The long-anticipated invasion of Ukraine by Russia took place this week. Uncertainty leading up to the invasion had investors retreating in mass from risky assets. When the invasion became official Thursday morning, stocks opened down and it seemed the selling would deepen. Instead, the morning lows on Thursday would be the base of a rally that extended through Thursday and Friday where stocks closed at their highs for the week in positive territory. After spending most of the week in negative territory, the S&P 500 (C-fund) finished the week up 0.84%. The small caps S-fund led the TSP funds for the week with a gain of 1.57%.
The reason of why investors were suddenly attracted to risky assets was left to speculation. The main thought process was that the war in Ukraine will leave so much uncertainty for the global economy that the Federal Reserve is less likely to be too aggressive with rate hikes in the coming months. Another supplemental argument is the war will add to the trade and inflation problems which will reduce the attraction to lower yield investments that are alternative to stocks. But the real answer is this was a relief rally in a bear market. The anticipation for an invasion had the worst priced into stocks, so when it finally took place and the market dipped even lower, investors with high amounts of cash jumped in to lock in the low prices and FOMO triggered a buying spree in the midst of a time of doom and gloom. The Ukraine and Russian drama will carry on and bring more problems, so volatility is here to stay.
Behind the headlines of the new war, high inflation data in the U.S. remains at highs not seen in decades. At the same time consumer spending, the backbone of the U.S. economy, bounced back in January despite the high inflation and the tail end of the Omicron infections. For now, consumers are not making more but they are spending despite the heightened prices. The price of gas is expected to rise due to the war in Europe so we will see how consumers react in the coming months.
Looking for an edge on your TSP return? Get the Last Look Report for as low as $4.19 / month. The report is a daily email on the TSP AutoTracker moves, news, forum threads, and more before the IFT deadline. The service is aimed to help you make your own IFT decisions by giving you relative information 30 min prior to the deadline including where the members of TSP Talk are moving their money.
Here are the weekly, monthly, and annual TSP fund returns for the week ending February 25:
The SPY (S&P 500 / C-fund) remained below its 200-day EMA this week and established new intraday lows for 2022 on Thursday. The prices reached intraday Thursday had not been seen since the second quarter of 2021. However, the open on Thursday would be the base of a rally that would eventually erase the week's losses and push the index back to nearly even with its 200-day EMA. The C-fund ended the week with a gain of 0.84%. The index is down 2.76% in February with one trading day left in the year.
The Dow Completion Index (S-fund) traded similarly to SPY however its high and close for the week was even with its 20-day EMA. January lows and the low of this week established a trend line below although it is descending. Overhead resistance will come before the index has a chance to test its 50-day EMA. The S-fund led the TSP funds with a gain of 1.57% for the week which erased most of the losses of the month putting the S-fund down just 0.55% for February with one day remaining.
EFA (EAFE Index / I-fund) also rallied off the lows on Thursday but the losses were too deep to reach positive territory for the week like in the U.S. stock funds. An open gap was left behind at Friday's open and the ETF ended the week above the resistance of a descending trading channel. The I-fund lagged the TSP funds for the week with a loss of 1.57%.
BND (Bonds / F-fund) slipped this week but did not trade at the previous week's lows so there is some stabilization in the bond market despite the war in Europe. There are still three open gaps above but the rising inflation does not make bonds and attractive investment to the average investor. The F-fund fell 0.33% for the week.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
wwww.tsptalk.com
Last Look Report
Facebook | Twitter
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
The reason of why investors were suddenly attracted to risky assets was left to speculation. The main thought process was that the war in Ukraine will leave so much uncertainty for the global economy that the Federal Reserve is less likely to be too aggressive with rate hikes in the coming months. Another supplemental argument is the war will add to the trade and inflation problems which will reduce the attraction to lower yield investments that are alternative to stocks. But the real answer is this was a relief rally in a bear market. The anticipation for an invasion had the worst priced into stocks, so when it finally took place and the market dipped even lower, investors with high amounts of cash jumped in to lock in the low prices and FOMO triggered a buying spree in the midst of a time of doom and gloom. The Ukraine and Russian drama will carry on and bring more problems, so volatility is here to stay.
Behind the headlines of the new war, high inflation data in the U.S. remains at highs not seen in decades. At the same time consumer spending, the backbone of the U.S. economy, bounced back in January despite the high inflation and the tail end of the Omicron infections. For now, consumers are not making more but they are spending despite the heightened prices. The price of gas is expected to rise due to the war in Europe so we will see how consumers react in the coming months.
Looking for an edge on your TSP return? Get the Last Look Report for as low as $4.19 / month. The report is a daily email on the TSP AutoTracker moves, news, forum threads, and more before the IFT deadline. The service is aimed to help you make your own IFT decisions by giving you relative information 30 min prior to the deadline including where the members of TSP Talk are moving their money.
Here are the weekly, monthly, and annual TSP fund returns for the week ending February 25:
The SPY (S&P 500 / C-fund) remained below its 200-day EMA this week and established new intraday lows for 2022 on Thursday. The prices reached intraday Thursday had not been seen since the second quarter of 2021. However, the open on Thursday would be the base of a rally that would eventually erase the week's losses and push the index back to nearly even with its 200-day EMA. The C-fund ended the week with a gain of 0.84%. The index is down 2.76% in February with one trading day left in the year.
The Dow Completion Index (S-fund) traded similarly to SPY however its high and close for the week was even with its 20-day EMA. January lows and the low of this week established a trend line below although it is descending. Overhead resistance will come before the index has a chance to test its 50-day EMA. The S-fund led the TSP funds with a gain of 1.57% for the week which erased most of the losses of the month putting the S-fund down just 0.55% for February with one day remaining.
EFA (EAFE Index / I-fund) also rallied off the lows on Thursday but the losses were too deep to reach positive territory for the week like in the U.S. stock funds. An open gap was left behind at Friday's open and the ETF ended the week above the resistance of a descending trading channel. The I-fund lagged the TSP funds for the week with a loss of 1.57%.
BND (Bonds / F-fund) slipped this week but did not trade at the previous week's lows so there is some stabilization in the bond market despite the war in Europe. There are still three open gaps above but the rising inflation does not make bonds and attractive investment to the average investor. The F-fund fell 0.33% for the week.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
wwww.tsptalk.com
Last Look Report
Facebook | Twitter
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
