Market Talk / Jan. 8 - 14

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I think tomorrow's inflaion report has the potential to move the market big time one way or the other. Low inflation is good for the economy AND the Fed stops sooner than later, stocks could straight up. On the other hand, high inflation means lower growth for 2006 and a Fed that raises rates to over 5%, stocks could go straight down. Since I moved over to G a couple of days ago, I am hoping for the latter. I feel like the guy standing at the craps table betting on the don't pass line, betting with the house and against the other 20 people standing there. My dilemna is how far down will it go before it stops. It seems for the couple years that I have been actively trading my TSP account, anytime I am looking for a decline of 5%, we get 3. If I am looking for 3% we get 1. I would love a decline of 4 or 5% here to set up the next run, but my experience tells me, if we get 1 1/2 to 2%, to jump back in guns blazin'.

Dave
<><
 
Kinda like playing the bond market - negativity in reverse

Roguewave,

Almost 40% of S&P 500 revenues are derived from overseas operations. A weaker dollar is good for U.S. large-cap export-oriented growth companies, they are more competitive in the global market place. A strong dollar provides a competitive edge to overseas imports because we can purchase them cheaper with a strong dollar. That is also why tourists like to shop or travel when the dollar is strong - it buys more in the local currency.

A German company would like to see a strong dollar so that their exports can undercut the local products prices and be more competitive.

The I fund players think in reverse - they would prefer a weaker dollar because they gain more in dollars when there is a currency revaluation at the end of the trading day. I tend to think this is over played because the reason the I fund is accelerating is because of domestic consumption and the degree of exports to other countries. So go to Burger King and have it your way.
 
I had posted this in "strong dollar" under the I forum. Thought it should go here as well.

The I fund did NOT account for the dollars gains, late in the day, on Jan 12. It appears that the I fund should have lost about 1% if the TSP police had "adjusted" the value for the dollars gain over the yen and euro. So, if the international markets are down today and/or the dollar continues to gain ground over the yen and euro, we could see the I fund lose a lot. Can anyone verify what Im saying or see where Im coming from?
 
Birchtree said:
Roguewave,

Almost 40% of S&P 500 revenues are derived from overseas operations. A weaker dollar is good for U.S. large-cap export-oriented growth companies, they are more competitive in the global market place. A strong dollar provides a competitive edge to overseas imports because we can purchase them cheaper with a strong dollar. That is also why tourists like to shop or travel when the dollar is strong - it buys more in the local currency.

A German company would like to see a strong dollar so that their exports can undercut the local products prices and be more competitive.

The I fund players think in reverse - they would prefer a weaker dollar because they gain more in dollars when there is a currency revaluation at the end of the trading day. I tend to think this is over played because the reason the I fund is accelerating is because of domestic consumption and the degree of exports to other countries. So go to Burger King and have it your way.
Click to expand...

Hmm, let me think about this and get back to you explaining my perspective on why I've been in the I fund for quite some time now. Here's a brief comment. A "strong" dollar is good for Wall Street but bad for America overall because it creates the framework for exporting jobs and inflation to the rest of the world while importing real goods and deflation thereby causing a massive trade imbalance in the form of a major trade deficit. Initially this isn't to difficult to deal with but over time it can develop into a structural trend and becomes a real problem to deal with. This is where we as a country are at and why the dollar as a trading currency unit has become quite volatile over the past few years.

I have to go for now but will try to follow-up with more comments later on today.
 
The Fed

Where were interest rates when the Fed started reducing them around 2001-2002?

Though economic conditions change, it would seem to be that rates were too high then just as they would be too high now.

It would be tragically funny it some kind of geo-political situation would disrupt oil markets again ... and market forces would necessitate actions by the Fed ... and the gold market(?).

Right now I Bonds are paying over 6.5% until June ... a good rate for no risk.
 
My sweat pumps are turned off. My transfer to 100% I to 100% G went through last night.

I am so glad. ;) . Those still in I fund. Buckle up.

Going to stay in the G fund for awhile. I just do not need the stress. The house all ways wins. :rolleyes:
 
Wheels said:
The MSCI EAFE was up .099% today (that is already adjusted for the dollar). The I fund went up exactly what it was supposed to. There should be no adjustment tomorrow. Tom keeps a link to the EFA on the bottom of this page with a header that says "EAFE (I fund)" but this is a link to the index "fund", not the index itself. There is no way to track the index itself on an intraday basis. I think this causes a little confusion. Morgan Stanley posts the results of the actual index each day at around 3:00pm at this address

www.msci.com/equity/index2.html

You'll find this post to accurately predict the price of the I fund over 95% of the time, except on the days that the TSP board does their little fair valuation thing, but again, today wasn't one of those days.

