Market Update: 02-21-23

Recession & Higher Rates!   The Issachar Fund is about 70% invested in 31 growth stocks and looking to sell more if the market continues to de-risk! Thursday’s hot PPI number damaged the disinflation theme that had taken root after Powell’s dovish comments following the last Fed meeting. Those comments launched a FOMO stock market rally as rates and the dollar advanced into double-top resistance. The dollar may be rallying because it expects US rates to rise as global assets flock to higher yields. Junk bonds have rolled below their 50-DMA, indicating risk may be increasing. Junk bonds rally when investors feel comfortable taking on more risk for higher yields. Investors’ risk appetite is waning, and junk bonds are retreating. Home-building stocks were doing well in anticipation the Fed would raise rates only two more times, but they have come under heavy selling pressure, so we sold out of those positions. CME Fed Futures say the Fed will raise rates three more times in 2023, causing lots of institutional distribution in the stock market. I expect the market to consolidate recent gains and not retest the 1/19/23 lows, but I will let the charts dictate my actions. I remain flexible and make incremental risk management decisions based on what I see in the market. The market decides the return, so we must manage risk to achieve our long-term goals. Risk is elevated, and caution is warranted. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

The Fed decreased its balance sheet by $51 billion last week! When the Fed reduces its balance sheet, it sells bonds causing yields to rise, which drains liquidity. Less liquidity is less money to buy stocks and bonds; therefore, prices tend to fall when buyers don’t show up to bid up prices. Liquidity is the blood that flows through the market veins. Less blood could lead to a sick patient, so let’s hope the Fed does not kill the economy by raising rates and unwinding its balance sheet too fast.

Bottom Line: Issachar is dancing close to the door in case we hear “last call.” No one rings a bell to say it is time to sell, but there may be a “dog whistle” if one is trained to hear. The S&P 500 Index lost over -18% last year, and there is no guarantee that it will not fail again this year. I am a risk manager, and my perception of risk has increased, so I am more willing to sell than buy. However, the market decides the return, so I will get more invested if I see signs of institutional accumulation coming back in the markets. The CPI, PPI, and retail sales came in hotter than expected, raising fear the Fed would raise rates higher and for longer than Wall Street had hoped and anticipated. The odds of a 50-basis point hike at the next Fed meeting have increased significantly, along with the risk of recession. Thank you, and may God bless and prosper all new and existing Issachar shareholders. May God’s Grace & Peace continue to guide your decisions.  

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Investors should carefully consider the investment objectives, risks, charges, and expenses of the Issachar Fund. This and other important information about the Fund are contained in the Prospectus, obtained by calling 1-866-787-8355 or visiting The Prospectus should be read carefully before investing. The Issachar Fund is distributed by Northern Lights Distributors, LLC., member FINRA/SIPC. Horizon Capital Management Inc. (HCM) is not affiliated with Northern Lights Distributors, LLC.

Important Risk Information: Mutual Funds involve risks, including the possible loss of principal. An investment in the Fund may not be appropriate for all investors. The Fund may hold cash positions when the Adviser feels that the market is not producing returns greater than the short-term cash investments in which the Fund may invest. There is a risk that the sections of the market in which the Fund invests will begin to rise or fall rapidly, and the Fund will not be able to sell stocks quickly enough to avoid losses or reinvest its cash positions into areas of the advancing market quickly enough to capture the initial returns of changing market conditions. The Adviser’s judgment about the attractiveness, value, and potential appreciation of particular asset classes and securities in which the Fund invests may prove incorrect and may not produce the desired results. Past performance is no guarantee of future results. Ratings are only one form of Fund performance and should not be used as the sole consideration in an investment decision. Opinions expressed are subject to change, not guaranteed, and should not be considered investment advice. There is no assurance these opinions or forecasts will come to pass, and past performance is no assurance of future results. For more information regarding the fund, including current performance, please visit   Review Code: 5230-NLD-02/21/2023.

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