Good Evening. Both yesterday and today the FED came to the rescue. Yesterday Jerome Powell changed direction from his earlier comments when he said that interest rates were now approaching neutral. During his last comments he had stated that there was a long way to go before we would reach neutral rates. OK Scott, wait a minute. Can you translate for me??? To put it in simpler terms you could say that neutral means normal. Part of Federal Reserves mission is to control inflation. One of the tools they use to do this is to increase the interest rate that banks charge one another which basically ends up increasing all rates. By doing this they tighten up money and slow spending. Thus, they are able to slow down inflation. So when they say the rate is neutral they mean it is just right to keep inflation under control. The Fed has a 2 percent inflation target which is what they consider to be normal. A healthy economy will have some inflation. When inflation slows down drastically it is a sign that the economy is not so healthy. At least that’s what they tell me. At any rate Jerome Powell’s statement yesterday signaled to the market that the Fed will look at current conditions before they increase rates in 2019. In other words they will not automatically increase rates but will put any increases on hold if the economy warrants it. Today when the market was again trading in the red the minutes from the last fed meeting were released in which the Fed opened debate on pausing rate hikes in 2019. That was enough to rejuvenate the market  and bring it off it’s lows for the day preserving most of yesterdays gains. All this action was a step in the right direction and may help the market to rally into the New Year, but it will take more to keep it going. We still have the specter of the trade war with China hanging over our heads. The G-20 meeting in Argentina starts tomorrow and that is where Presidents Donald Trump and Xi Jinping will be having dinner to discuss trade. To say this is the next market moving event is an understatement. I won’t rehash the possible outcomes of the meeting here as we already discussed the subject in a few of my most recent blogs. Just be aware of it and monitor it closely. Especially if you are invested in stocks!

The days trading left us with the following results: Our TSP allotment was steady in the G Fund. For comparison, the Dow slipped -0.11%., the Nasdaq -0.25%, and the S&P 500 was -0.22%. For those of you who are wondering the S Fund was -0.12%…..

The days action left us with the following signals: C-Neutral, S-Neutral, I-Neutral, F-Neutral. We are currently invested at 100/G. Our allocation is now -4.09% on the year not including the days results. Here are the latest posted results:

God bless, Scott 

 

 ***Just a reminder that you can review the performance of our allocation at the Web Site TSPTALK.com in the autotracker section under the screen name KyFan1.

 

 

I produce and publish this blog as both a ministry and for the benefit of any Federal Government Employee. This is done to offer you some guidance as to how to approach your retirement more financially successful. When it is time for you to retire, I recommend you utilize the services of a Professional Money Manager, who works with a reputable investment firm. He understands the guidance you have already received and he can manage your savings assets utilizing a more advanced investment program into the future. 

 

If you would like to receive more information about this introduction, please feel free to contact me at  KyFan1@aol.com.