Dave
<><
Click to expand...

Thanks for the info the Dave, will have to keep an "I" on this.......:p
 
Quips said:
Where were interest rates when the Fed started reducing them around 2001-2002?

Though economic conditions change, it would seem to be that rates were too high then just as they would be too high now.

It would be tragically funny it some kind of geo-political situation would disrupt oil markets again ... and market forces would necessitate actions by the Fed ... and the gold market(?).

Right now I Bonds are paying over 6.5% until June ... a good rate for no risk.
Click to expand...

6% was the final nail March 2000. The started to lower at 6.5% in December 2000. By that time the NASDAQ was nearly halfed.

I talk about the lag effect. Perfect example here.

From a historic perspective 4.25% is the low end of the bell curve.

I funds are paying 6.73 until 30 April. Just thought I would chuck that in the mix.
 
Market sentiment

The poll came through this morning, and I voted bearish. I see I was not alone. At least for the next couple of days. I think the run up was healthy, but it was time to take a breather.

The TSPTALK poll so far was:
Bullish (up) 40%
Bearish (down) 43%
Neutral 17%

Have you voted yet?

On another front, did you read the govexec.com article at:

http://govexec.com/dailyfed/0106/011206pb.htm

which reported that Congress has changed the formula again on how GS pay will be calculated- itwas ECI +05 for the military, and ECI -05 for civilians, but Congress kept giving pay parity. Now it si going to be straight ECI.

But I am in the FAA, so the "pay band caps" will hold down future raises where I am. TSP day trading is my best shot to being able to have a decent retirement someday.

So it goes....
 
Economic data not very good, rut roh.

PPI 0.9% and retail sales below expectations.

Core PPI only .1% though.........
 
8:30am 01/13/06 U.S. DEC. PPI ENERGY PRICES UP 3.1%

8:30am 01/13/06 U.S. CORE PPI UP 1.7% IN 2005, VS 2.3% RISE IN 2004

8:30am 01/13/06 U.S. PPI UP 5.4% IN 2005, LARGEST SINCE 1990

8:30am 01/13/06 U.S. DEC. PPI UP 0.9% VS. RISE 0.5% EXPECTED

-----------
Looks like neutral is a lot higher then 4.25%

Largest increase since 1990 - no do not look at the man behind the curtain. ;)
 
You stay in that G fund. I'll take the Core PPI only being up 1.7%. Raising interest rates won't bring down energy prices. But then again, I'm not the market timer................
 
Should be an interesting day.

Core does not include energy, food and renting vice owning a home.

Not even sure what the core is since my three biggest expenses are energy, food and owning a home.
 
Last edited:
The I fund has posted major gains all in the presence of historic highs in the price of gold. The traditional relationship that exists between Gold and the Dollar has not existed for some time, my feeling is that China and India as much to do with that.
The I fund has posted some of its largest gains when the dollar falls and even bigger gains when the prospect of the Feds stopping the rate hikes is talked about.
The basic relationship; and I mean BASIC between the I fund profits; have been falling dollar = I fund gains.
Can anyone comment on why pulling out of I is a good thing when the Dollar falls??
Don’t take offence to this post, as I value all posted information. I use the posts as a stimulus for further examination. I would be one of the last to criticize anyone’s moves.
Joe
 
Wizard said:
Up only 1.7%....

???? In one month. On an annual bases that is only....20.4%.

20.4% in one year. Up only 1.7%. Hmmm.
Click to expand...

That was for the year MT.

Yes we do have an ignore function. :)
 
Core does not include energy, food and renting vice owning.

I am not a mouse and it is torture I live in a house. Look at what I got a double energy bill.
 
Heal the gap

There is the risk that a negative divergence could occur if the DJIA were to reach a new high but the DJ Utilities, which are nearly 8% below their October peak, fail to hit a new high. I'm some what relieved that today's market action has both the DJTA and the DJUA showing relative strength and moving on the plus side. Thank the pause that refreshers to allow catch up - this is healthy.

Dennis - that was some air pocket at 1300 hrs.
 
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