3-11-25-SPX

The HCM-BuyLine® turned negative, and we have further reduced exposure to equities. As you will recall, two weeks ago the HCM Pivot Point® was hit, and we reduced exposure by about $1.8 billion. This puts us at roughly 40% cash. Volatility is high, and after making an all-time high on the S&P 500, the market has gone in a straight line down.

Everyone is blaming the market for having a tariff tantrum. The reality is that tariffs are just the excuse, but the fact is that it was a technical selloff. We have not had a real correction of 10%+ in a long time, so it was long overdue. Corrections happen, that is just part of the process of markets moving higher.

So, what is going to happen? We are sitting on multiple billions of cash and yes, we are looking for the market to turn back up and we will be striving to buy some very attractive deals. We still see the market moving higher by year-end, and if we can catch the turn at a reasonable level, we should have a very satisfying year. Selloffs like this come and go, it is just part of the process.

Some will say, why are you so unconcerned? It’s because I have been doing this for about 40 years and the cycle of pullbacks to markets moving back to new highs has happened 100% of the time. The objective now is, can we pick up bargains?

Several economists exacerbated market fears by downgrading their forecasts due to tariff uncertainties. Goldman Sachs notably revised its economic outlook downward. Mark Zandi increased recession probability forecasts from 15% to 35%.

Important economic data this week will be critical for markets.

Tuesday’s January JOLTS report will provide insights into labor market trends, with weaker figures potentially beneficial for market sentiment.

Wednesday’s February core CPI report, with a consensus forecast of 0.30% MoM, will significantly impact market movements; lower-than-expected inflation could reinforce optimism around Fed rate cuts.

Thursday’s core PPI report and Friday’s continuing resolution deadline for government funding add further importance to the week’s events.