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*                       FIEND'S SUPERBEAR MARKET REPORT                     *

*                                  May 29, 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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Records Over Reality

Thursday’s market action was a perfect example of how Wall Street works when expectations are low enough.

The PCE inflation report was not good. Headline PCE rose to 3.8% year-over-year, the highest in nearly three years, and core PCE was still running at 3.3%. That is nowhere near the Fed’s 2% target. But because the numbers were mostly “as expected,” investors treated them as a relief.

That is the game right now: inflation doesn’t have to be good. It just has to avoid being worse than feared.

At the same time, first-quarter GDP was revised down to 1.6%, confirming that the economy is not exactly booming underneath the record stock-market surface. Consumer spending was weaker than first reported, and the savings rate has fallen to uncomfortable levels. The average household is not living in “record high” territory. It is living in a world where prices are still rising and income growth is not keeping up.

Yet the stock market went higher anyway.

The S&P 500 and Nasdaq hit new records again, and the Dow edged to another high. The explanation is simple enough: oil dropped, bond yields softened, and investors decided the combination of “not worse inflation” and “slower growth” might eventually give the Fed more room to maneuver.

But that is still a strange bargain.

The market is celebrating weaker growth because it might make policy easier later, while simultaneously ignoring the fact that inflation is still too high for the Fed to cut cleanly. In a healthier environment, soft GDP and high inflation would be a warning. In this market, it is just another reason to buy tech and assume the cavalry arrives eventually.

Oil remains the key swing factor. If crude keeps falling on hopes of a durable U.S.-Iran arrangement and a reopening of the Strait, the market can keep treating April’s inflation spike as temporary. But if oil stabilizes at higher levels or rebounds, the “temporary” story becomes much harder to defend.

That’s the risk going into June.

The market is pricing:

  • inflation that fades,
  • oil that keeps falling,
  • growth that slows but doesn’t break,
  • earnings that hold up,
  • and a Fed that eventually gets more flexible.

That is a very tidy set of assumptions.

The problem is that the data itself is not tidy. Inflation is rising again. Growth is slowing. The consumer is stretched. The war is not fully resolved. And the Fed is still nowhere close to declaring victory.

So Thursday’s record highs should be respected, but not worshipped. Wall Street didn’t get an all-clear signal. It got a report that was bad, but not worse than expected.

That may be enough for a rally. It is not enough for confidence.

 

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