Market Update: 10-10-22

Resting: On a Cliff!  The Issachar Fund is 97% in Cash! I purchased three 1% ETF positions: the dollar and two inverse ETFs that short the NADASQ 100 and Emerging Markets. I am trying to build conviction on the short side, and if it works, I plan to increase exposure betting the market will continue lower. However, I will change my opinion/position if the market/Fed “pivots.” The S&P 500 (SPY) is down about -23% YTD and the NASDAQ 100 (QQQ) is down about -32%, so it has been a tough year for buy-and-hold strategies. Issachar is down a fraction, and I am not happy since my goal is to make money. This is a Bear Market/recession; bad things can happen, so please do not ignore risk. I respect/manage risk by getting out when my perception of risk is high and getting in when risk is low. Risk is still high, and I see no reason to buy anything at these levels; although it is tempting, who likes catching a falling knife? Stocks that were holding up are now getting hit, and they will eventually take down all the stock market generals before this bear is over. The market did not like the Friday employment report and took the SPY and QQQ down to the June 17th low level of support, right to the “edge of a cliff.” If the market can not “pull a rabbit out of its hat” and trade higher, we will likely see the market fall fast on its weight. Where will new money come from to prop this market up and give us a typical V-bottom recovery we have been conditioned to expect? Is it truly different this time since the Fed is now raising rates and reducing its balance sheet? Let’s stay tuned and focus on the facts, not opinions. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

The Fed’s balance sheet decreased by another $39 billion last week, so now they are getting serious! Last week, the Fed’s balance sheet hit its lowest level of the year, down $206 billion from its peak in April and $74 billion over the previous three weeks. This is the largest 3-week decline since July 2020. Who will counter or replace the Fed’s Quantitative Tightening (QT) experiment while the Fed is draining liquidity to fight inflation? The market is discounting another 75bps rate increase by the Fed before the November election, and it appears they are bent on breaking something before they stop. Average mortgage rates in the US are now over 7%, up a massive 4% or 133% from earlier this year. Average mortgage payments have doubled THIS YEAR. This is from Fed head Philip Jefferson: “Restoring price stability may take some time and will likely entail a period of below-trend growth. However, I assure you that my colleagues and I are resolute that we will bring inflation back down to 2 percent.” The Fed hiked rates 3% so far this year and expected to hike another 1.25% before year-end. Fed head Evans said rate hikes of 125 bps are expected over the next two meetings. Wow! Are they considering the collateral damage they may cause hard-working Americans who love this country?

Tidbits: Switzerland announced they would imprison people for up to 3 years if they raised their thermostats above 66 F. This is all spurred from ESG’s wave of “woke morality.” The entire energy market in Europe is falling apart because of severe Environmental Social Governance (ESG) caps on energy production. For every reduced gas production unit, the slack is picked up by Russia and China. Major companies such as BlackRock gain state favors in China by forcing companies to adopt ESG practices in the United States. This weakens the US because the Chinese companies are not forced into the same uneconomic ESG standards. Global debt hit $303 trillion in 2021! More than 50% of CEOs are planning layoffs. 60% of HR managers are looking to lay off people working remotely. Bonds had their worst year in history, and rates are expected to rise, forcing bond prices to lower. Housing prices are falling for the first time in a decade. Two straight quarters of negative real GDP equals a recession. Nuclear War is on the table as Putin suspects Biden blew up his gas pipeline to Germany. Was the pipeline sabotage designed to start another war and take our focus off the November elections? However, there is hope in November if we elect God-honoring leaders.

Personal Notes: I am a New Covenant Believer living under God’s Grace, and I am free! I believe Wisdom is a gift from God to anyone who asks. God made everyone and everything, including the tools/techniques we use to manage risk. I try to rely on Wisdom and common sense to be a good steward of what I have been entrusted with. We are all children of God, and when we believe/know our true identity, we can then rest in His Love and Grace. Jesus had not performed any miracles yet, but God said he was “well pleased with his Son.” When a son/daughter knows who they are, there is no need to perform or seek approval because their Father cannot love them anymore or any less. If more people knew the Truth about their identity (who they really are), there would be more Peace and less chaos. I pray that you rest knowing you are a son/daughter of the All-Mighty Creator of the Universe. Amen!

Bottom Line: Issachar is 3% invested in pilot positions betting the market will continue down. This is the worst year for stocks since the Great Financial Crisis in 2008—so far. The major indexes declined to the June 17th low and seem ready to roll off the cliff. Biden has been manipulating oil prices by draining the Strategic Petroleum Reserves by 1 million barrels/day, bringing oil prices down. OPEC will counter Biden by reducing production by 2 million barrels/day to boost oil prices before the election, and gas prices at the pump are on the rise. I am looking for an opportunistic entry to go long oil. Fiscal policies increased the money supply by 40% in the last 18 months, and the Fed’s monetary policies are designed to counter self-induced inflation. The hopes of a “Fed pivot” and market bottom have faded. However, inflation reports out Wednesday (PPI) and Thursday CPI) could be telling. We are children of God, and whether we believe it or not, He still loves us equally and unconditionally. Please help me defund darkness by only investing in companies that honor God. Grace & Peace to Everyone!

Links: Performance, Fact Sheet & Strategy, Blogs, My Story, Docs, BRI

Issachar: A Buy & Hold Alternative Actively Managed Like A Hedge Fund!

God created man in his own image; in the image of God, he created him; male and female, he created them. Genesis 1:27

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: 4098-NLD-10/10/2022.

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