Don't think Fed should be hiking here, says 3Fourteen's Warren Pies

Summary

Warren Pies discusses how rising oil and potential Fed hawkishness create macro risks, recommending overweight commodities as a hedge. He stays overweight equities despite vulnerability, noting a deep stealth correction and a bullish semiconductor earnings setup driven by extremely high implied volatility. He argues the Fed should not hike into a supply-driven inflation spike.

• Warren Pies advises overweight commodities to hedge geopolitical and macro shock risks.
• He maintains an overweight equities stance, calling the environment a bull market with a significant stealth correction.
• The semiconductor group enters earnings with the highest implied volatility outside the GFC, raising the bar for bears.
• Pies believes the Fed should not hike rates given decelerating wages and a housing recession.
• He warns that if oil does not cool, political pressure may push the Fed to consider a hike, which he sees as a policy mistake.
• Rising oil and low inter-stock correlations leave the broader market vulnerable to a macro shock.
• Commodities benefit from backwardation and ongoing inventory drain amid the Middle East conflict.