- Coiled Spring Capital Macro Report
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- Coiled Spring Capital 3/9/25
Table of Contents
Introduction
From Euphoria to Despair. The Trump post-election pump has been completely erased—undone by austerity measures and tariff rollouts. Some argue this was by design: a strategy to rein in wasteful spending, penalize trading partners for unfair deals, and ultimately vanquish inflation once and for all. Whether intentional or not, it seems to be working. The economy is cooling—fast.
GDP forecasts are being slashed. Macro data is deteriorating at an alarming rate. Even Wall Street’s perma-bull optimism is starting to crack.
The irony? This entire unraveling has played out in just weeks, marking one of the fastest market declines in years. The sharp drop has flipped the script—investors who were bullish heading into 2025 are now calling for recession.
This past week, the market saw broad-based selling, with indexes posting their worst weekly performance in months as investors scrambled to interpret a barrage of conflicting tariff headlines.
This poor showing has pushed the SPX into the red for the year. The Dow Jones is managing to cling on to its gains.
On Friday, the SPX tested the July high pivot. This is an important area to defend, since the stock market peaked last July, which took over 2 months to reclaim. Losing this area would call the current bull market into question.
Friday’s market reversal came on the heels of a supportive Powell, reassuring investors with a strong economic backdrop. Earlier in the day, the employment report narrowly missed expectations but still showed growth, with 151K jobs added—hardly a sign of collapse.
Still, the market continues to grapple with the uncertainty surrounding Trump’s policies and the slowdown they may trigger.
Nowhere is this more evident than in the bond market—the 10-year yield has plunged ~70bps since January (peak to trough) as investors price in a cooling economy.
In our 3/5 report, we outlined what we believed could be a pivot point for the market to find relief—and that view remains intact, even with Friday carving out a lower low.
When volatility is elevated, calling for a tactical reversal will never be an exact science. After a sharp correction, true market lows tend to be climactic, something we haven’t seen yet. Until then, we’re only looking for tactical reversion opportunities.
So, was Friday the low? If you’ve read our past reports, you know what’s written on our office whiteboard: “Bottoms rarely happen on a Friday.” We won’t break that rule now. That doesn’t mean it wasn’t the low, but history and probabilities suggest otherwise.
Our goal is to provide a framework for thinking about market setups and offer the confidence to execute in uncertain conditions. Unfortunately, the fundamental picture remains murky—uncertainty is feeding on itself, freezing business and consumer spending.
Until there’s more clarity and adjustments can be made, we have to assume one thing: volatility is here to stay.
It doesn’t help that Treasury Secretary Scott Bissent openly acknowledged what the markets have been signaling—policy changes will cause economic disruptions. If the horse has spoken, it’s probably worth listening.
The market’s perception of tariffs has also shifted—what was once seen as inflationary is now being viewed as recessionary. That change in thinking is driving sentiment and price action.
Ironically, while U.S. markets struggle, the turmoil has been a boon for other global stock markets, which are benefiting from the ripple effects.
The SPX is trailing European benchmarks and getting trounced by Chinese markets.
With global markets stealing the U.S.’s thunder, does that mean a U.S. recession is off the table?
Historically, it’s rare for the U.S. to tip into recession while European markets are hitting highs and China is in a new bull market. Typically, global markets are somewhat correlated, with the U.S. leading economic cycles.
If Europe is rallying, that suggests strong global demand, stable financial conditions, and solid corporate earnings—not exactly the backdrop for a U.S. recession. Meanwhile, China’s bull market signals improving economic conditions, which tend to boost global trade and commodities.
That doesn’t eliminate the possibility of a U.S. recession, but it does lower the probability. Historically, when the U.S. catches a cold, the rest of the world gets sick—yet right now, international markets are pricing in the opposite. That implies the U.S. market weakness is corrective, not the start of something more systemic.
Regardless, we don’t let macro opinions dictate our decisions. Price action is our guide—it always shows the real path forward.
Let’s see what the charts have to say.
