Fed Now Considering HIKES Amid Global Supply Shock

Midterm-election period increases the risk of a material equity drawdown as geopolitical tensions, uncertainty over the Fed's rate path, and rising AI-related costs for Big Tech shift market tone to cautious/risk-off. Recommend defensive positioning: raise cash by ~5%, trim high-multiple Big Tech exposure by ~5–10%, hedge 3–5% of equity risk (puts or inverse ETFs), and consider lengthening duration by ~50–100 bps to buffer against volatility.

Analysis

Midterm-election period increases the risk of a material equity drawdown as geopolitical tensions, uncertainty over the Fed's rate path, and rising AI-related costs for Big Tech shift market tone to cautious/risk-off. Recommend defensive positioning: raise cash by ~5%, trim high-multiple Big Tech exposure by ~5–10%, hedge 3–5% of equity risk (puts or inverse ETFs), and consider lengthening duration by ~50–100 bps to buffer against volatility.