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*                       FIEND'S SUPERBEAR MARKET REPORT                     *

*                                November 11, 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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The Inflation Train Is Still Running

Monday’s thousand-point Dow rally ran into an unwelcome reminder Tuesday: inflation has not finished with this economy.

October CPI rose 0.4%, exceeding the expected 0.3%. Core prices increased 0.3%, also above expectations, marking a third consecutive month at that pace. Shelter, food and energy all contributed to the increase. The headline number improved from September’s 0.6%, but prices were still climbing faster than anticipated.

That is becoming an uncomfortable pattern. Each report offers another opportunity to declare that inflation is finally coming under control. Too often, the actual numbers require another explanation for why it hasn’t happened yet.

Meanwhile, the Fed’s response to this renewed inflation cycle still amounts to one quarter-point hike in September.

There has certainly been no shortage of speeches. The shortage has been in action sufficient to demonstrate that the inflation train is slowing.

From Whether to Hike to How Much

A December increase is now effectively fully priced into markets. The new question is whether the Fed will move by 25 basis points or 50. During Tuesday’s trading, reported probabilities for the larger increase reached roughly 10% to 14%. A quarter-point hike remains the clear favorite, but the half-point alternative has entered the discussion.

Christopher Waller helped establish the stakes before the CPI release. He said a monthly core reading around 0.3% or higher would warrant considering a half-point December increase. The report then delivered precisely that 0.3% reading.

That does not commit the committee to a larger move. It does make another round of reassurance harder to sell.

Only last week, investors were wondering whether falling stocks might persuade the Fed to skip December altogether. Now policymakers face the possibility that waiting too long has created a need to move more aggressively.

This is the danger of falling behind inflation. A central bank delays because it wants more evidence, then discovers that the additional evidence is a more persistent problem.

One quarter-point increase does not tell us everything about how restrictive policy is. Existing borrowing costs and the delayed effects of earlier decisions also matter. But after repeated disappointments, the burden is increasingly on the Fed to show that its approach is working.

The Money Supply Keeps Growing

The monetary backdrop deserves attention as well.

The Fed’s latest figures put seasonally adjusted M2 at approximately $23.41 trillion in September, up from $22.15 trillion a year earlier. That is an increase of roughly $1.26 trillion, or 5.7%, calculated from the Fed’s published data.

Money growth does not translate mechanically into an identical inflation rate. Production, credit demand and the willingness to spend all affect the outcome. Nevertheless, this is a growing stock of money alongside persistent price pressure.

It makes the picture considerably less reassuring than the tough language coming from policymakers might suggest.

The concern is that inflation becomes embedded in routine decisions. Businesses raise prices to recover costs. Workers seek higher wages to maintain purchasing power. Suppliers build larger increases into contracts. The longer that behavior persists, the harder it becomes to restore confidence in stable prices.

An uncontrolled spiral is not inevitable. But neither is a painless return to 2%.

Bonds and Metals Take the Warning Seriously

The bond market reacted much more forcefully than stocks.

The 10-year Treasury yield briefly moved above 5%, while shorter-term yields jumped as investors adjusted expectations for Fed policy. The dollar strengthened as well.

Those moves matter immediately. The Fed may wait until December, but market borrowing costs do not need permission to rise. Higher Treasury yields can tighten financing conditions before officials cast another vote.

Precious metals received the familiar punishment. Spot gold fell nearly 3%, while silver dropped roughly 4% in Tuesday’s trading.

Once again, evidence of inflation produced selling in assets commonly purchased as protection against it. The immediate trading logic is understandable: a stronger dollar and higher expected yields can outweigh the appeal of inflation protection.

Still, there is something remarkable about how quickly markets price the effects of forceful Fed action when the actual policy response has been so limited.

The metals reacted to what policymakers might do next. Whether those measures ultimately restrain inflation remains a separate question.

Stocks Still Don’t Look Frightened

The major averages absorbed the news surprisingly well. The Dow lost approximately 0.3%, the S&P 500 fell 0.4%, and the Nasdaq declined 0.7%. Those were modest setbacks following Monday’s powerful recovery.

More strikingly, the VIX declined again, closing at 19.46. Hot inflation, higher bond yields and discussion of a larger rate hike apparently did not create much additional demand for protection.

Some of that can reflect uncertainty coming out of option prices once a scheduled report is released. Even so, the broader impression is that stock investors remain comfortable with the idea that any additional tightening will be manageable.

My reading is that equities are still looking beyond the next hike toward eventual relief. That expectation has supported valuations through repeated inflation disappointments.

The risk is that the anticipated relief keeps moving farther away.

Nvidia was a notable exception to the market’s resilience, falling another 5.5% as the controversy surrounding its leadership continued to weigh on the shares. The broader indexes again held up considerably better, suggesting that the company’s difficulties have not become an excuse for indiscriminate selling.

That is encouraging for market breadth. It does not make the inflation problem less important.

Friday Could Add More Fuel

Oil’s recent collapse slowed to a modest further decline Tuesday, offering some continuing relief from the energy shock. Sustained lower crude prices would help, but they cannot immediately reverse costs already passed through the economy.

Friday brings October’s Producer Price Index. Another stronger-than-expected report would reinforce concerns that businesses still face pressure to raise prices or accept narrower margins. It could also give the advocates of a larger December hike additional ammunition.

A softer report would be welcome. It would take more than one favorable release, however, to establish that the underlying trend has changed.

For now, bonds are demanding higher yields, the dollar is responding to tighter policy expectations, and metals are paying the price. Stocks remain comparatively relaxed.

The Fed has spent months explaining that it takes inflation seriously. December may test how much action it is prepared to put behind those words.

The inflation train is still running. Talking about the brakes has not stopped it.

                                     

 

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