Update: 04/29/24

Weak GDP & Strong Inflation = Stagflation   

Issachar Update: I purchased a small position in an inverse 20-Yr Treasury Bond ETF that should go up if yields continue to rise, which I believe they will. We still hold about 25% in gold and silver and may buy more growth stocks to stay ahead of inflation if they continue to be accumulated. There has been some rotation out of stocks that have led the market higher since the November bottom into more defensive consumer staple stocks. Shifting from growth to staples like soap, toothpaste, and toilet paper could indicate a weakening economy. The major indexes and junk bonds are trading below their 50-day moving averages, which suggests investors’ appetite for risk has diminished. I try to react to what I see in the charts and not predict what I think will happen. Everything I need to know is in the price chart, and the price is always right! (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

Market Update: First quarter preliminary GDP came in at 1.6% vs. expectations of 2.4%, while the GDP deflator, a measure of inflation, came in hot at 3.1% vs. 2.9% expectations. Personal income for March was up 0.5%, but spending was up 0.8%. Sales were up mainly because prices were higher (inflation), so consumers were spending more to maintain their lifestyles. A weak GPD and strong inflation equates to stagflation. I believe the economy will continue to slow, and inflation will continue to rise because prices will continue to increase until Congress cuts spending. Congress spends, and the Fed prints money to buy the bonds fewer investors want, so the Treasury will be forced to pay higher yields to attract more buyers. Higher yields slow economic growth. A weak economy with persistent inflation creates stagflation. If stagflation is the new reality, the market will adjust its sails.

The market has been expecting rate cuts from the Fed since January, but we may be looking at a rate increase to tame inflation created by printing more money. The Fed may surrender and raise its arbitrary 2% inflation target since it would be hard to justify a rate cut, putting more pressure on inflation. It seems like the Fed has painted itself into a corner, so they may abandon balance sheet reductions and switch back to QE (quantitative easing). QE, or creating new money out of nothing, will increase the Fed’s balance sheet so they can buy more bonds, putting pressure on lower yields. It is complicated, but the market will figure it out and display it in the price charts.

Bottom line: The economy is weakening, and inflation is strengthening so risk/volatility has risen. The Fed is behind the eight-ball, and we may see if it surrenders to inflation or keeps rates where they are. I believe inflation will not decline until we enter a recession. Higher rates are not good for bonds, but some growth stocks and maybe gold/silver will do well; that is where I am focused. Grace and Peace!

May the God of hope fill you with all joy and peace in believing, so that by the power of the Holy Spirit you may abound in hope. Romans 15:13 

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., a member of 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. 3333-NLD-04/29/2024

Dexter Lyons, Portfolio Manager
Issachar Fund (LIONX & LIOTX)
Buy Issachar Fund @ Schwab, Fidelity, or
Fully Committed to Biblically Responsible Investing (BRI)

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