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* FIEND'S SUPERBEAR MARKET
REPORT *
* July 21,
2026 *
*
*
* e-mail:
fiendbear@fiendbear.com
*
* web
address: http://www.fiendbear.com *
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Fiend Commentary
================
Tariffs
Return While the High
Flyers Lose
Altitude
Monday’s
trading captured the increasingly fractured character of July.
Stocks gave
up early gains and finished modestly lower. Oil rose as the Middle East
conflict intensified. Treasury yields remained close to their recent highs.
Gold, silver and Bitcoin found buyers, but none has repaired the damage from the
first half of the year. At the same time, SpaceX fell for a seventh consecutive
session, extending one of the fastest post-IPO reversals anyone can remember.
Then tariffs
returned to the front page.
The Trump
administration announced new 50% tariffs covering nearly $20 billion of
Canadian imports, including products such as wine, furniture and sporting
goods. Energy, potash, fish and critical minerals were among the exemptions, but
that does not make the policy harmless. The tariffs are scheduled to take
effect after a 30-day window, leaving time for negotiation—or retaliation.
Tariffs had
almost disappeared from the market conversation. The war, the Strait, oil,
inflation, SpaceX and the AI bubble pushed them into the background. But
tariffs did not disappear from the economy. They are simply another cost
waiting to be absorbed.
Companies
can eat that cost through lower margins, or they can pass it along through higher
prices. Neither choice is especially attractive. Canada is not a remote trading
partner with a few isolated products. North American supply chains are deeply
interconnected, and a trade dispute with Canada can spread through
manufacturing, retail and agriculture in ways that are difficult to calculate
in advance.
That is
particularly inconvenient for a Fed still pretending the path back to 2%
inflation is visible.
Oil is
already complicating the picture. Brent finished Monday near $89 and WTI above $83
as the U.S.-Iran conflict continued and the Houthis threatened another maritime
blockade. There is once again talk of mediation and a possible short pause, but
no durable settlement has been accepted. Each new proposal seems to last only
until the next strike or threat.
So the market is now dealing with two inflation risks at once:
higher energy costs from the war and higher goods costs from tariffs.
That should
make next week’s Fed meeting more important, but the futures market is already telling
us the likely result. Traders see only about a 17%
probability of a hike at the upcoming meeting. The odds rise to roughly 63% by
September and more than 80% by December, but those numbers should not be
confused with prophecy. They are snapshots of current positioning, and they can
reverse after one inflation report, one employment report or one oil headline.
The
political calendar also matters. A rate increase before the midterms would be extremely
difficult for the new Fed leadership, especially under a president who openly
wants lower borrowing costs and higher asset prices. Warsh may continue to
sound hawkish, and individual Fed officials may keep the threat of hikes alive,
but actual action is another matter.
The most
likely near-term outcome remains no change.
The Fed will
probably argue that it needs more data. It will point to the temporary effects
of oil and tariffs. It will talk about anchored expectations and policy being appropriately positioned. In other words, it
will find a reason to wait.
But the bond
market may not wait with it.
The 10-year
Treasury yield is near 4.6%, while the 30-year remains
above 5%. Those levels tell us investors are not fully convinced that inflation
will fade or that the Fed will impose enough discipline to force it lower.
That is the
key distinction between the futures market and the bond market.
Fed
funds futures are attempting
to guess what Warsh will do at a particular meeting. Long bonds are trying to
price what inflation, deficits and policy credibility will look like over many
years. The first can swing wildly on a headline. The second is harder to pacify
with a press conference.
If the Fed
finds a way to avoid hiking while inflation stays sticky, the long end can
tighten conditions on its behalf. Mortgage rates remain high. Corporate
refinancing stays expensive. Private credit remains under pressure. Government interest
expense keeps rising. The Fed can avoid raising its policy rate and still watch
the market raise the cost of capital.
Meanwhile,
the speculative high flyers are beginning to discover
gravity.
SpaceX
closed Monday just below $120 after seven straight losing sessions. The stock
is now roughly 47% below its brief intraday peak above $225 and below its $135
IPO price, although the company still carries a market value near $1.6
trillion.
SpaceX may still
become one of the world’s most important companies. That was never the
immediate issue. The issue was the price investors were willing to pay almost
instantly after the IPO.
At the peak,
buyers were not analyzing valuation. They were buying
a dream because everyone else appeared to be buying it. The small public float,
index-inclusion expectations and enormous publicity created a scarcity-driven
stampede. Now the stock has fallen during nearly every session since the frenzy
peaked.
A great company
and a great stock at any price are not the same thing.
The SpaceX
reversal should be watched because it may say something about the wider AI and
technology trade. Semiconductors and data-center stocks have enjoyed
extraordinary gains, but July has exposed increasing instability. A market can
tolerate one speculative bubble deflating. It becomes more dangerous if SpaceX,
crypto, AI infrastructure and semiconductor shares all begin losing momentum
together.
Gold and silver
are showing the opposite pattern. They have been crushed for months and are now
trying to form a base. Gold moved back above $4,050 Tuesday morning, while
silver bounced nearly 3% toward $58. Those are meaningful rebounds, but they
are not yet proof of a durable reversal.
Bitcoin
presents an equally mixed picture. It has rebounded during July and has even
outperformed semiconductor stocks for the month, yet it remains down roughly 25%
for the year. That looks more like stabilization after a liquidation than the
beginning of another obvious bull run.
So July remains divided:
The major
averages are still elevated.
The bond market remains skeptical.
Oil is rising again.
Tariffs have returned.
Metals are trying to bottom.
Bitcoin is trying to recover.
SpaceX is testing the limits of speculative valuation.
And the Fed is trying to maintain credibility without doing anything
politically explosive.
There is no broad
collapse yet. But there is also no longer one simple story lifting every asset.
The market
spent the spring assuming that peace, lower oil and
easier financial conditions would arrive together. Instead, the war is still
running, oil is volatile, tariffs are back and long-term yields remain
stubbornly high.
The Fed will
almost certainly stand still next week.
The more
important question is whether the bond market allows it to remain still for
much longer.