Good Evening, Surprised? You really shouldn’t be. We talked about this before the trade. So far it has not gone well but the issue is far from decided. The market sold off again today in a major sort of way as more negative stuff came out on the trade negotiations. Are there any of you that need me to to say those trade negotiations are with China?? I didn’t think so but I mentioned just the same in case we have some new and I mean brand new folks reading today. Anyway, early on it was reported that the Chinese could leave this weeks trade negotiations a day early. Then shortly after that it was reported that the Trump administration was adding additional Chinese names to the no business blacklist and was also moving to further restrict capital flow to the country. That hardly sounds like the US and China are moving toward a trade agreement and quite to the contrary suggests that the trade war may in fact be escalating. Investors were clearly in the “escalating” camp resulting in today’s triple digit sell off. There are two things that are gong to decide the outcome of this conflict between the bulls and the bears. #1 without question are the trade negotiations and #2 is Fed policy during Octobers FOMC meeting. Let me explain. The market is obviously going to celebrate any agreement or even partial agreement on trade between the US and China. If there is no agreement there will be a sell off. Secondly, right now the investors are betting that there is an 80% chance that the Fed will reduce interest rates during the October meeting. It is widely thought that a slowing world and US economy will force them to do so. A rate cut in October will keep the selling in check in the event that there is no trade agreement. Should there be no trade agreement and no rate cut the massive sell off that the bears have been predicting for so long will come. At the very least my best guess would be that there will be at a minimum a 10% correction in that scenario. Should there be a trade agreement and a rate cut, the market will party like it’s 1999! It is my thought that there will likely be a rate cut but no trade agreement in which case the market will continue to trade in this wide and volatile trading range. The bottom line is that the only thing that can ultimately save the rally is a trade agreement with China. That has been and will always be the case……
The days trading left us with the following results: Our TSP allotment sold off to the tune of -1.56%. For comparison, the Dow lost -1.19%, the Nasdaq -1.67%, and the S&P 500 -1.56%. Just in case you were wondering the S Fund dropped -1.78% and the I Fund -0.94%. None of it was good….
The days action left us with the following signals: C-Neutral, S-Sell, I-Neutral, F-Buy. We are currently invested at 100/C. Our allocation is now +5.79% on the year not including the days results. Here are the latest posted results:
| 10/07/19 | Prior Prices | ||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 16.2833 | 19.8018 | 42.7953 | 51.0454 | 29.8513 |
| $ Change | 0.0024 | -0.0375 | -0.1924 | -0.1148 | 0.1653 |
| % Change day | +0.01% | -0.19% | -0.45% | -0.22% | +0.56% |
| % Change week | +0.01% | -0.19% | -0.45% | -0.22% | +0.56% |
| % Change month | +0.03% | +0.58% | -1.25% | -1.27% | -1.29% |
| % Change year | +1.82% | +9.14% | +19.03% | +16.07% | +11.75% |
| L INC | L 2020 | L 2030 | L 2040 | L 2050 | |
| Price | 20.6961 | 28.5135 | 32.8474 | 35.8347 | 20.7738 |
| $ Change | -0.0032 | -0.0055 | -0.0160 | -0.0207 | -0.0134 |
| % Change day | -0.02% | -0.02% | -0.05% | -0.06% | -0.06% |
| % Change week | -0.02% | -0.02% | -0.05% | -0.06% | -0.06% |
| % Change month | -0.20% | -0.27% | -0.70% | -0.85% | -0.98% |
| % Change year | +5.11% | +6.42% | +10.83% | +12.54% | +13.96% |
