Fed is Done, Offense! The Issachar Fund has about 20% invested in growth stocks and 80% in a high-yielding short-term fixed-income ETF! The S&P 500 (big caps) and NASDAQ 100 (technology) indexes bounced above their 50-day Moving Averages (DMA) on above-average volume after the reported number of job openings unexpectedly dropped. The market viewed the lower job openings and higher unemployment figures as a sign the Fed may be done raising rates. Businesses typically hire fewer people if they are concerned about a future economic slowdown. The Fed will likely pause its rate-raising inflation-fighting campaign, and the market welcomes an end to higher short-term Fed rates. However, the market continues to price in higher rates on the longer-dated treasury bonds as Congress continues its irresponsible deficit spending. The Artificial Intelligence (AI) meme theme continues to ripple through leading growth stocks, confirming the bull may still have some legs to run higher. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The recent spike in the 10-year Treasury bond yields to 4.36% raised fears the US may be borrowing more than it can afford – or fund! August’s $1.03 trillion in Treasury refinancing is still creating aftershocks as the realization that the interest burden on servicing $32 trillion of debt may be unsustainable. We are spending more on interest than defense, which is unsafe. Last week, the Fed continued to reduce its balance sheet by selling another $18 billion of bonds, which supports higher yields. Rising rates cause bonds to decline, so investors buy growth stocks to outpace inflation and the dollar’s purchasing power loss.
Crude oil prices are up 30% in 2 months, nearing $90.00/barrel again! Gas prices are now 31% above the 5-year average and rising rapidly. Oil prices are in a sustainable uptrend now that the Biden administration has stopped draining/selling our strategic petroleum reserves, artificially keeping gas prices low. I expect Saudi Arabia and OPEC to extend production cuts over the next few days, which could drive oil prices even higher, causing more trickle-down inflation. Issachar owns a few stocks in the energy space that have been adding to our gains.
Consider that while 187,000 new non-farm payrolls were allegedly created in August, unemployment rose sharply from 3.5% in July to 3.8% in August! Meanwhile, July’s job number was revised downward from 187,000 to 157,000, making it seven months in a row that the job number was revised lower the following month. Can we trust our government to report the truth?
Personal savings in the US peaked at $2.1 trillion during the pandemic and have fallen sharply since! Only about $190 billion in personal savings remains, down ~91% from the peak. Since 2022, average household savings have declined by $100 billion per MONTH. By the end of this quarter, excess savings in the US are expected to be depleted. Debt levels are going to soar. Delinquencies on auto loans, credit cards, and consumer loans just hit their highest levels since 2012. In 1 month, student loan payments on $1.6 trillion of debt will resume. People are “fighting” inflation with debt they can’t afford. Debt will soon be the answer for many more people.
Bottom line: The market produced a Follow-Through Day (FTD) last week, putting Issachar back on offense. So, I followed my discipline and purchased stocks with accelerating earnings and sales near price consolidations. An FTD is when a major index advances over 1% on higher volume at least four days after a market bottom. The economy appears to be slowing, the Fed may be done raising rates, and the market has been rewarding selected growth stocks. I plan to get more invested this week. Grace and Peace to everyone!
My command is this: Love each other as I have loved you, Jesus. John 15:12
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: 3329-NLD-09/05/2023