Happy Belated New Year 2025 everybody
As today Jan 15 2025, closes out, we now have two weeks of “market action” behind us. My last post dated in November discussed the election and obviously we know the winner is Mr. Trump. Politics aside, I see GOOD THINGS happening as they directly relate to the economy. Some of which are deregulation, revised tax policy, and (all indications…) a pro-business administration. ALL of this should propel the stock market higher.
In my October 22, 2024 post, I discussed my move the the S-Fund. I remain committed to those reasons, and expect small cap stocks to perform well in 2025, consistent with historical patterns associated to elections.
The market does have some concerns: Tariffs, “Trade Wars”, and of course the ongoing good news-is-bad news, such as improving inflation numbers, which of course “means” (does it?) the Federal Reserve will not lower interest rates much further. Lets look at some charts:
As noted on the chart, is the huge “upside move” on 11/06/2024, once we had a known winner of the election. The market likes certainty. Then, traders went home for Thanksgiving and Christmas, and the index drifted downward, with no volume to prop it up. Normal behavior. We saw some “sell off” action on or about 12/18/2024, likely to exit positions before the holidays. Normal behavior. On 01/15/2025 (date of this post), the Dow Jones (NOT a small cap index, I know….) rose 700 points, arguably based on the fact that inflation indeed is improving. Lets look at that, Core CPI:
As indicated, Core CPI is improving, much improved from its peak of 6.6% in September 2022. This has allowed the market to breath a sigh of relief in regards to interest rates.
The way I see the world, the fundamental and economic “story” supports the charts, and thus I remain committed to my position in the S-Fund. My personal TSP is 100% S-Fund, however I would be probably just as happy being 50% S-Fund and 50% C-Fund.
With that said, this concludes the first post of 2025. As things warrant, I will post again in the upcoming weeks. I hope everyone has a great year. Please continue to share this website with your colleagues and friends.
Direct link to this post, if the above images do not come through your email, is at this link: https://www.thefedtrader.com/
Thank you again
-Bill Pritchard
