Market Update: 06-06-22

Energy is Hot!  The Issachar Fund is still about 40% invested in energy, agriculture, retail, transportation, and utility stocks! We hold many energy-related stocks that have worked well while other sectors are experiencing heavy selling pressure/distribution. Biden has not changed his “anti-fossil fuel” position to increase oil production in the US, so I expect oil prices to continue rising, producing higher profits for the energy sector. The market is trying to digest higher gas prices, higher interest rates, supply chain problems, and the Fed’s response to these inflationary issues. Two weeks ago, stocks were dropping 30%-50% on earnings beats, and now we are seeing companies reduce guidance, and they are rallying. That is an encouraging sign! I believe 5/20/22 marked a tradable bottom and expect the market to drift until we get more economic data, possibly the jobs report on Friday. I hope to get us back in the black for the year shortly. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

Treasury yields are rising again, causing high P/E stocks to pause! The 10-year Treasury yield is approaching the 3% highwater mark last seen on 5/6/22. From 11/23/18 to 5/6/22, the yield chart looks like a giant cup formation, and we are trading near the top right side of the cup. The dollar is rallying higher again, indicating higher rates. The 3% treasury yield should serve as a hard ceiling of resistance, but if it does not hold and rates continue beyond 3%, it will likely not be good for the economy or the bond market. Higher interest rates caused by higher expected inflation can cause higher growth stocks to get repriced lower. However, selected stocks could do well in a post-3% yield environment as investors get out of bonds seeking higher yields. I expect active risk management stock-picking to outperform passive index buying in the foreseeable future.

The Fed kept its balance sheet steady last week with little change! However, the Fed indicated they would raise rates 50bps in June and start quantitative tightening (QT) by reducing its balance sheet. I believe the Fed will raise rates by 50bps, but they will find an excuse not to materially sell down its massive $9 trillion of government bonds. If the Fed shuts off liquidity by selling bonds too fast, they run the risk of higher rates and higher inflation, so they will likely take a measured approach and do very little bond selling. The Fed created the inflation they are tasked with fixing. How crazy is that! It is like asking an arsonist to put out the fire they started.

William O’Neil founded Investor’s Business Daily (IBD) to share his money management secrets that helped him become a self-made billionaire. I have studied several systems and models in my 32-years of active risk management, and I believe that O’Neil’s time-tested method is the best. It uses a proven logical and common-sense approach to fundamental and technical analysis, and I understand how and why it works. I use O’Neil’s Market Smith program and highly recommend it to anyone passionate about managing risk to grow and protect their hard-earned assets. I have no affiliation with O’Neil or IBD; it has helped me, and I simply want to help you achieve your financial goals.

Bottom Line: I am still holding our positions but will not hesitate to sell if they do not perform as expected. Energy is hot, but higher oil prices are typically not good for the economy. I believe the Biden administration wants higher oil prices to force everyone into more expensive electric vehicles. They could use rolling black-outs of the government-controlled electric grid to show us who has the power. I believe the masks and social distancing were a trial run for the bigger plan agenda of socialism, so please vote for people who will honor God and the Constitution. My eyes are on what the Fed does and how the market reacts. Grace & Peace until we meet again!    

Love one another. As I have loved you, so you must love one another. John 13:34

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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 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 IssacharFund.com.   Review Code: 5511-NLD-06/06/2022.

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