Dear Diary: Friday, February 20th, and Everything Is On Trial
Dear Diary: Friday, February 20th, and Everything Is On Trial
A dispatch from somewhere between the trading desk and the confessional booth
Seven-thirty in the morning. PCE drops. Q4 GDP drops. The Supreme Court may or may not detonate the legal scaffolding holding up $170 billion in tariff revenue. Bitcoin is drawing a bearish pennant on the chart like it's auditioning for a technical analysis textbook. Iran is one carrier group away from a crude oil spike that would embarrass every rate-cut projection made in the last six months.
And futures are basically flat.
This is either the most blasé market in recorded history, or everyone is holding their breath and calling it calm.
Let's start with the number everyone pretended to already know: core PCE for December. Consensus was 2.8% year-over-year. The range of estimates — 2.8% to 2.9% — told you everything about how little room the Fed has to breathe. Two percent is the target. Two-point-eight is where we are. The gap between those numbers is a full rate-hiking cycle in reverse, priced in over two years, still unfinished. Markets are still pricing two 25-basis-point cuts before year-end. That's not confidence — that's hope wearing a suit.
The Fed minutes from Wednesday made clear that at least some voting members are prepared to hike again if inflation doesn't cooperate. Read that sentence again slowly. We are sitting in February 2026, and the central bank of the United States is having internal conversations about raising rates further. Meanwhile, Polymarket is giving 77% odds that the Supreme Court strikes down the tariffs — which, if it happens, should in theory lower inflation expectations — but also opens a $133 billion question mark in the federal budget and weeks of legal ambiguity that would make even the most hawkish FOMC member reach for the Maalox.
The irony is exquisite. A ruling against the tariffs might actually give the Fed more room to cut — right as the same ruling creates a fiscal mess that complicates everything else.
Meanwhile, Q4 GDP. The Atlanta Fed's tracker was at 3.7%. Bloomberg consensus was 2.8%. That spread alone was reason to be humble. Strong growth + sticky inflation = stagflation's polite cousin, the one nobody wants to name at Thanksgiving. If GDP prints hot today while PCE stays warm, the "higher for longer" people get vindicated and the rate-cut-by-June crowd quietly updates their spreadsheets without making eye contact.
Strong growth is supposed to be good news. In 2026, it's complicated news. An economy that refuses to slow down while inflation refuses to fall is an economy that has stripped the Fed of its most powerful justification for easing. There's a reason the 10-year yield bounced to 4.09% after Wednesday's minutes. The bond market read the room.
Bitcoin is at $66,000 and change, staring into the void. It fell from above $126,000 at its 2025 peak. That is not a correction — that is a restructuring of the investor base. The early adopters who held through multiple cycles are fine. The 2024 wave of institutional buyers and ETF-chasing retail who loaded up near the top are sitting on losses that are starting to feel less like a dip and more like a narrative problem.
IBIT saw outflows. Extreme Fear at 9 on the index. Ethereum nudging $2,000 from above, which historically is the kind of level that acts less like support and more like a turnstile. Nifty Gateway, the NFT platform, announced it's shutting down on February 23rd. That's not a market signal — it's a cultural signal, and those tend to precede the market signal by a quarter.
The SCOTUS tariff ruling matters for BTC not because tariffs affect proof-of-work, but because a ruling that forces the U.S. government to refund $133 billion in collected duties — on some unknowable timeline, through some unknowable mechanism — is a liquidity and confidence event. What that means for the dollar, for yields, for the risk-on/risk-off calculation: nobody knows with precision. And in an asset class that runs on narrative and positioning, uncertainty is just volatility in a waiting room.
What's actually underreported in all of this is the Deere number. While everyone was parsing Walmart's tepid guidance and watching Blue Owl crater 5.9% on liquidity tightening, Deere & Company put up a quarter that beat expectations and surged 11.6%. Agricultural equipment. Old economy. Physical world. The kind of company that builds things that dig into the ground.
In a week when software names bled out on AI disruption fears, when private credit asset managers suddenly had questions they couldn't fully answer, when the most sophisticated financial products were explaining themselves to nervous LPs — a tractor company was the best-performing large-cap on the tape.
There's a joke in there somewhere. I'm too tired to make it.
The week ends with everything unresolved. The Fed still hasn't decided what it believes. The Supreme Court still hasn't ruled. Iran and the U.S. are still doing their dance around the Strait. Bitcoin is still drawing patterns that technicians argue about and traders actually trade. The S&P is up 14% year-over-year, down slightly on the week, RSI just above 48 — right in the middle of nothing.
Nvidia reports Wednesday. If you're looking for the one event that could actually break the standoff — the moment that forces the market to take a position — that's probably it.
Everything before then is just the market breathing through its nose.