Updated: May 4, 2021
After scrapping vacation plans earlier in the summer, and still not eager to sit on a plane for an hour or two (especially after video surfaced of three hazmat-suited officials removing a passenger from a packed plane on the London tarmac after he tested positive for COVID-19), I briefly flirted with the idea of buying a motorhome and striking off to see America. That flirt lasted long enough to a) see the pricing behind a new Class A motorhome, and b) read the story of Kyle and Olivia Brady, who had been living out of an RV for the past 5 years, traveling the U.S. with a dog and a new baby, only to recently give up the lifestyle. "Everyone is going to RV parks, national parks, and campgrounds, so it was literally impossible for us to make a reservation on our last trip out," Kyle said. "We felt so frustrated."
Putting aside the Brady’s frustrations for a moment, what’s happening in the RV industry is just one sign of our strange split-screen America. The RV Association monthly survey of manufacturers reported the highest July shipments in four decades. It’s no coincidence then that the stock of Thor Industries, makers of Airstream and other brands, is up 33% for the year. The flip side of that: Marriott International down -29%, American Airlines down -52%, and Norwegian Cruise Line Holdings, down -69% YTD. The bifurcated U.S. economy doesn’t stop with travel and leisure. The energy sector is down -37% YTD. The financial sector is off -16%. Even utilities, usually a bastion of safety during troubling times, is negative for the year, down almost -7%. There are now two distinct Americas. One America is employed or otherwise financially secure, and invested and benefiting from thriving U.S. corporations that have been able to successfully thread the needle of this pandemic. The other America is struggling, with 27 million workers filing for some form of jobless assistance. A record number falling behind on their auto loans. Nearly a third of households in arrears on their mortgage or rent. And the virus continues its unrelenting toll on lives. While sensitive to the fact that 54 million Americans will struggle to put food on the table this year, it’s important – for the safety and protection of our own families – to stay on the right side of that bifurcated economy. Toward that end, the strategies helped us in August.
The 12% Solution has continued to benefit from the tech-heavy QQQ.
Bond Bulls and Global Trader got a second monthly boost from the defensive play of silver.
American Muscle held both Apple and Amazon, two of the true champions of this economy.
The White Knuckle, coming off a 13% July, was overweight in leveraged Treasuries – and got clipped a bit from recent Fed speak.
What to expect in September? One thing for sure – volatility. Valuations of the top stocks are in nosebleed territory, school re-openings are not going especially well, and the Presidential campaigns are kicking into high gear amid extreme voter anxiety. As I’ve said before, long term, the strategies will get the trends right. Short term, there may be a miss or two as the market juggles conflicting signals. So keep allocations of strategies reasonable within your portfolio, and remember that protection remains paramount. And for the opportunistic among us, the provisional picks can provide a heads-up on potential trends. Look for asset class shifts that hold up for a few days. Not every such move is a trading opportunity or justifies a rebalancing, but information is power. Best always, David
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