Coiled Spring Capital MR 3/23/25

Table of Contents

• Introduction

• Index Analysis

• Internals

• Macro Updates

• Crypto

• Conclusion

We’re still traveling this week but remain committed to delivering analysis, even with a packed schedule. As a result, this report will be in a more concise format—thank you for understanding.

Introduction

"To Tariff or Not to Tariff"—that is the question. This Shakespearean twist captures the market’s current dilemma, as uncertainty around the scope, duration, and economic impact of tariffs clouds the outlook for both stocks and the broader economy. No one, not even Powell at last week’s FOMC presser, can say with certainty how this will play out—adding to the prevailing confusion.

April 2nd is fast approaching, and as Trump has coined his self-proclaimed holiday, "Liberation Day," it could indeed free the market from the grip of uncertainty. If the worst-case tariff fears have already been priced in, April 2nd could serve as a clearing event for stocks. After four consecutive weekly declines since the February 19th peak, the SPX eked out a 0.5% gain last week—perhaps a sign of stabilization?

Markets often react sharply in the short term, pricing in worst-case scenarios before full clarity emerges. This is why the classic "sell the rumor, buy the news" pattern exists—institutions race to de-risk before potential upside catalysts emerge. Friday’s hints of tariff "flexibility" from the Trump administration triggered a market reversal, proving that investors are looking for reasons to reprice risk higher. We saw a similar reaction after Wednesday’s FOMC meeting, when fears of a hawkish Powell were quickly dismissed.

This week is likely to keep investors on edge, as conflicting soundbites from the White House regarding last-minute tariff negotiations will fuel volatility. However, our role is not to predict policy outcomes—that’s a job for political analysts. Instead, we focus on market signals, as price action often reveals the direction before policy outcomes become clear.

As we highlighted in our 3/16 report, key Fibonacci levels have held, suggesting that bulls see enough value to defend the market and halt the recent slide. This, combined with our broader market indicators, supports the potential for a clearing event reversion. Of course, no path is guaranteed, but we deal in probabilities, and the setup appears favorable.

Beyond the tariff drama, this week’s PCE report is another market-moving event. Institutional investors we’ve spoken with remain focused on sticky inflation, particularly given that tariffs are inherently inflationary. The FOMC echoed these concerns last week, making every inflation release critical. Expectations are for a mild month-over-month inflation uptick—not exactly helpful for the current market narrative. Friday’s report will also include spending data, projected to show a modest increase. Unless the data is wildly out of line, however, Liberation Day is likely to overshadow everything else.

While we await greater clarity on Trump’s tariff policy, key market developments continue to unfold, strengthening the case for a durable bottom.

Let’s review.

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