Good evening, TSPwire Tactical Investor!

Stocks prices on Friday dropped to the levels last seen in March, back when investors feared that the global financial markets were on the verge of collapse.

That earlier selloff had all the hallmarks of a panicky run to the exits. This time it is something more basic: a realization that the combination of the credit crunch and higher energy prices is causing more prolonged harm to corporate earnings than many investors had expected. And unlike the Fed’s bailout of the financial system, these are problems that are unlikely to be solved with a quick fix.

The dollar fell Friday after crude oil prices rebounded and U.S. stocks plunged ahead of next week’s decision on U.S. interest rates. The dollar traded in a depressed range as a recent string of poor economic data in the past few days appears to limit the Feds ability to raise its benchmark interest rate. Investors expect the Federal Open Market Committee to keep the interest rate on hold during meeting next Wednesday.

While we can not predict which way the U.S. Stock market will move next, we see no reasons for dollar to rebound against major currencies. Our current allocation should benefit from falling dollar and therefore we are keeping it at the same level: 50% C Fund and 50% in I Fund.