Interfund Transfer 8/18 for 8/19/05

[tsptalk]

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I'm making a move to the F Fund this morning. Effect Friday (Close of Business Thursday) I will be 100% F Fund. I talk about it in today's Market Comments.

 

[tsptalk]

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To those who moved to the F fund -

With the F fund up .03 Thursday, don't get too freaked out if we see a small loss Friday.It was ashort term move butI'm thinking we need to give it acouple three weeks to play out, unless I see evidence to the contrary.

Tom

 

[tsptalk]

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A nice late day rally in bonds allowed usto avoid that small loss.

Bonds (F fund)

 

[Birchtree]

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TSPtalk,

A bond friendly note: despite the jump in oil prices, core inflation is lower today (+2.1% year to year) than it was five years ago (+2.5%) when oil was trading near $30 a barrel and 10 years ago (+3%) when oil was about $20 a barrel.

If long rates trend lower the cacophony over the yield curve will start again - making for a bumpy ride. Typically, when the yield curve goes negative for about 90 days or more, the country goes into a recession within 12 months.

Lead times vary between the inversion of the yield curve and a subsequent profits recession. The shortest lead time was six months (June 1989) and the longest was 24 months (June 1973) and (December 1978) The average was 14 months. Equally important, sp500 earnings rates varied from cycle to cycle. The strongest profits growth when the curve inverted was 22% (August 2000) and the weakest was 8% (January 1969).

Dennis