Friday’s Market Selloff: Broad-Based, Data-Driven, and Policy-Sensitive

By Victor Sperandeo with the Curmudgeon

Introduction:

Friday’s market selloff was very broad-based, affecting equities, fixed income, precious metals, and digital assets. There was no place to hide other than the U.S. dollar, which rose as all risk assets declined.

Profit-taking crushed big technology names and semiconductor companies that had recently experienced massive, parabolic rallies as the AI bubble continued to inflate. As yields rose and equity multiples were reset, investors fled risk assets entirely, pulling capital out of both cryptocurrencies and precious metals.

The catalyst for the move was the stronger-than-expected BLS Establishment Survey payroll print of 172,000, versus consensus expectations of 80,000. Markets interpreted the BLS jobs report as increasing the risk of near-term Fed rate increases, which pressured asset prices across the spectrum.

Astonishingly, that assessment was not supported by the CME Fed Watch Tool which shows a 0% and 14% probability of ANY Fed Funds rate hikes at the June and July FOMC meetings, respectively!

Reported Economic Data vs Reality:

It is important to note that markets trade on reported data, not on debates about its statistical authenticity. Whether the job numbers are ultimately revised or viewed as noisy, market participants respond to the releases as published, because that is what drives price discovery and P&L.

On a year-to-date basis, the BLS "jobs created" data are deeply flawed:

· Reported seasonally adjusted payroll gains totaled 569,000, while the Birth-Death Model contributed 531,000, implying a net difference of only 38,000 year to date, or roughly 7,600 per month.

· On an unadjusted basis, 2026 payroll gains were 109,000 or about 21,000 per month.

· For May 2026, the reported gain of 172,000 compared with a Birth-Death estimate of 158,000.

-->Despite the BLS "hocus pocus" chicanery markets reacted to the headline number, not the methodological details of how it was calculated.

Precious Metals Signal Disinflation-NOT Inflation Ahead:

The down move this year in precious metals is not consistent with economist consensus forecasts for higher inflation. The gold and silver ETFs each have negative total returns in 2026: GLD is -0.51% year to date, and SLV is -6.36% year to date.

Most other metals are also lower, with copper as a notable exception due largely to its demand in AI data center infrastructure buildouts.

This pattern suggests the metals markets are now discounting disinflation or deflationary pressure, rather than a renewed inflationary impulse.

Cryptocurrency Collapse:

Bitcoin also weakened materially on Friday, closing at $60,922.67 (Source: Yahoo Finance), a 20-month low. The world’s favorite Cryptocurrency is approximately 51% below last October’s all-time high of 124,753.

Bitcoin's decline this year, alongside broader weakness in inflation-sensitive assets, reinforces the view that markets are pricing a softer nominal growth and tighter liquidity environment. The speculative frenzy may have ended.

Curmudgeon Add-On: BofA's Bull & Bear Indicator has risen to 8.7, its third week on a sell signal. This market sentiment gauge is designed to track investor positioning, liquidity, and momentum to identify potential inflection points in global financial markets.

The Fed Under Kevin Warsh:

New Federal Reserve Chairman Kevin Warsh has strongly stated that monetary policy independence is essential for the Fed to operate effectively. He plans to lower the Fed's balance sheet, which in turn will decrease the money supply (M2). The Fed may shift its inflation framework toward measures such as the Dallas Fed's trimmed mean CPI which would drop the inflation rate from the current 3.8% to 2.35%. Also, “Forward Guidance” will end among other changes.

Such a Fed policy mix could be interpreted as disinflationary, even if short-term rate cuts were are now off the table. If those expectations gain credibility, both U.S. Treasury Notes and T-Bills would rally strongly.

Geopolitical Uncertainty, High Oil Prices and Demand Destruction:

Oil remains another key variable. Futures prices have been relatively stable in recent weeks, but supply conditions could tighten later in the summer as oil inventories continue to draw down. Victor continues to believe that high oil prices will cause demand destruction after July when inventories are depleted.

Soaring costs are already restricting consumption across the energy and agricultural sectors as markets adjust to persistent, geopolitical supply shocks.

Nitrogen and phosphate costs remain historically high. This is compounded by limited exports from major global suppliers like China and persistently high natural gas prices in Europe.

Victor's Conclusions:

The geopolitical situation involving Iran and the Strait of Hormuz is and will continue to be a source of great uncertainty. It has already affected energy markets, slowed global growth, and increased recession risk.

The Iran war is hurting many nations more than the U.S. because of their higher dependency on oil imports and fertilizer. If this conflict is not resolved soon, recessions and even depressions may occur.

End Quote:

Friday was a rare day, as there was no “shelter” to hide from the broad market losses. As such, the lyrics of the

Rolling Stones 1969 song "Gimme Shelter" seem apropos:

Ooh, a storm is threatening

My very life today

If I don't get some shelter

Ooh yeah, I'm gonna fade away

War, children

It's just a shot away

It's just a shot away

War, children

It's just a shot away

It's just a shot away, yeah

Ooh, see the fire is sweepin'

Our very streets today

Burns like a red-coal carpet

Mad bull, lost your way

Rape, murder, it's just a shot away

It's just a shot away

Rape, murder, yeah, it's just a shot away

It's just a shot away

Rape, murder (Whoo), it's just a shot away

It's just a shot away, yeah

Mmm, a flood is threatening

My very life today

Gimme, gimme shelter

Or I'm gonna fade away

It's just a shot away

End Note: The vocals sung by Merry Clayton are what made this song extraordinarily popular as her singing voice was unique, and chilling.

..........................................................................

Wishing you good health, success and good luck. Till next time....

The Curmudgeon
ajwdct@gmail.com

Follow the Curmudgeon on Twitter @ajwdct247

Curmudgeon is a retired investment professional.  He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996.  He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.

Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever-changing and arcane world of markets, economies, and government policies.  Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.

Copyright © 2026 by the Curmudgeon and Marc Sexton. All rights reserved.

Readers are PROHIBITED from duplicating, copying, or reproducing article(s) written by The Curmudgeon and Victor Sperandeo without providing the URL of the original posted article(s).