The current mood of consumers reminds me of a remark by John Mitchell, attorney general under the notoriously opaque Nixon administration: “Watch what we do, not what we say.”

Public opinion polls have consistently shown that Americans are pessimistic about the economy, despite low unemployment, resilient economic growth, and a bull stock market.

Likewise, the latest reading from an influential survey of U.S. consumer sentiment fell in early March from a 32-month high, indicating uncertainty among Americans as to how the economy will perform in this tumultuous presidential election year.

The University of Michigan reported last Friday that its consumer confidence index edged lower to a reading of 76.5 from 76.9 in February, versus economists’ expectation that the index would climb to 77.4. The data was downbeat, albeit not terrible.

A recent Gallup poll showed that the largest share of Americans (45%) rate current economic conditions in the country as poor.

This gloominess contradicts resilient retail spending and a vibrant stock market. Fact is, sentiment indicators are tricky for investors to analyze. The good news is that consumer sentiment is largely a lagging indicator.

The market’s vagaries ensure that sentiment readings can quickly shift. Indeed, the Gallup poll, released in late January, actually reflected a slight improvement in perceptions of the economy.

A contrarian analysis of the consumer doldrums leads me to take a more optimistic view of where the market may be headed. The bull market lives on, although (just like the consumer) it’s in a holding pattern.

The stock market rally cooled off last week due to hotter-than-expected inflation data for February. The equity decline was modest, as investors stuck to hopes of a Federal Reserve interest rate cut sometime in the middle of the year.

However, the bond market reacted more fervently to the inflation surprises. The yield on the benchmark 10-year U.S. Treasury yield (TNX) spiked to 4.31%, its highest level since late February (see chart).

In stark contrast, there’s no doubt that cryptocurrency has been red hot so far in 2024, building on its outsized gains of 2023. Bitcoin (BTC) recently shot past $72,000, although it currently hovers at about $65,000 after a spate of profit-taking (more about crypto, below).

The stock market’s overvaluation makes equities vulnerable to impulsive selloffs in response to disappointing data or headlines. A geopolitical surprise also looms as a threat. The Russia-Ukraine and Israel-Hamas wars are bloody quagmires and China is increasingly bellicose with its Asian neighbors and the U.S.

As I’ve recently written, you should treat any such dips as buying opportunities within a still durable bull market. We’re in the midst of a market rotation, whereby the leaders and laggards are switching places. Beaten-down stocks in cyclical sectors are coming into vogue.

Economically sensitive sectors, e.g. communication services and industrials, are appealing. Among defensive sectors, health care and utilities should offer ballast with growth potential.

Also, make sure you’re sufficiently diversified not just among asset classes but also geographical regions. Latin America is particularly compelling right now, as that region’s middle-class burgeons and commodities enjoy a “super-cycle.”

The Week Ahead…

Watch these major economic reports in the coming days:

Housing starts, building permits (Tuesday); Federal Open Market Committee (FOMC) interest rate decision, followed by Fed Chair Jerome Powell’s press conference (Wednesday); initial jobless claims, S&P flash U.S. services and manufacturing PMIs, U.S. leading economic indicators, and existing home sales (Thursday).

The dominant event this week will be the Fed’s decision on rates, in which case no news will be good news. The betting on Wall Street is that the FOMC will stand pat and won’t cut rates any earlier than its meeting in June. Investors also will parse Powell’s comments for clues as to future policy moves.

In the coming months, I expect the cryptocurrency market to continue its winning ways, as the bull market in Bitcoin and other crypto assets forges ahead.

Consider this fact: the “blue chip” of crypto, Bitcoin, gained 156% in 2023. This year, BTC and the broader crypto realm are building on those gains, driven by the introduction of Bitcoin exchange-traded funds (ETFs) and the “halving” event expected in April.

Every portfolio should have some sort of exposure to crypto. But you need to be informed, to make the right choices. Start receiving our FREE e-letter, Crypto Investing Daily. Click here now!

John Persinos is the editorial director of Investing Daily.

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This article previously appeared on Investing Daily.