TommyIV's TSP Talk Blog

Investors sold stocks this week with fears that trade wars will eventually drag down the already slowing economy. The ongoing trade dispute with China has had buyers on the sideline since a deal fell apart weeks ago. The falling momentum created by the deteriorated China deal has sparked the Dow Industrials Average longest losing streak in 8 years. On top of the concerns about the economy, President Trump warned he would add tariffs to Mexico goods if they did not do something to stop the current immigration problem from Mexico to the United States. This pushed stock prices lower to end a week already in negative territory.

A deal with Mexico is possible before the tariffs go into effect, but the real concern for investors may be the use of tariffs as a geopolitical weapon rather than just a trade war tool. This is an added uncertainty to stocks in a time where stocks seemed to have lost their Goldilocks conditions that drove them up through April. What is to come for stocks will be news driven and volatile.

The U.S. stock TSP funds fell more than 2.5% this week although both are still up more than 10% for the year. Investors jumped into bonds especially Friday following the Mexico tariff announcement driving the F-fund up 0.92% for the week; a weekly move normally unheard of for the F-fund.




Here are the weekly, monthly, and annual TSP fund returns for the week ending May 31st:




The SPY (S&P 500 / C-fund) fell to is its 200-day EMA this week. The index closed slightly below the moving average. There are a couple open gaps above the current price from the last couple weeks but there is an open gap left unclosed from back in February now reasonably in reach below the current price. The index has the technical support to rebound off the lows of this week but any signs of trouble with China and Mexico may push prices below support. The C-fund fell 2.59% for the week and 6.36% for May.




The Dow Completion Index (S-fund) underperformed the TSP funds with no support from moving averages and a fail of the lows of March. There is a short-term falling trading channel has been in during May. The hope for this index is a turn around in sentiment in the new month. The S-fund fell 2.63% for the week and 6.99% for May.




EFA (EAFE Index /I-fund) struggled with U.S. stocks gapping down below the lows of May to end the month only higher than the early prices of Friday. There are open gaps to be filled above the current price and the world has not fallen apart so there is a chance for a correction of the aggressive selling lately. The I-fund fell 1.85% for the week and 4.69% in May.




AGG (Bonds / F-fund) was already rising at a relatively steep and steady pace before the influx of bond buyers following the Mexico tariff announcement. The index push above resistance and may look to be a bit overbought. The extent to how much effect tariffs with China and maybe Mexico will have on the U.S. economy may be a bit over exaggerated; but investors are not taking the risk. The fall in interest rates in turn are narrowing the gap between what banks charge to borrowers and what they pay depositors adding pressure to the bank sector. The F-fund rose 0.92% for the week and ended May with a 1.77% gain.




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
www.tsptalk.com
Weekly Wrap-Ups Archive
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.