Block Out the Noise, we are looking at Bullish MACRO Divergence.

Fears and uncertainty surrounding Trump's tariff strategy have put a halt on Bull Market Momentum. THIS IS A BUYING OPPORTUNITY FOR INVESTORS

• As long as Oil prices remain MUTED, Tariffs can't stimulate Inflation.

• Interest Rates would move higher if the market believed the tariff strategy was inflationary. In 2018, tariffs didn't stimulate inflation; they hurt growth.

Trump‘s US secretary, Scott Bessent is focused on lowering the US 10y treasury yield which is the mechanism that sets mortgage rates.

BULLISH DIVERGENCE

There is a clear bullish macro divergence between investor sentiment and macro conditions. I will break this down for you, starting with Investor sentiment.

Growing Bearish Sentiment

Neutral Stock Market Participation
The percentage of stocks in a bullish trend has slipped from 75% in November to 50% as of February. This lack of "broadening" partially reflects the S&P 500's inability to make new highs. There's just not enough participation. This also echoes in the crypto market.

Where is the Bullish Divergence?

Market sentiment (red) and business sentiment (black) usually have a positive correlation.

Look closely. Over the past two months, you will see these indicators diverting away from each other.

Investors have de-risked their stock exposure (red) while the ISM (manufacturing cycle) has moved into positive territory for the first time in two years. The ISM Manufacturing cycle reflects the "capital-intensive" part of the economy. Thus, a rise above 50 is associated with rising economic activity and rising GDP.

These are the highest levels since May of 2022 👇🏽 (New Orders)

When ISM new orders accelerate from these levels, the economy begins to rapidly expand.

An accelerating ISM is tightly correlated to the Crypto Cycle.

The ISM New Orders Index is a critical leading indicator because it captures purchasing plans and commitments from businesses, reflecting their expectations for future demand. When new orders rise, manufacturers ramp up production, hire more workers, and invest in expanding capacity. Conversely, declining new orders signal a potential slowdown, prompting caution in inventories, capital expenditures, and hiring, dampening overall demand in the US economy.

When small business confidence accelerates, this leads to business expansion.