TSPwire Blog

May-11: TSP Weekly Allocation Alert

ee@tspwire.com — Sun, 11 May 2008 22:39:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Wall Street’s optimism confronted reality during the week. Reality won.

American International Group (AIG) dropped 8.8%. The insurer late Thursday posted $7.8 billion loss and unveiled the plan to raise $12.5 billion in capital. General Motors (GM) was the second-worst blue-chip after AIG falling 4.1%. FedEx also added some negative news to the mix. After the closing bell, the shipping company, an economic bellwether, warned that it will miss expectations because of rising fuel prices. Its shares fell 3%.

Stocks also were hurt by the climb in oil prices (passed $125 per barrel). Commodity prices can weigh on economic growth and stocks. Basic materials and energy sectors were the worst-performing sectors on Friday, suggesting that high prices will crimp demand. And though the worst of the credit crunch may be over, its economic effects seem to be lingering. The Commerce Department reported the trade deficit shrank in March as imports and exports fell.

Stocks were due for a break. After touching bottom on March 11, US stocks bounced back 10-11% to its highest level of the year when the week began. We believe that this week we observed a temporary adjustment and there is nothing to worry about.

Next week we will keep our allocations at the same level: 50% in I Fund and 50% in C Fund.

May-04: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 05 May 2008 02:47:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

It was a respectable week for stocks overall, helped by another cut in short-term interest rates by Federal Reserve. While investors responded positively to the employment report, analysts said it reflects a stalled economy. Friday, the Fed unveiled an expansion of its Term Auction Facility to provide extra cash to struggling banks.

The Standard and Poor 500 index (C Fund) gained 1.1% for the week. Treasury bonds fell on jobs report, sending yields higher. The dollar gained against the euro and yen.

For this week we will keep our allocation at the same level: 50% in I Fund and 50% in C Fund.

Apr-27: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 28 Apr 2008 02:18:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Investors shrugged off soaring oil prices and crumbling consumer confidence to push stocks higher Friday with a hope the credit crisis might be waning. The consumer survey also found that inflation expectations are rising. Underlining that worry, crude oil surged.

Some Wall Street analysts believe that the worst may be over. Oil hit another record high but has pulled back. The dollar has finally started to show some signs of life. And for the most part, corporate earnings were pretty good. There have been no more major bombshells from financial institutions, a sign that six rate cuts since last September and massive injections of liquidity into the banking system may be working.

Overall we still feel very good about our current allocation: 50% in I Fund and 50% in C Fund.

Apr-05: TSP Weekly Allocation Alert

ee@tspwire.com — Sat, 05 Apr 2008 17:03:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

The U.S. economy lost 80,000 jobs in March, the biggest drop in five years, as weakness in the labor market spread beyond housing and finance to engulf a broad swath of businesses. The bigger than expected employment drop keeps pressure on policy makers at the Federal Reserve to cut interest rates aggressively when they meet at the end of April.

Stocks mounted a valiant effort to move higher Friday in the face of bad news about the economy. Then the air steadily leaked out of the market as worries mounted that Wall Street’s credit crunch is spreading into other sectors. Meanwhile the dollar weakened further against the euro and yen.

Despite a flurry of bad news in recent weeks, stocks have been on a solid upward trajectory. The advance started on March 11, when the Fed unveiled a plan to lend certain Wall Street banks as much as $200 billion of its own Treasury bonds and bills for 28 days. The move raised hopes that it would help thaw the credit crisis that has caused financial markets to seize up. Several other Fed initiatives have helped prop up stocks since, including its bailout of Bear Stearns, which was purchased at a fire-sale prices by J.P. Morgan Chase.

This week we will keep our allocation at the same level: 50% C Fund and 50% in I Fund.

30-Mar: TSP Allocation Alert

ee@tspwire.com — Mon, 31 Mar 2008 04:13:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

The stock market tried but failed to shake off its worries Friday, tying a grim ribbon on a mostly downbeat week. For each bit of good news Friday, there was bad news to offset it. Standard & Poor 500 index (C Fund) fell 1.1% on the week and is down 10% this year.

A Commerce Department report on personal income and spending was not entirely abysmal raising hopes the economy might yet avoid a deep recession. Oil futures fell 1.8% to $105.62 a barrel. Gold prices fell 2% to $930.60 (Note: that may indicate that investors started to move their funds away from conservative investments back into stock markets.)

So far our overlook of the market did not change. We will keep our allocation at the same level: 50% C Fund and 50% in I Fund.

