The markets had a bullish week going into Friday, and then things turned sour with the S&P 500 breaking a string of back-to-back winning weeks, closing Friday down at 5,976. Monday was a positive but muted day as U.S./China trade talks seemed to be making progress. On Tuesday the two sides reached consensus and the S&P 500 tacked on a gain of about 0.5%. Before Wednesdays open the May CPI and Core CPI came in beating both monthly and annual expectations, but the markets stayed within a tight range with the S&P 500 down about a quarter of a percent. Before Thursdays open we got the second inflation component as the Producer Price Index (PPI) had similar results to yesterdays CPI, but this time the markets reacted positively with the S&P 500 clawing back Wednesdays losses and then some. However, that all changed after Thursdays close as news of Isreals strike on Iran came in. As such, the S&P 500 gapped down at the open. But it then gained some morning steam as the June UMICH consumer sentiment index rose to 60.5, well above market expectations of 53.5 and marking the first increase in six months. In the afternoon Iran retaliated against Israel, erasing the mornings gains and falling below the 6,000 for the first time this week with a daily loss greater than 1%. From a technical perspective last week we mentioned that the S&P 500 has ratcheted itself higher at a 2:1 ratio since 8 April. Well, that same pattern continued this week as the S&P 500 closed lower this week. While we were thinking that next week we might see the Fed lower interest rates and the S&P 500 setting new records, these Israel/Iran strikes have now thrown more uncertainty in the markets. Hopefully this will be short lived, but for now we will remain nimble and flexible and will make reallocations when warranted in accordance with our technical analysis criteria. For TSP TIPS the I fund has been leading the way with seven straight new record highs until Friday. And similar to previous weeks, the C and S funds remain in the runner up and third Performance Ranking positions. As such we recommend no changes to our Aggressive model while increasing our cash allocation in both the Moderate and Conservative models.
The markets had a bullish week going into Friday, and then things turned sour with the S&P 500 breaking a string of back-to-back winning weeks, closing Friday down at 5,976. Monday was a positive but muted day as U.S./China trade talks seemed to be making progress. On Tuesday the two sides reached consensus and the S&P 500 tacked on a gain of about 0.5%. Before Wednesdays open the May CPI and Core CPI came in beating both monthly and annual expectations, but the markets stayed within a tight range with the S&P 500 down about a quarter of a percent. Before Thursdays open we got the second inflation component as the Producer Price Index (PPI) had similar results to yesterdays CPI, but this time the markets reacted positively with the S&P 500 clawing back Wednesdays losses and then some. However, that all changed after Thursdays close as news of Isreals strike on Iran came in. As such, the S&P 500 gapped down at the open. But it then gained some morning steam as the June UMICH consumer sentiment index rose to 60.5, well above market expectations of 53.5 and marking the first increase in six months. In the afternoon Iran retaliated against Israel, erasing the mornings gains and falling below the 6,000 for the first time this week with a daily loss greater than 1%. From a technical perspective last week we mentioned that the S&P 500 has ratcheted itself higher at a 2:1 ratio since 8 April. Well, that same pattern continued this week as the S&P 500 closed lower this week. While we were thinking that next week we might see the Fed lower interest rates and the S&P 500 setting new records, these Israel/Iran strikes have now thrown more uncertainty in the markets. Hopefully this will be short lived, but for now we will remain nimble and flexible and will make reallocations when warranted in accordance with our technical analysis criteria. For TSP TIPS the I fund has been leading the way with seven straight new record highs until Friday. And similar to previous weeks, the C and S funds remain in the runner up and third Performance Ranking positions. As such we recommend no changes to our Aggressive model while increasing our cash allocation in both the Moderate and Conservative models.