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*                       FIEND'S SUPERBEAR MARKET REPORT                     *

*                                 June 26, 2026                             *

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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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Temporary Inflation, Permanent Damage?

Thursday’s PCE report gave Wall Street exactly what it wanted: bad inflation data that was “not worse than expected.”

That is the market’s favorite kind of bad news. It lets everyone acknowledge the problem while immediately explaining it away.

Headline PCE inflation rose to 4.1% year-over-year in May, the first move above 4% in three years. Core PCE, which strips out food and energy, rose 3.4% from a year ago. That second number matters. It means the inflation problem is not just gasoline, not just war, and not just the Strait of Hormuz.

Of course, the narrative is already forming: oil has fallen, the war premium is coming out, energy inflation will cool, and therefore the Fed can be patient. In other words, transitory inflation — again.

Maybe that works for a month or two. Oil did drop sharply, and that should reduce some headline pressure going forward. But there are two problems with the “temporary” argument.

First, inflation was still high after stripping out energy. Core PCE at 3.4% is not close to the Fed’s 2% target. Services inflation also remains sticky, and those prices do not reverse just because crude falls.

Second, the economy has already absorbed months of higher fuel, shipping, insurance, and supply-chain costs. Those costs don’t vanish instantly. They move through the system slowly, and once businesses raise prices, they are not usually eager to cut them back.

So Wall Street’s new story is not really “inflation is fine.” It is: inflation may have peaked just enough to keep the Fed from hiking immediately.

That distinction matters.

After the report, the odds of a July hike came down a bit. Markets are now treating July as unlikely, while September remains very much alive. So the rate-cut fantasy is still dead, but the rate-hike panic cooled slightly. That was enough to stabilize metals after their brutal slide.

Gold and silver finally stopped bleeding, at least for the moment. That makes sense. The metals had been crushed by the stronger dollar and sudden belief that Warsh’s Fed would turn into a real inflation fighter. But if the market starts to believe the Fed will talk tough while waiting for energy prices to do the work, the metals may begin to find support again.

The bigger crack is showing in crypto.

Bitcoin, Ether, and the crypto-related stocks are no longer acting like revolutionary assets. They are acting like broken momentum trades. The whole “digital asset treasury company” scheme — raise money, buy crypto, watch the stock levitate — is starting to implode as the underlying coins fall and investor enthusiasm dries up.

Strategy, the best-known Bitcoin treasury stock, has been sliding toward 52-week lows, and the broader copycat trade looks increasingly exposed. When these stocks were rising, they were treated as brilliant financial engineering. Now they look more like leveraged wrappers around a falling asset.

That is usually how speculative schemes end. First they are “innovative.” Then they are “misunderstood.” Then liquidity leaves and everyone remembers that balance-sheet games are not a business model.

This is also why the crypto weakness matters beyond crypto. It suggests that speculative air is leaking out of the most aggressive parts of the market first. The AI/SpaceX bubble is still alive, but crypto is warning that not every mania can keep receiving fresh money forever.

For now, stocks are trying to digest the inflation report as harmless. The Fed is trying to sound credible without doing anything dramatic. Metals are trying to stabilize. Crypto is breaking lower. And Wall Street is trying to convince itself that the next few inflation reports will magically improve because oil came down.

Maybe they will.

But if inflation remains sticky even with lower oil, the market will have a much bigger problem. At that point, “temporary” stops being an explanation and starts looking like an excuse.

The Fed can wait. Wall Street can rationalize. Crypto can pretend the structure is sound. But the numbers will eventually decide the argument.

And right now, the numbers still say inflation is too high.

 

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