16-Mar: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 17 Mar 2008 04:32:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

We just survived another crazy week on the Wall Street. Stock indexes skyrocketed on Thursday after Feds introduced their plan to improve liquidity crisis. On Friday stocks opened higher, boosted by better-than-expected inflation data, before new developments in financial sector pushed all major US stock indexes down. Bear Sterns turned to JP Morgan Chase and the Federal Reserve for a 28-day loan of yet undetermine size, sparking concerns about the depth of the problems in the already roiled financial markets.

This week we decided to keep our current allocation: 50% in C Fund and 50% in I Fund.

Mar-09: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 10 Mar 2008 02:00:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Another brutal week on the Street… Investors ran away from signs that credit crunch is squeezing Main Street sending stocks tumbling. The blue chip average (C Fund) went down 2.8% last week. The reason behind drop on Friday was a Labor Department report that showed that nonfarm payrolls fell by 63,000 in February after dropping 22,000 in January.

Crude oil gained $3.31 a barrel, or 3.3% for the week to $105.15.

Analysts said stocks could continue to move lower unless the credit markets recover soon. The Federal Reserve stepped up its efforts to put a halt to the downward spiral Friday. The central bank plans to inject more cash into the financial system by increasing the size of its loan offerings from $60 billion to $100 billion. Because of the fact that stocks’ valuation became even more attractive last week and the assumption that US dollar will continue to slide down we decided to keep our current allocation: 50% in C Fund and 50% in I Fund.

Mar-02: TSP Weekly Allocation Alert

ee@tspwire.com — Mon, 03 Mar 2008 03:42:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Friday selloff leaves the stock market in a rut, and it may go in deeper before it digs itself out.

With market unable to muster any conviction about the future, it has been trading in a narrow range despite violent moves in both directions. The pattern continued this past week. After a burst of optimism at the start, stocks tumbled as fears bubbled anew about credit markets and the economy.

In the week to come, the economic calendar is heavy, headlined by the February payrolls report on Friday. The schedule is light on earnings news, which has been mostly good outside of the financial sector, meaning the market might continue its downslide.

So far our long-term outlook on stock market did not change. After this week’s downturn valuations of stocks in S&P 500 (C Fund) became even more attractive. For now we are staying with our current allocation: 50% in C Fund and 50% in I Fund.

24-Feb: TSP Weekly Allocation Alert

ee@tspwire.com — Sun, 24 Feb 2008 06:00:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

Stocks ended the week with gains after a sharp turnaround late Friday undid losses recorded for the most of the day and the second half of the week on concerns about the US economy. That recovery highlights how important the bond insurers have become to confidence in financial system. They guarantee principal and interest repayment on both low-risk municipal bonds and the riskier complex debt instruments that have come under pressure during the housing downturn. If the insurers become unable to make good on their commitments, it could mean more troubles for banks and investors who hold the debt.

Minutes of Federal Reserve Open Market Committee meeting in late January, which came out on Wednesday, spoke of increasingly difficult financial conditions for consumers and businesses. On Thursday, the Federal Reserve Bank of Philadelphia’s survey of local economic conditions slipped well into contraction territory as it recorded its lowest reading since 2001.

Warning signs about inflation also caught stock-market off guard. Oil surge to $100 a barrel on Tuesday, combined with a January rise in consumer-price inflation, put a dumper on any rally under way at the start of the week. Oil futures fell back from their highs by Friday’s close.
Overall investors continued to flock to the safety of Treasury bonds (F Fund). The Standard & Poor 500 stock index (C Fund) gained 0.2% on the week but it is still down 7.8% this year.

Because of concerns about inflation, weakening dollar and recession we will continue to stay away from F, G and S Funds and will keep our allocation at 50% in C Fund and 50% in I Fund.

Feb18: TSP Funds Allocation Alert

ee@tspwire.com — Tue, 19 Feb 2008 01:39:00 GMT

I Fund	C Fund
50%	50%

Good evening, TSPwire Tactical Investor!

After beginning the week with a bounce, stocks ended it with a slid, dragged down by renewed worries about the economy and credit markets.

Stocks fought to rebound from Thursday's decline but failed, spending most of Friday in the red after a raft of troubling economic news. The University of Michigan said its measure of consumer sentiment plunged to the lowest level in 16 years. The New York Federal Reserve's index of regional manufacturing activity sank into negative territory, its biggest one-month drop on record.

Together with a tepid industrial production reading from the Fed and a Labor Department report of surging import prices, the data sparked fresh fears that economical problems might be deep-rooted.

Data that we are getting indicates that we might be already in the middle of recession. Feds might continue cutting interest rates which will push dollar even lower against other currencies. C Fund and I Fund both can benefit from the falling dollar and because of that we would like to keep our allocation at the same level: 50% in I Fund and 50% in C Fund.