Powell Plummet! The Issachar Fund is about 67% invested and concerned! Junk bonds are trading below their 50-day moving average, indicating investors have lost their risk appetite and the market may be headed lower. I added a small junk bond short ETF as a hedge against further stock declines. Issachar owns stocks in the oil, gas, coal, solar, chemicals, and fertilizer space which have been holding up relatively well. However, I follow the charts, do not buy and hold anything, and always have an exit strategy. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
We could be in the third and final bear market wave lower to test the June 16th bottom, which is another 11% lower! I make daily decisions managing risk, and the market determines the return. Jay Powell (Fed Chair) said, “there will be a pain to households and businesses as they fight inflation.” Ouch! Powell spooked the market with more words like “forcefully” and “until the job is done” on Friday, and major index ETFs dropped over -3% on above-average volume. This drop could be a simple “shake-out bull-trap” designed to scare investors out of their positions or a new leg lower. If the market were worried about Powell raising rates higher than the 75bps that may already be priced in, the bond market would have tanked, but it didn’t. Instead, 20-yr Treasury bond prices went up ¾% on Friday, indicating a more ominous flight to safety. No one knows. I believe the Fed could raise rates 75bps at their next meeting in September and do nothing before the November elections to not appear political. However, it seems people of power may influence the Fed in office, and he may do their bidding to keep his job.
The Fed increased its balance sheet by $2 billion last week! I expected the balance sheet to shrink faster, like the prior week. The Fed indicated they would decrease their balance sheet by $60 billion/month starting in September. This could be bad for stocks and bonds if they do what they say. Maybe they are trying to achieve a “soft landing” and not crash the economy and stock market ahead of a major election in November. The market is always looking ahead, and when new data from the Fed appears, the market adjusts accordingly. Higher rates hurt higher growth stocks with higher debt, so they typically get hit the hardest, like on Friday.
Tidbits: We depend on hydrocarbons for 84% of all energy, which is only 2% lower than 20 years ago. Wind and solar technologies supply about 5% of global energy. Electric vehicles offset less than 0.5% of world oil demand. Is the “climate change” scare another hoax like “Russia Collusion?” Electricity in Europe has risen about 800%, which is unaffordable. Natural gas in Europe is priced at 580% the price of oil, up from 400% a few weeks ago. What will happen to natural gas prices when winter hits? Europe could be flirting with a deep depression, while the US could be stuck in stagflation battling with negative GDP growth and high inflation. The S&P 500 index has been up less than 1% since 4/9/21. Please financially support and vote for people of integrity in November who do what is right in God’s eyes, not what is popular.
Bottom Line: Issachar is invested, but that could change if the market continues its high-volume sell-off from Friday. Since the Fed started lowering rates and printing “fake money” to save us from the 2008 financial collapse and blowing up their balance sheet from $1 trillion to over $9 trillion on 4/19/22, the market has rewarded the V-shaped dip buyers. The Fed has been raising rates and decreasing its balance sheet to reduce the inflation it helped create, so “this time is different.” We may be in a U-shaped stock market recovery era where stock picking outperforms index buying. I am concerned that a recession in Europe may create a worldwide recession unless we elect God-honoring people to get us back on track. God gives us free will to make good or bad choices, and bad decisions can create generational chaos. Let the Holy Spirit be your umpire and guide you to a position of peace. Grace and Peace to everyone!
Let the peace that Christ gives control your thinking. It is for peace that you were chosen to be together in one body. And always be thankful. Colossians 3:15
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 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: 4020-NLD-08/29/2022