8% Retirement Millionaire Doc Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 4 Stansberry's Investment Advisory Porter 3 Retirement Millionaire Doc 2 Extreme Value Ferris 1 Stansberry Innovations Report Engel --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst ETH/USD Ethereum 12/07/18 1,380.2% Crypto Capital Wade ONE-USD Harmony 12/16/19 1,167.3% Crypto Capital Wade POLY/USD Polymath 05/19/20 1,053.2% Crypto Capital Wade MATIC/USD Polygon 02/25/21 920.8% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 639.1% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root Rite Aid 8.5% bond 4.97 years 773% True Income Williams ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. 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