I am feeling more pessimistic about US market:
1) US interest rate can go higher.
At best, it will remain high for quite some time to subdue the high inflation rate. Many commented that high inflation rate is persistent and need time to lower it to 2-3%.
The longer the high interest rate, the more it will feed into the economy and businesses. E.g. If Company A need to re-finance its loan in late 2024 and interest continue to be high in 2024, Company A may re-finance its loan at higher interest rate than before.
The longer the high interest rate, the more drag it has on US stock market
2) What is the likely time that US interest rates will be cut? During recession. When the economy is going into recession, earnings will decline. The declining earnings will affect US stock market S&P negatively.
Given the above, I should maintian my high cash position and deploy the cash into fixed deposit/t-bills for next few months.
When the market corrects later and people are feeling quite negative, it will be a good time to enter the market again.
