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*                       FIEND'S SUPERBEAR MARKET REPORT                     *

*                                December 31, 2025                          *

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*                       e-mail: fiendbear@fiendbear.com                     *

*                    web address: http://www.fiendbear.com                  *

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Fiend Commentary

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The Calm, the Chaos, and the Credit Behind It

On the last trading day of 2025, the market is sending two messages that don’t belong in the same sentence.

The first message is calm: U.S. equities are still hovering near record highs, and volatility has been crushed back toward the lows. The second message is chaos: precious metals—especially silver—have been behaving like a market that’s trying to price in a regime change, not a routine year-end.

It’s tempting to treat the silver-and-gold action as a sideshow. I think that’s a mistake. The metals are not just “going up.” They’re flashing a warning about what the rest of the market is built on:

1) Easy credit is still the oxygen of this cycle

The biggest under-reported shift late this year is not another quarter-point rate cut. It’s the plumbing.

The Fed has ended QT and moved back toward reinvestment, and the balance sheet is already showing signs of stabilizing and turning higher again. In plain English: after spending years trying to slowly drain liquidity, the Fed appears to have concluded that the system can’t tolerate much more “tightness” without something cracking.

You could call this “not QE.” You can also call it what it functionally is: less restraint.

And there’s another tell: banks’ use of the Fed’s standing repo facility spiked into year-end. That kind of borrowing isn’t a doomsday siren by itself (year-end funding always gets quirky), but it is a reminder that financial calm is often manufactured with liquidity backstops—and the market knows it.

The result is a weird emotional cocktail:

  • Stocks trade like the Fed will keep the floor waxed and polished.
  • Metals trade like the floorboards are getting soft.

2) The economy looks “fine” in the headline… weaker underneath

Yes, the GDP prints have looked resilient at times. But the more forward-looking signals have been deteriorating, and the labor market is starting to look less like a pillar and more like a question mark.

Layoffs and job-cut announcements have been running hot enough to get attention even in a year dominated by AI headlines. At the same time, sentiment surveys have been ugly—especially measures of how consumers feel about their current situation.

That combination—softening labor + depressed sentiment—doesn’t guarantee an immediate recession. But it does raise the odds of an economic air pocket in 2026, particularly if credit tightens even slightly or if households finally hit a spending wall.

3) Stocks can be overvalued even with a “passive” Fed

A passive Fed is not automatically bullish. It depends on why the Fed is passive.

If the Fed is pausing because inflation is conquered and growth is stable, that’s constructive.

If the Fed is pausing because it’s stuck—worried that easing reignites inflation, but worried that not easing breaks the economy—then “passive” starts to look like policy drift. Markets can levitate for a while in a drift, but they become fragile because investors stop believing anyone is steering.

Add one more ingredient: the stock market’s gains remain highly concentrated in the biggest names. When a narrow group carries the index, it creates the illusion of strength even as many stocks quietly weaken underneath. That’s how peaks are built: not with a crash first, but with narrowness and denial.

4) Why metals matter beyond the “fear trade”

This is the part most people miss: 2025 wasn’t only a gold-and-silver story.

A number of industrial metals also had powerful moves this year. Copper has been lifted by electrification and AI infrastructure demand. Platinum and palladium had their own supply-and-policy tailwinds. Those are not just “inflation hedges.” They’re inputs—real economy materials—responding to scarcity, policy, and capital spending.

So when precious metals spike while industrial metals stay firm, it suggests something bigger than a speculative frenzy. It suggests a world where:

  • future demand is assumed,
  • supply is doubted,
  • and currency confidence is questioned.

5) “Too little, too late” is a real risk for 2026

A string of 25-basis-point cuts can end up being the worst of both worlds if the cycle turns.

If the economy is slowing meaningfully, quarter-point cuts may be too small to prevent rising unemployment and falling confidence. Yet if inflation reaccelerates (tariffs, rebates, wage pressure, supply shocks), those same cuts can look reckless in hindsight.

That is exactly the policy trap metals are sniffing out:

  • the Fed “rescues” growth,
  • inflation comes back,
  • credibility erodes,
  • and the cost of capital rises anyway as lenders demand a higher premium.

How do the final sessions play out?

The last few trading days of the year are often more about positioning than truth. That said, here are the tells that matter:

  • If volatility stays pinned while metals stay jumpy, it’s complacency with a crack forming somewhere else.
  • If the Fed’s balance sheet keeps drifting higher, risk assets can stay supported into January—even if the economy is weakening.
  • If inflation stays “contained” only because energy is soft, the market may be underestimating how quickly that can change.

The takeaway into 2026 is simple:

This year ended with everything up and fear turned down. That’s usually when the real risk begins—because the system is still living on credit, and credit cycles don’t end gently.

 

 

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