I'm officially changing my market strategy

February month over month CPI was at 0.3% versus a 0.3% forecast.

January month over month quarter PCE price was at 0.4% versus a 0.4% forecast.

The main reason for the relatively high February PPI was due to B2B service cost hikes and the delayed pipeline pass-through of early 2026 tariffs.

The FOMC meeting happened on March 18th, and the Fed kept the rates flat, maintaining the interest rate at the range of 3.5% to 3.75%.

The Fed is still forecasting one rate cut within the year, as indicated indirectly through the dot plot.

The war started in late February and has now been ongoing for about 4 weeks.

Historically, when the market is impacted by a war, it generally becomes stale after a few months.

The Iraq War started in March 2003, and the market fell about 15% but recovered within the year.

The Russia-Ukraine war started in February 2022, caused a drop of about 7%, but the market recovered after around a month.

Brent oil recently spiked back above $110 per barrel.

Interest rate is the fundamental basis of valuation, and a mismatch between the actual and expected interest rate will generate disappointments as the discount rate of cash flow will be higher, leading to a lower valuation of stocks.

Trump claimed repeatedly that he would end any conflict in 24 hours with one phone call, but it has been almost 4 weeks with zero diplomatic exit.

Trump claims US drilling completely shields Americans from Middle East shocks, but because oil is globally priced, US consumers are still paying the exact same war premium as the rest of the world.

Conducting more MBS buybacks through Fannie Mae and Freddie Mac or further pressuring the Fed to do a QE or an interest rate cut would be suicidal because it would just add more inflationary pressure.

The S&P and the NASDAQ are down 7% and 10% respectively.

The current situation is a somewhat ambiguous one which makes it hard to predict what will happen, but investors need to be ready for a scenario where the market suddenly moves higher with some unexpected events.

If the oil price stays at $100 or higher for more than a year, the base of the year-on-year CPI will already have been elevated leading to a lower inflation down the road.