Good Evening, The market continues to be shaped pretty much by the same dynamics that have moved it since last summer. Covid-19 (Cases and Immunization), The economy (Reopening and Jobs Jobs Jobs), Pandemic Relief in Congress (passed in the house, currently in the Senate), and one new issue treasury bond rates (mainly their anticipated effect on interest rates and high flying tech stocks that have led the market higher heretofore). I could talk about that last one for a long time using terms like overblown, ridiculous, needless worry….joke…….. You the picture. Basically, treasury rates are rising in response to an improving economy. As I said before money rolls out of bonds to be invested elsewhere. As bond prices go down the yield goes up. For those of you who are new to the game bond yield is what the bonds pay. Interest rates are set off of bond yields. At the same time this happens inflation starts to rise in the economy. When inflation reaches or exceeds the Fed’s (FOMC) target they raise interest rates to tighten up money and control the inflation. These people are playing what we call in the deep south an iffin game. If this happens that will happen… They are Assuming. This is a Christian site so I’m not even going to tell you what my Marine Corps drill instructor had to say about that word when I once let it slip……Oh those old memories. Anyway, their worries are totally unfounded for three reasons. #1 The rate of inflation has yet to reach the current Fed target of 2 percent. #2 While treasury yields are indeed rising you must consider where they are rising from. Historic lows!!! The current rise in yields is just starting to get bond yields back into what are considered the normal range. In simpler terms things are just returning to normal!  #3 And what about those dreaded interest rates? Is the Fed going to raise them if inflation approaches 2 percent? Jerome Powell, Chairman of the Federal Reserve said in prepared remarks before both the Senate and House banking committees just last week that the Fed is not going to raise rates. That they are willing to overlook the 2 percent target to help this economy recover. Again in simpler terms they are willing to let the economy run a little hot so it can recover. He reiterated the fact that current inflation has not reached their target. Can the man make it and plainer than that?? The Fed is not going to raise rates for the foreseeable future. So why are all the major news sources reporting that investors think they might. If I ever learned one lesson in my investing career it is that you don’t fight the Fed. Never ever bet against the Fed!!! and make no mistake, selling because you think rates are going higher at this time is betting against the Fed. I will bet the farm that interest rates will not rise in 2021. However, inflation will start to rise. There’s little doubt about that!! At least you better hope it does!!! Do you want an economy that’s cooling off or do you want one that’s heating up?  Here’s the whole deal  Hot Economy = Recovery. Enough said!

The days trading left us with the following results: Our TSP allotment fell back -1.68% after posting a strong gain yesterday. For comparison, the Dow dropped -0.46%, the Nasdaq-1.69%,and the S&P 500 -0.81%.

The days action left us with the following signals: C-Buy, S-Buy, I-Buy, F-Sell. We are currently invested at 100/S. Our allocation is now +11.57% not including the days results. Here are the latest posted results:

More Prices & Returns

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  [email protected].