I was texting with some friends who were happy that our TSP was doing well this past year.
Here's a few articles I've found the past few days:
Over 1700 announced of possible 12,000 expected major retail stores closing in 2020
2019 Auto Sales lowest in 5 years
Auto Sales supported by sub-prime lending while delinquencies rise
Auto Dealers falsifying buyer’s income on car-loan applications
Baltic Dry Index largest drop since 2008
ISM Manufacturing Index 10 year low
US Rail Traffic down %5.1% since last year
Nine States are experiencing a contracting economy
So why is the Market going up?
Lots of reasons, but here is one biggie: The Federal Reserve bank has been pumping (printing) hundreds of billions into the repo market since September as posted about earlier. More announced just a few days ago. The four biggest primary lenders (JP Morgan, Citi, B of A, and Wells Fargo) need that cash to keep hedge funds afloat.
These massive hedge funds are borrowing money to buy equities, which drives the market up. Hedge fund purchases and corporate buybacks are masking the real business values. If hedge funds have trouble making these loan payments, they stop buying. If they don’t keep buying, stock prices stagnate. If they liquidate to make payments, prices decline.
In short, the US government is printing money for the purpose of allowing banks and hedge funds to gamble borrowed money in a rigged game, and you are assuming the risk.
The Market is following the increasing Fed Balance Sheet and little else. We can’t print money indefinitely while the government runs a $1 Trillion dollar per year deficit. So, when we stop printing, no repo market funds, hedge funds liquidate to pay bills, stocks decline, a panic and rush for the exit ensues. Wall street will be the first to the exit and they’ll be taking the bulk of the cash with them. Passive investors like you and I will be at the back of the line. Don’t fall in love with your TSP gains and I feel bad for anyone signed up with BRS.
Keep an eye on this link: