Author: Deep Tide TechFlow

Let's first lay out today’s core numbers:

• Dow Jones: +0.05% closing at 50,668.97 points (slight increase, at one point during the day fell by -0.63%)
• S&P 500: +0.58% closing at 7,563.63 points, a historical high (also reached a historical high during the day)
• Nasdaq: +0.91% closing at 26,917.47 points, a historical high (also reached a historical high during the day)
• Snowflake: +38%, the largest single-day increase in 5 years, soaring from $175.26 to $244.45
• PCE inflation (April): Year-on-year +3.8%, the highest since May 2023
• Core PCE: Year-on-year +3.3%, the highest since October 2023
• Gold: reported at $4,404 in the morning, down 1.73%

Let's break this down piece by piece.

PCE 3.8% + GDP revised down to 1.6%: The first invitation of stagflation

This morning at 8:30, the BEA released two pieces of data that caused economists to frown:

The first piece is PCE inflation, the inflation indicator the Fed cares about the most:

• Headline PCE year-on-year +3.8%, the highest since May 2023
• Core PCE year-on-year +3.3%, the highest since October 2023

The second piece is the Q1 GDP revision:

• Q1 GDP revised down from the initial estimate of 2% to 1.6%, indicating the US economy was weaker than expected in the first quarter.

Please look at these two numbers together. This is a rare occurrence in the US economy in nearly 30 years of "accelerating inflation + slowing growth". There is a specific name for it in textbooks: Stagflation.

Why has this stagflation come so suddenly? Because the US is impacted not by global supply chain disruptions, but by its own war.

Looking back at the timeline:

• Q4 2025: Inflation returns to 2.5%, market expects continued rate cuts in 2026
• February 28, 2026: The US + Israel launch airstrikes against Iran, functional closure of the Strait of Hormuz
• March 2026: CPI jumps to 3.5%
• April 2026: CPI 3.8%, PPI 6%, PCE 3.8%, all three major inflation indicators reach a 3-year high simultaneously

More troubling is a detail in today’s BEA report: "Housing and utilities" rose 0.6% month-on-month in April, the largest monthly increase in a year. This means inflation has transitioned from energy to housing, and housing is the most sticky inflation category, once it rises, it often takes 18-24 months to come down.

This is the "hellishly difficult" task assigned to Kevin Warsh upon becoming Fed Chairman.

Warsh's dilemma: raise interest rates due to inflation, but GDP is already slowing

Kevin Warsh took office as Fed Chairman on May 22. Today's PCE data is his first heavy inflation report since assuming office.

What is Warsh's dilemma?

If he raises interest rates according to inflation logic, the Q1 GDP has already been revised down to 1.6%, further rate hikes could push the economy directly into recession; if he lowers rates according to economic slowdown logic, PCE at 3.8% and Core PCE at 3.3%, cutting rates would make inflation completely uncontrollable.

This is why CME federal funds futures gave a very nuanced reaction today:

• The probability of rate hikes this year has decreased somewhat, as the GDP downgrade gives the Fed a reason to "wait and see"
• But the probability of rate cuts this year remains almost zero, as the PCE hitting a 3-year high leaves no room for cuts

The market is effectively pricing Warsh as a "locked Fed", unable to raise or lower rates, only able to continue to "hold" in the 3.50-3.75% range.

What does this mean for all assets? It means the Fed Put (the Fed's ability to support markets) is temporarily ineffective. For the past 15 years, every time the market faced risks, the Fed would cut rates or provide liquidity as a safety net, but this time, the Fed itself is caught between inflation and recession, with no bullets left.

Another notable reform from Warsh is his commitment to eliminate FOMC press conferences + dot plots. This means that his first FOMC meeting on June 16-17 could be a Fed that no longer provides any forward guidance or interprets decisions. The market will have to guess what the Fed will do.

This is the lowest point of Fed transparency since 2010.

US stocks: Snowflake +38% reverses "SaaS apocalypse" panic

However, today the US stock market did not follow the "stagflation script."

S&P 500 rose 0.58% to 7,563.63 points, a historical high. Nasdaq rose 0.91% to 26,917.47 points, a historical high. Even the Dow rose slightly by 0.05% to 50,668.97 points, despite falling -0.63% at one point during the day.

Why? The answer is Snowflake.

Snowflake announced its Q1 FY27 earnings report on Wednesday after hours + a $6 billion AWS Graviton agreement. At the opening today, SNOW's stock jumped from $175.26 to $244.45, closing up +38%, the largest single-day increase in the past 5 years.

The story behind this 38% is even more important than the number itself:

Snowflake's earnings report truly "killed" the largest SaaS panic of 2026:

In the past six months, the entire enterprise software sector (Salesforce, HubSpot, Workday, ServiceNow, Datadog) has been suppressed by a narrative, "agentic AI will replace traditional SaaS". The more capable the agents from Anthropic and OpenAI become, the more dubious the "software subscription" models like Salesforce are viewed. The entire SaaS sector has seen a significant drop YTD from 2026, with the market coining the term "SaaSpocalypse" for this panic.

But Snowflake revealed through its data: SaaS is not dead; in fact, it is accelerating driven by AI.

Specifically:

• Q1 product revenue of $1.33 billion, YoY +34%, the strongest single-quarter growth on record
• Full-year guidance revised up to $5.84 billion (vs. previous $5.66 billion + market expectation of $5.68 billion)
• $6 billion AWS agreement: purchase of AWS Graviton CPUs + AI accelerators within 5 years, the largest infrastructure commitment in Snowflake's history
• Acquisition of Natoma (enterprise Model Context Protocol platform), expanding agentic AI management framework
• 813 customers from Forbes Global 2000

The most persuasive statement is from Snowflake CEO Sridhar Ramaswamy: "AI for Snowflake is a powerful tailwind, and Q1 marks a clear inflection point in that journey."

Translation: For Snowflake, AI is not a rival replacing it but a partner. By packaging the capabilities of agents from Anthropic and OpenAI within its own data governance framework, Snowflake has become the "necessary path" for the deployment of agentic AI in enterprises.

This is why the software sector rebounded across the board today, with investors using a +38% candlestick to tell the market: The SaaSpocalypse was prematurely declared.

Another detail worth savoring is that Microsoft also rose today, with the reason being plan to deploy self-developed coding AI models. This, along with Snowflake, sends a common signal: hyperscalers are internally digesting AI, no longer purely relying on OpenAI/Anthropic. The "cake-sharing" game in the AI industry is shifting from "model vs model" to a complex game of "infrastructure vs application layer."

The only loser is Salesforce, which fell 2.8% after hours on Wednesday (weak Q2 guidance + squeezed by AI), today it further declined. On the same day as Snowflake's +38%, Salesforce's drop carries more signal value, the gap between winners and losers is quickly widening within enterprise software.

Another "surprise" in consumer stocks: Dollar Tree +19%, Best Buy +18%, Hormel +13%

Today, there is another story overshadowed by the firework brilliance of Snowflake, consumer stocks rebounded across the board:

• Dollar Tree +19%, discount retail
• Best Buy +18%, electronics retail
• Hormel +13%, food

This is a counter-correction of the market narrative of "the first solid blow of consumer recession" after Walmart's 7% plunge and Target's weak guidance last week.

Dollar Tree's +19% is especially noteworthy. Discount retail is the winner in an environment of consumer weakness, as middle to low-income households are squeezed by inflation, they are not "not consuming," but "downgrading consumption," moving from Walmart to Dollar Tree, and from Best Buy sinking to the electronics section of Costco.

This provides a patch to the narrative of "consumer recession" after Walmart's 7% decline on May 21: Consumption has not collapsed but is structurally downshifting. This is an important revision for macro judgment in the second half of 2026.

But please remember, this "consumption downshift" is detrimental to long-term inflation. When American households shift from Walmart to Dollar Tree, it means their "psychological price expectations" have been elevated. Once Dollar Tree also raises prices (which it has already done several rounds), inflation will form a "wage-price spiral," harder to manage than a simple energy shock.

Crypto: BTC drops below $74,000, Asia's early trading already at $72,800

Now let's move to the other side of the wall.

The keyword in today's crypto market is again bloodbath.

• BTC opened at $74,332.94 (fell below the $75,000 milestone)
• ETH fell below $2,100 and dropped to around $2,054, nearing the psychological barrier of $2,000

This is the deepest low for crypto in May 2026. Let me place this drop in a longer timeline:

• BTC historical high on October 6, 2025: $126,198
• Intraday low on May 28, 2026: $73,285
• Cumulative decline: approximately -42%
• YTD approximately -15%

This decline, within traditional assets, would have already been classified as a "bear market," but in the crypto circle, due to the larger corrections of 2017, 2021, and 2022, it is still referred to as an "adjustment."

