The high CPI (inflation) report on Wednesday had led to Fed Funds Futures pricing in a higher probability of a 100-basis point rate hike at their next meeting in July. It’s also pricing in another 75-basis point hike at their meeting in September. Although I don’t think all this will happen, if it does, the market cannot handle another 1.75% hike. There’s too much leverage in the system and this restrictive monetary policy will continue to put tremendous pressure on the market.
As I’ve said over and over since early April, we will not see any SUSTAINED upside until the Fed pauses their current rate-hiking cycle. I cannot repeat this enough: Please stay patient and be defensive. I came into today approximately 40% invested and I reduced down to less than 15%. As always, when I present my investment levels, it’s in an effort to try and be as transparent as possible with members. Your decisions should be based on your own investment objectives and risk tolerance. Good luck for the remainder of the week and I will discuss this further in Saturday’s video.