Friday’s employment report was certainly not as expected, but major market indices rallied with the S&P 500 closing the week at a new record of 4232. As noted in last week’s update, “economist’s estimates were calling for 1 million jobs added and the unemployment rate expected to fall to 5.8%.” Instead, only 266,000 were added and unemployment ticked up to 6.1%. While on the surface you would expect the markets to sell off on the “bad news”, but the markets play the mouse trap game. 1) If the numbers were “good news” as expected, 2) inflation fears might rise, 3) causing the Fed to raise rates, 4) thereby competing with equity returns, 5) which would cause a drop in equity prices. In actuality, the “economic bad news” turned out the be “stock market good news”. From a technical perspective, this is why we use “Price” as a primary determinant in our analysis. “Price is the ultimate resolution of all the forces that have an effect on any particular stock at any particular time. Everything anybody knows, thinks, believes, or feels about a stock is translated into the price at which a stock trades.” For TSP TIPS, both the C and I funds hit new record highs on Friday and the S fund gained 1.3%. All three also have a Performance Ranking that is tightly bunched in a range between 12.94 and 14.06. Based on these factors, we recommend holding with our current allocation.
Friday’s employment report was certainly not as expected, but major market indices rallied with the S&P 500 closing the week at a new record of 4232. As noted in last week’s update, “economist’s estimates were calling for 1 million jobs added and the unemployment rate expected to fall to 5.8%.” Instead, only 266,000 were added and unemployment ticked up to 6.1%. While on the surface you would expect the markets to sell off on the “bad news”, but the markets play the mouse trap game. 1) If the numbers were “good news” as expected, 2) inflation fears might rise, 3) causing the Fed to raise rates, 4) thereby competing with equity returns, 5) which would cause a drop in equity prices. In actuality, the “economic bad news” turned out the be “stock market good news”. From a technical perspective, this is why we use “Price” as a primary determinant in our analysis. “Price is the ultimate resolution of all the forces that have an effect on any particular stock at any particular time. Everything anybody knows, thinks, believes, or feels about a stock is translated into the price at which a stock trades.” For TSP TIPS, both the C and I funds hit new record highs on Friday and the S fund gained 1.3%. All three also have a Performance Ranking that is tightly bunched in a range between 12.94 and 14.06. Based on these factors, we recommend holding with our current allocation.