What is most worth savoring today is the macro context:

• PCE 3.8%, inflation skyrocketing, the traditional "BTC hedging against inflation" logic should hold
• GDP revised down to 1.6%, economic slowdown, the "BTC as a safe-haven asset" logic should hold
• S&P 500 hits a new high, risk appetite increases, the "BTC as a risk asset" logic should hold
• Snowflake +38%, tech stocks celebrating, the "BTC as part of new tech allocations" logic should hold
• Oil prices rise, inflation expectations remain unrelaxed, the "BTC hedging against fiat currency depreciation" logic should hold

Five independent macro logics all support an increase in BTC, yet today BTC broke through the key support level of $74,000 after three weeks.

What does this mean? It means crypto has been completely abandoned by the market's macro narrative. BTC is neither a hedge against inflation, nor a safe-haven asset, nor a tech stock, nor a fiat currency alternative; it is transforming into a "drifting asset" with no dominant narrative.

The next key support levels:

• Fibonacci 0.382 retracement level: $74,528 (already breached)
• Fibonacci 0.5 retracement level: $70,000 milestone (psychological level)
• Low point in November 2025: $67,000-$68,000
• Long-term 200-week moving average: approximately $58,000 (extreme scenario)

This is the most dangerous technical pattern for crypto in the past six months.

Gold: Stagflation has arrived, yet safe-haven assets continue to get hit

Today gold continued to decline to $4,404 per ounce, down 1.73%, quoted during Asia's early trading.

This is the third trading day this week that gold has seen a drop. Accumulated decline since the war began: -15%, the best evidence that the traditional safe-haven logic has completely failed in 2026.

Why does gold fall as stagflation arrives? Three layers of reasons:

First layer: The dollar is actually strong in a stagflation environment, as other regions (Europe, Japan) also face stagflation, thus the dollar's "relative safety" premium increases. Second layer: Real interest rates are rising, nominal rates being "held down" by Warsh in the 3.50-3.75% range, but falling inflation expectations mean real rates are actually rising, which hurts gold as a non-yielding asset. Third layer: Risk appetite returns, with Snowflake up +38%, S&P and Nasdaq hitting new highs, and consumer stocks rebounding across the board, all funds are flowing out of gold to seize risk assets.

Gold's role as a "traditional safe-haven asset" is being replaced by tech stocks. This is one of the most memorable market structural changes of 2026, the new hedge for asset allocation is "AI giants + large tech stocks," not gold, not BTC.

This sounds counterintuitive, but that’s how today’s market has played out.

Summary of today: The invitation of stagflation, the market has yet to attend the feast

May 28, is the most dramatically contrasting day in May 2026, the market now stands before three suspenseful questions:

The first suspense: Will Trump approve the US-Iran 60-day MOU this weekend? If approved → oil prices test $85; if rejected → oil prices surge back to $100+.

The second suspense: How much liquidity will the June 12 SpaceX IPO (targeting a $1.75 trillion valuation) absorb from the secondary market? This is the last straw of the crypto narrative.

The third suspense: June 16-17 Warsh's first FOMC meeting, a new era of the Fed that no longer holds press conferences and no longer publishes the dot plot officially begins. The market must adapt to the old era of "guessing the Fed's intentions."

The most important sentence for holding positions:

The invitation of stagflation has arrived. The market has not attended the feast yet, because that 38% firework from Snowflake is too beautiful.

But the feast will eventually begin. When the fireworks fade, what remains on the table are PCE 3.8%, GDP 1.6%, a 33-kilometer wide waterway in Hormuz, and a Fed Chairman who no longer speaks; none of these dishes are easy to swallow.

Historically, every stagflation has corresponded to a period of "extremely high winner concentration" in the market, such as the "Nifty Fifty" of the 1970s, the tech leaders of 2000, and the energy stocks of 2022. The 2026 version may be represented by today's Snowflake +38% + Micron breaking $1 trillion + collective celebration of quantum stocks, "AI + Data Governance + Quantum" combination.

If your position is in this combination today, congratulations. If your position is still in the 2020s narrative of crypto being a "hedge against fiat + technological revolution," you might need to reread SpaceX S-1 tonight, the unsettling detail is that even Musk is quietly hoarding BTC, but the price is still falling.

This means that the upcoming rebound may need to rely on those "invisible on-chain funds" to rescue themselves at lower price levels.