Trade wars and tariffs continue to cause uncertainty for the markets. Tom Essaye of The Sevens Report wrote, “The worst case scenario is foreign governments (China/Mexico) simply wait Trump out given we’re 19 months from an election. In that outcome, there is no China trade deal and tariffs (Chinese and Mexican) act as an anchor on global growth and market sentiment for 18 months, increasing the chances of a recession.” From a technical perspective, interest rates are at their lowest levels since 2017 which is good for bonds. However, we have seen increasing weakness in equities over the last month. On Friday the S&P 500 closed at 2752, about 200 points below its recent high of 2945 on 30 April. This is eerily similar to last fall’s pattern. On 20 September 2018 the S&P was at 2930. Three weeks later on 11 October 2018, the S&P 500 had lost about 200 points and stood at 2728. On 24 December 2018, the market closed at 2351, losing almost an additional 400 points. That said, the possibility exists that we could challenge that Christmas Eve low. For TSP TIPS, the TSP bond fund (F) hit new record highs every day this week. However, the equity funds (C/S/I), which were holding above their 200 day Moving Averages last week, dropped below it this week. As such we will use our first allocation of the month to reallocate accordingly.
Trade wars and tariffs continue to cause uncertainty for the markets. Tom Essaye of The Sevens Report wrote, “The worst case scenario is foreign governments (China/Mexico) simply wait Trump out given we’re 19 months from an election. In that outcome, there is no China trade deal and tariffs (Chinese and Mexican) act as an anchor on global growth and market sentiment for 18 months, increasing the chances of a recession.” From a technical perspective, interest rates are at their lowest levels since 2017 which is good for bonds. However, we have seen increasing weakness in equities over the last month. On Friday the S&P 500 closed at 2752, about 200 points below its recent high of 2945 on 30 April. This is eerily similar to last fall’s pattern. On 20 September 2018 the S&P was at 2930. Three weeks later on 11 October 2018, the S&P 500 had lost about 200 points and stood at 2728. On 24 December 2018, the market closed at 2351, losing almost an additional 400 points. That said, the possibility exists that we could challenge that Christmas Eve low. For TSP TIPS, the TSP bond fund (F) hit new record highs every day this week. However, the equity funds (C/S/I), which were holding above their 200 day Moving Averages last week, dropped below it this week. As such we will use our first allocation of the month to reallocate accordingly.