We have finally seen a pullback which was long overdue. Pullbacks in bull markets are usually fast and furious and a little vicious. The basic reason for this was an unwinding of big hedge fund yen trade. I will not go to deep in the weeds to explain this but the Japanese government surprised with a rate increase and it threw this strategy offside and hence the gyrations in the market to unwind this trade. However this strategy has been in place for over 25 years so there may be more volatility to come. Then over the last weekend we had Berkshire Hathaway sell out a good portion of their Apple holdings and this accelerated the selloff.  I used this opportunity to put some money to work in other areas that were also sold off unfairly.

Today I will be looking to lighten up some positions as the last week has seen a big rebound and I do not think this is sustainable. We will likely see an interest rate decrease in September from the Federal Reserve as inflation now has come down to acceptable levels. However we do have a lot of unstable situations in Ukraine, and the Middle East appears to be a very increasing concern. On top of that we have a US election about to come into the final two months and that too creates a pocket of uncertainty. I do not expect doom and gloom but caution is warranted until we start to see earnings and the playing out of the above events. Based on the above, we are staying with our energy positions and fully invested into defense stocks and over-weighting with funds on the sidelines to take advantage of the opportunities that may come from increased volatility.

Have a great day and I look forward to keeping you updated on any further developments.