Market Update: 05-20-19

The Fund holds 15% in Muni Bond ETFs and 85% in Cash.  I like what I am seeing in the muni bond space, especially high yield muni bond ETFs and mutual funds.  I added two muni ETFs as a starter position with plans to possibly add more if things work out the way I anticipate.  I typically “test the waters” with small positions and if they “work” then I try to add bigger positions as I get more conviction in the trade.  On a risk-adjusted basis, the muni bond sector looks attractive at this juncture in anticipation of a slower economic environment.  According to fund tracker EPFR Global, investors pulled $19.5 billion out of global mutual funds and ETFs in the week ended May 15, while bonds added $5.1 billion for their 19th week of inflows.  There is the potential for the stock market to make lower lows.  However, I believe that we are one tweet away from a rally or one tweet away from a sell-off, so stay alert.

Chinese trade tensions have not eased and may have gotten worse.  Trump feels that he is in the driver’s seat when it comes to trade negotiations with China and sometimes, he pushes the envelope …because he can.  However, China sold the most Treasuries in almost 2.5 years in March, offloading over $20 Billion taking China’s Treasury holdings to $1.12 Trillion.  I believe the Fed will buy whatever China sells so I am not too concerned about China selling US Treasuries unless they start dumping then I will become more concerned.  I also believe Trump generally wants the best for America and he is will willing to stick his neck out, just a bit.  It does not seem fair to hard-working Americans who spend money and take risks to bring a product to market to have the Chinese or anyone else steal their intellectual property.  They often duplicate the American product overseas and sell it at a lower price.  It’s believed that this has been going on for many decades and I am glad that someone is finally standing up for America.  Now this trade dispute may incur some pain on both sides, but I believe it is worth it for our economic health in the long run.  I also believe that any economic weakness could be met with more Quantitative Easing (QE) by the Fed.  The Fed has the ability to buy bonds with money it creates out of thin air (QE) in an effort to add liquidity to the markets in hopes of stopping a decline or stimulating demand.  If one looks under the hood and understands how the system really works, it can be a scary scene.  So, let’s pretend all is well and not peak under the hood, okay?  I believe that one day there will be a stiff price to pay for all of this fiscal irresponsibility, but I do not see that happening in the next year so let’s enjoy the ride while it lasts.  However, one should never fall asleep at the wheel and ignore the flashing signs of higher risk.                

The semiconductor stocks were leading the market, but they have turned south.  Semiconductor stocks have historically been a barometer for the health and direction of the market, and they were trending higher up over 45% since the Christmas Eve low.  However, the semiconductor stocks are now trending lower and they are down over 10% since peaking at the end of April.  Risk is high of a further continuation of this down trend.  The NASDAQ, S&P 500 and Russell 2000 Indexes are all trading below their respective 50-day moving averages and that confirms to me that risk is high.  I have learned over the last 29-years of managing money that there are times to be invested and there are times to not be invested.  I believe that cash may be a good place to be right now.

Bottom line:  I believe the market is the sum total of the collective mindset and none of us is as smart as all of us.  The market is always trying to send us a message and I believe the message is …stay out.  When the market sends a different message, I hope to be able to take advantage of the opportunity but for now, the market does not seem to be rewarding risk-takers.  I am graciously optimist looking at the glass as half-full, but I see the glass as half-empty today but that could change.  When I perceive that the market will reward me for taking risk, I plan to seize the opportunity.  Gratitude leads to optimism, and I believe a positive attitude is 90% of the game.

All this is for your benefit, so that the grace that is reaching more and more people may cause thanksgiving to overflow to the glory of God.   2 Corinthians 4:15

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.

S&P 500 Index is an unmanaged composite of 500 large capitalization companies. This index is widely used by professional investors as a performance benchmark for large- cap stocks.
Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index.
NASDAQ Index is an electronic traded listing of over 5,000 active large and small companies.    NLD Review Code: 3385-NLD-5/20/2019