Comments based on information available as of 5:15 am CT on 6/12/2026
Growth: Hiring Through The Gloom
If you only read the surveys, you’d think the expansion was over. The NFIB Small Business Optimism Index fell to 95.3 in May, its weakest reading since October 2024 and a third straight month below its long-run average. The uncertainty gauge climbed to 91, far above its historical norm. Right now it reads less like an optimism index and more like a pessimism index, with owners citing fuel costs they can’t pass along the way their larger competitors can. But the hard data keep telling a different story. ADP’s weekly employment pulse showed private employers adding an average of 29,000 jobs per week through late May. That is a deceleration, but still firmly positive. Even housing chipped in, with existing home sales rising 3.2% in May to the fastest pace of the year. Sentiment is dark; the data are not.
Inflation: Too Hot To Handle
The May CPI confirmed what everyone’s wallet already knew: headline inflation rose 0.5% on the month and 4.2% year over year, the hottest annual pace in three years. Thursday’s producer price report piled on, with wholesale prices rising at their fastest clip since late 2022. But the details matter. Energy accounted for over 60% of the monthly CPI increase, while core inflation rose just 0.2%—actually below expectations. What matters more isn’t what just happened; it’s what happens next, and that depends squarely on oil. Brent slipped back toward the low $90s this week as tanker traffic through the Strait of Hormuz showed signs of life and gasoline prices continued to ease from their highs. Meanwhile, pay growth of 4.4% for job-stayers is nowhere near fast enough to feed a wage-price spiral. If oil cooperates, lower inflation is a just matter of time.
Policy: A Warm Welcome
Chair Kevin Warsh gavels in his first FOMC meeting June 16–17, and the economy has prepared him a warm welcome: hot inflation and a warm labor market. Awkward as that combination sounds, it’s actually a comfortable place to sit. The labor market is sturdy enough that the Fed doesn’t have to cut to rescue it. And if oil moves materially lower, headline inflation will recede on its own, so they won’t have to hike to stave it off. Markets expect a hold and a shift from an easing bias to a neutral one, alongside a fresh set of dots. But the real takeaway is that whatever the committee does next week, it will be a choice, not a forced move. For a brand-new chair facing a skeptical market, optionality is the best welcome gift there is.
Looking Ahead: Hoping For Relief, Braced For Churn
It was that kind of week—a sharp Wednesday selloff as the CPI landed and Middle East tensions reignited, followed by a Thursday rebound off a five-week low, led by the very chip stocks that started the slide. We’re hoping for a relief rally if oil keeps falling and next week’s Fed meeting passes without surprise, but bracing for continued churn. The fundamentals are fine as hiring is positive and earnings are growing. The problem is that expectations are high and valuations are rich. Rich valuations create vulnerabilities. This past earnings season has shown that even spectacular growth isn’t always enough when perfection is already in the price. A market riding a sentiment wave is a tentative thing: quick to celebrate, quicker to flinch. We’d rather lean on fundamentals than surf the mood.
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