Proflex Market Update - Wk 28

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BBB Signed | Bull Market Breakouts Continue

“Big Beautiful Bill gets a big beautiful response—stocks soar, and bulls charge ahead.”

Markets are celebrating the signing of the “Big Beautiful Bill” (BBB) with renewed euphoria, marking another fresh all-time high of 6284 for the S&P 500. The index has now logged multiple consecutive weekly gains, powered by falling volatility, strong liquidity flows, and optimism around upcoming trade deals.

The structural setup remains bullish, but the pace of the last two months has been steep. After a string of weekly gains and elevated sentiment, markets may be due for a near-term pullback or volatility spike. This isn’t a top call—but a reminder that even strong bull markets breathe.

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🐂 Bull Markets: Long, Liquid, and Often Underestimated

The current bull market, which began in October 2022, is tracking well below the magnitude of previous rallies—and that’s a feature, not a bug. According to UBS/Macrobond, the S&P 500’s current path (highlighted in red) remains subdued in comparison to prior bull runs.

In fact, the average of the strongest bull markets since 1966 has delivered 3–5x gains over multi-year periods, with the 2009–2020 cycle reaching nearly 6x peak returns over 3,200 days.
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This explains two points:

• Bull markets are longer than we think — They typically last 3–11 years, not 6–12 months.
• Liquidity & earnings matter more than sentiment — With global M2 supply still expanding and AI-led earnings set to kick in, structural tailwinds remain in place.
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Key Drivers This Week
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🔹 Bessent Signals a Flurry of Trade Deals

U.S. Treasury Secretary Scott Bessent confirmed this week that multiple trade deals are nearing completion ahead of the July 9 tariff escalation deadline.
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Markets are pricing in these developments optimistically, especially after the U.S.-Vietnam deal, which set 20% tariffs on Vietnamese imports and 0% for U.S. exports— a strategic rebalancing in America’s favor.

The most critical driver, however, remains the U.S.-China trade deal. Despite ongoing talks, tariffs are still elevated at 22.5%, the highest average effective U.S. rate since 1909. Until meaningful progress is seen on this front, the market is likely to stay headline-sensitive.

🔹 Bitcoin: Consolidation before breakout?

Bitcoin is just ~3.5% below its ATH of $112K, recently hitting $108K as institutional demand—especially from spot ETFs—continues to drive flows.
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In Q1 2025, public buyers—including U.S. spot ETFs and firms like MicroStrategy—acquired 95,000 BTC, which is over 57% of the total supply expected to be mined for the entire year (165,000 BTC)

But not all is smooth sailing.

In 2025, two wallets dormant since 2011 moved 10,000 BTC each, and a 2012 wallet moved 500 BTC—adding over $2.3B in potential sell pressure.
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These legacy “Satoshi era” coins re-entering circulation could be absorbed, but they introduce supply overhang that must be cleared before BTC can move decisively higher.

🔹 AI Infrastructure Spending Sets Up Tech Earnings Season

Massive AI infrastructure projects like OpenAI’s “Stargate” are driving sustained demand for semis, custom chips, and data center REITs—extending the hardware-led earnings cycle.

A clear rotation is in play: infra leads now, while software—with data and distribution advantages—positions for the next leg.

This sets the stage for the upcoming tech earnings season, where focus shifts from macro headlines to actual delivery. Earnings will test whether AI capex is translating into real growth across the stack.

Macro sensitivity remains high:

• Section 232 review may impact chip stocks
• Bessent’s trade deal outlook boosts sentiment
• Fed minutes and Treasury buybacks will shape rate and liquidity tone

💡 Impact: AI infrastructure spend is reshaping tech leadership. As earnings approach, delivery—not narrative—will drive dispersion, with macro triggers amplifying moves across hardware, software, and supply chain names.

📅 Macro Watch: Fed Minutes & Treasury Buyback

Wednesday : FOMC Minutes Release

The Fed held rates steady at 4.25–4.50%, citing risks on both sides: sticky inflation vs. labor market softening. Investors will parse the minutes for clues on whether the Fed is leaning closer to a policy pivot or remains in wait-and-see mode. The SOFR curve still implies easing by Q4.

Thursday: Treasury Buyback Plan

The Treasury will announce its bond buyback plan, which has major implications for liquidity, yield curve behavior, and risk appetite. Markets will watch closely—any aggressive buyback strategy could boost duration assets and lower long-end yields further.

Proflex Playbook – Let the Bull Run, But Stay Tactically Aware

After a powerful two-month rally, markets may be due for short-term volatility or a tactical pullback. The pace of gains has been aggressive, and with multiple macro catalysts ahead—earnings, trade deals, Fed minutes—expect elevated two-way price action.
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The bull is intact, but it's sprinting. Pullbacks from overbought conditions are not risk-off signals—they’re setups for disciplined rotation.
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As we navigate this environment, our core stance remains:

✅ Stay hedged using structured options
✅ Use macro moves to rotate, not chase
✅ Allocate to core themes with long-term tailwinds: AI, gold, Bitcoin
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If you're in All-Access or Managed Portfolios, you've already seen how this playbook translated into capturing the technical breakout gains while building protective positions—maximizing the final bull phase while preparing for the inevitable risk-reward deterioration that follows peak optimism.

📣 Join the Macro WhatsApp Group for weekly calls, market insight, and real-time macro signals.

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Until next week,

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— The Proflex Team
​ Trusted Macro Insights. Calm Investing. Tactical Trades.

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