S&P 500 risk rises as oil supply cuts boost inflation fears; analyst turns neutral and raises cash.

Markets have been supported by rising earnings estimates for the S&P 500, pushing its forward price-to-earnings ratio to 22x. However, the closure of the Strait of Hormuz has cut off 25% of global crude supply, raising the risk of supply shocks and soaring oil prices similar to those seen during the 2022 Russia-Ukraine conflict. Bond markets are reacting by increasing investments in inflation-protected assets amid rising inflation expectations. Given the current valuation and heightened risks, the analyst is shifting to a neutral stance on the S&P 500 and starting to raise cash by trimming winning positions.