Market Update: 12-09-19

The Issachar Fund (LIONX), is about 95% invested in stocks and my conviction level is high!  I sold a few stocks that were not performing as expected and traded up for what I believe are better prospects.  There are a lot of stocks that meet my fundamental criteria of three consecutive quarterly increases in earnings and sales AND have double-digit next year earnings estimates.  I really like what I am seeing in the market especially as the indexes approach new highs.  It feels like Santa will arrive on time and NOT disappoint like last Christmas.  Let’s not forget that the market had fallen over 19% in Q4 before bottoming on 12/24/18.  The Fed was in a rate raising mode and the market was not happy UNTIL the Fed did an about-face and lowered rates.  The Fed decided to be more accommodative in early 2019 and the market rewarded it’s policy change with a new up-trend.  Recently, the Fed became even more friendly by expanding its balance sheet.  The market seems to again welcome this liquidity expansion experiment with open arms.  My stock positions are very liquid allowing me to sell very quickly if needed.  However, I am expecting the market to finish strong into Christmas and a bring in a Happy New Year!  LIONX is a BRI, Trend Following, Liquid-Alternative Mutual Fund that is Actively Managing  Risk like a Hedge Fund seeking low-correlation/beta/risk to the stock indexes.  When my Strategy identifies a low risk environment, I seek to invest in junk bonds/growth stocks with strong technical chart patterns and sound fundamentals.  During high risk environments I seek to avoid Life-Changing losses.  The Issachar Fund seeks moderate capital appreciation consistent with capital preservation.  The Fund Adviser (HCM) is Celebrating 30 Years of Actively Managing Risk!  (Portfolio holdings are subject to change at any time and should not be considered investment advice.)

QE continues to Expand!  From 1/2/18 to 8/30/19, the Fed’s balance sheet declined about 15% (10% annualized).  However, from 9/3/19 to 12/3/19, the Fed’s balance sheet expanded from $3.759 Trillion to $4.052 Trillion or $293 Billion which is an 8% increase (34% annualized).  Bottom line, this additional liquidity injection has to go somewhere, and I believe a lot of this “liquidity” is finding its way into the stock market.  This “shot in the arm” of additional liquidity gives me GREAT CONVICTION to stay fully invested!  In early October, the Fed made an important policy switch, announcing injections of $60 billion/month instead of the prior withdrawals of $60 billion/month.  That was a huge $120 billion switch/month and I believe the market seems to agree with the Fed’s decision.  This additional “boost of credit” may provide the “fuel” to keep this bull market charging ahead.  I believe the market is anticipating a robust economy with very little risk of a recession in 2020 AND a Trump presidency re-election.

266,000 new jobs were created in November and the unemployment rate hit a 50-year low at 3.5%!  Wages advanced 3.1% from a year earlier and that has not been seen in over 16 years.  This is great news and I believe it shows the incredible strength of this economy.  President Trump is working on another tax cut aimed at the middle class.  Japan launched its biggest fiscal package in three years hoping to lift its economy.  Japan has been hit by the Chinese slowdown as well as its own trade war with South Korea.  Liquidity rules the day!

I believe “liquidity” is more important than “earnings”!  In fact, during the bear market of 1973-1974, a major stock market index lost 80% of its value as the Fed tightened the money supply to stifle soaring inflation.  Earnings of the S&P 500 index rose every quarter during that bear market which tells me that earnings are not as important as we may have been led to believe.  Earnings have declined every quarter this year and they are expected to show a decline in Q4 as well.  Economic growth has been weakening for the last two years but the stock market does not seem to care.  I believe “credit/liquidity expansion” trumps “earnings”.  What do you believe?

Bottom line I try to never fight the Fed when they are expanding liquidity/credit.  The more money banks have to lend, the more likely they are to lend it.  Let’s just go with the flow and enjoy the ride while it lasts.  I believe there will be a price to pay for this global money expansion experiment, but the time is not now.

Junk bonds are trending higher!  The junk bond average has resumed its uptrend and that tells me that investors’ have a good appetite for risk.  I see lots of “green lights” ahead so let’s enjoy the party while it lasts and make a little hay while the sun is still shinning.

Bottom line:  I believe QE appears to be still “alive and kicking”!  Thanks to a strong jobs report, I believe the Fed is likely to NOT lower rates on Wednesday and precious metals could lose support they recently acquired.  If the President decides to NOT raise tariffs on December 15th, that could add more “fuel to the fire” in support of a year-end rally.  If I am wrong, by God’s Grace I will not hesitate to do what it takes to “right the ship” and avoid life-changing loses.  Wishing You and Your Loved Ones a Very Merry Christmas!                 


Here is a link to the latest
3rd Quarter Issachar Fund Fact Sheet

Member organizations: KA, NACFC, CIF, OSC, NAAIM and here is a podcast link to my interview on The Real FBI.       

Biblical Responsible Investing (BRI) is the term used to describe the activities of Christian investors who purposely align their investment choices to support their Christian beliefs. The Fund is ESG (Environmental Social Governance) conscious, pro-life and pro-family and will not invest in securities with a negative InspireImpact Score.     

For nothing will be impossible with God. Luke 1:37

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, which can be obtained by calling 1-866-787-8355 or visiting https://www.LIONX.net.  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, Inc is not affiliated with Northern Lights Distributors, LLC.  Important Risk Information.  Mutual Funds involve risks including the possible loss of principal.  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.  If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss.  The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments.  The Adviser’s judgment about the attractiveness, value and potential appreciation of particular asset classes and securities in which the Fund invests may prove to be incorrect and may not produce the desired results.  Past performance is no guarantee of future results.  If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss.  The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments. Quantitative easing (QE) is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject liquidity directly into the economy.  S&P 500 Index is an unmanaged composite of 500 large capitalization companies.  NLD Review Code: 7334-NLD-12/9/2019

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