The market is getting the timing of the Fed rate hike wrong, and it could deliver a big blow to stocks, according to one hedge fund manager who's turned negative on the markets.

"The Fed funds futures are pricing in less than a 40 percent probability of a hike by the September meeting. and only a 59 percent probability of a hike this year," Matarin Capital co-founder and hedge fund manager Nili Gilbert said recently on CNBC's "Futures Now. "That is a pretty low probability given what we are seeing with a rebound in cyclicals, materials and energy."

Wall Street firms BNP Paribas and IHS Global Insight predict that a rate hike won't happen until late this year at the earliest. But while there's a markedly low chance it will happen at next week's Federal Reserve meeting, Gilbert makes the case the markets will see one as early as July.

"We actually think that the Fed may be more likely to raise rates this year than what is currently being discounted in the market, and that's because we believe that future inflation may make it increasingly difficult for monetary policy in the U.S. to remain as accommodative as it is today," she said.

Gilbert's firm, which has $740 million in assets under management, has a long/short strategies fund that claims the ability to navigate "any market," and a separate futures portfolio.

Two years ago, Gilbert was bullish on stocks — a good call. Since then, the gained more than 8 percent and the Nasdaq has surged 15 percent.

Now she's cautious and holding a large cash position.

"Our stock market outlook is somewhat negative for most countries, and that's because we expect that if the Fed has to increase rates earlier or more than what is expected, then it's going to be quite a negative surprise," she said.

The other major element she's watching: Whether Britain will decide to leave the European Union.

"The markets really haven't priced in much of a probability of Brexit," said Gilbert. "If there were a Brexit in the near term, there would certainly be a lot of uncertainty, a lot of volatility, and that just doesn't seem to be priced into the markets right now. So it could be very unsettling."