The Issachar Fund is fully invested in Muni Bonds with a small allocation in Preferreds (15%) and Stocks (5%). Munis and preferred stocks are still acting well as they appear to anticipate further rate reductions. I added a small 5% position in a handful of stocks last week as I became more convinced that QE may not be ending anytime soon. These five stocks have had great fundamentals of sequential quarterly earnings and sales increases along with attractive looking technical chart patterns. I hope to be able to add to these positions if they perform as expected. If they do not do what I expect, I will take the necessary action seeking to minimize losses. (Portfolio holdings are subject to change at any time and should not be considered investment advice. Past performance is no guarantee of future results.)
An allegedly strong jobs number on Friday initially caused the market to drop then a rebound ensued into the close. The unemployment rate rose, and annual payroll growth continued its decline, coming in at 1.5% which is the lowest since January 2018. While hopes of a 50-basis point rate cut in July was dashed, the market may still be holding out for a 25-basis point cut by the Fed. The trend for more Quantitative Easing (QE) and reduced rates at home and abroad remains intact.
Gold continues to flirt with 6-year highs indicating to me that too much QE may now be a serious concern. If gold keeps rallying and stocks go with it, then I will be more convinced that the market is concerned about fiat currency devaluations. Historically, gold has rallied when it perceives that government printing presses are too “free and lose” as money tends to flow out of “soft” assets (currencies) into “hard” assets like gold. Bitcoins also known as “alternatives” are also seeing a lot of renewed interest as it flirts with the $11,500 level from an all-time high near $20k. Recession is almost a certainty in Germany (Europe’s largest economy) as manufacturing orders fell more than expected in May to around a negative -8.6% annualized rate. German and French 10-year bond yields hit record lows last week, both dropping further below zero after dovish comments from the European Central Bank (ECB). Japan has been in a long-term state of perpetual QE and slow growth and they are perhaps the best real-world example that QE does not necessarily create economic growth. Meanwhile, the Chinese are also injecting additional liquidity into their financial system with little noticeable impact on growth.
Grace and peace be yours in abundance through the knowledge of God and of Jesus our Lord. 2Peter 1:2
Bottom line: I believe that QE is alive and well and that is the dominant force driving stock and bond prices higher and there is no sign of QE ending anytime soon. I believe the market is “hooked” on QE and it will not be a pretty sight when we can not get our “fix” anymore.
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. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the inability to collect revenue, for the project or from the assets. Moreover, an adverse interpretation of the tax status of municipal securities may make such securities decline in value. 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 to be incorrect and may not produce the desired results. Past performance is no guarantee of future results.
Fiat Money – Fiat money is government-issued currency that isn’t backed by a commodity such as gold. Fiat money gives governments’ central banks greater control over the economy because they control how much currency is printed. NLD Review Code: 3476-NLD-7/8/2019