Bear Bounce! The Issachar Fund remains patiently in Cash! On Friday, the market rallied strongly after several weekly declines forcing short sellers to cover their beaten-down NASDAQ stocks. I have not seen anything that fundamentally changed the economic outlook of higher inflation and rising rates; therefore, I call it a bear market bounce. However, I am watching the dollar and treasury yields for clues on where the market may be headed. The dollar is trading near its 3/19/20 high, marked by its 1/6/21 V-shaped bottom, which could be a ceiling of resistance and a possible turning point for interest rates. The 10-year Treasury yield has been in an uptrend since 12/3/21, indicating that inflation was on the rise and not “transitory,” but that could be changing. CME futures predict an 85% probability the Fed will raise rates 50bps at their June meeting. However, CME futures assign a slight 15% chance the Fed will raise rates 50bps after June, so the market thinks one more rate hike is all we need to halt inflation. The market expected a positive 1.1% GDP growth rate in Q-1 but received a -1.4% decline. The market may now be slowing faster than anticipated, and the Fed may not have to aggressively raise rates because the economy may already be in recession. Gold prices that have historically been negatively correlated to the dollar are stuck in a steep downtrend and have declined by -1.2% YTD. Cryptocurrencies and NFTs (non-fungible tokens) are in crash mode as liquidity is drying up due to less free government stimulus money. When credit is easy, and liquidity is flowing, it may seem easy to make money, but this is not one of those times. Until the fundamental and technical picture changes, we will remain on defense in capital preservation mode. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed’s balance sheet barely budged last week, up $2 billion! Powell indicated they would reduce their balance sheet by about $47 billion in June, then $95 billion a month starting in September. However, they may put that on hold if the market senses the economy may be slowing faster than anticipated. If the data-dependent Fed raises rates in June 50bps and the market tanks, the dollar could go into a steep decline because king dollar was advancing based on several more rate Fed rate hikes. Higher rates in the US attract global assets converted into dollars to buy higher-yielding treasury bonds. If the market thinks we are already in a recession, there will be less need for the Fed to raise rates to bring inflation down, which could cause rates to stop rising and the dollar to decline. A steep decline in the dollar could be a significant disrupter for global markets, so I am watching the dollar, rates, and gold closely for our next opportunities.
Bottom Line: Issachar is on defense as my perception of risk is too high for the potential reward. The sun will shine again, and we will have fun making money, but the sky is cloudy today. The market is forward-looking and may be telling us that we are in a recession and the Fed will not need to raise rates to tame inflation. Gold has not proven safe-haven status, but it could become insurance against a declining dollar. I pray the dollar does not lose its “king dollar” status because that could be a massive disruption to the stock and bond markets around the world. We win in the end, but life-changing losses could be in the cards for those unprepared.
The one who conquers and who keeps my works until the end, to him I will give authority over the nations. Revelation 2:26
Please watch “2000 Mules” to see how elections are stolen and share the Truth with your neighbor.
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 www.IssacharFund.com. 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 making 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 www.IssacharFund.com. Review Code: 5479-NLD-05162022.