Your Centsational Market Update June 25th 2026

Hi love,

This is your weekly market update the place where we slow things down together and turn all the noise out there into something you can actually understand.

And this week, there's one question on a lot of people's minds, so let's go straight to it: is this a bubble?

The short answer is no. Not yet. But let me walk you through why we can say that, because the reasoning matters far more than the answer.

What's actually happening

Right now the market is in what we'd call a reflective phase. It's pausing, catching its breath. The part of the market that's pausing the hardest is the most exciting one of the last few years: advanced technology — AI and the microprocessors that sit underneath it all. That whole area has had a sharp pullback.

If we look at the Nasdaq you can see that reflection clearly. The Nasdaq is the one most packed with technology companies, and the one we keep coming back to in these updates. What we've been picturing for a while is a market that moves sideways for a bit, then gradually pushes higher later in the year as interest rates come down. More on the rates in a moment.

The chip sector is a good example of why moves feel so violent right now. In just three months it had run up around 107% — more than doubling — and then gave a good chunk of that back. Markets that are heavily tied to chips, like Taiwan and Korea, felt the same swing, because their stock markets are very exposed to that one industry. Even SpaceX, which rallied hard earlier, slid from $225 to $154 a share.

That last one connects to something I showed you before: IPOs when a company sells its shares to the public for the first time. The pattern repeats again and again. The early excitement runs hot, the price often disappoints over the following year, and then things settle down in the years after. What feels like a collapse is frequently just euphoria cooling off.

Why the swings feel so big

Two things are amplifying every move right now.

The first is leverage: borrowed money used to buy shares. There's a lot of it in the market at the moment, historically high. When investors buy with borrowed money, every move gets magnified: gains feel bigger on the way up, and drops feel bigger on the way down. It's like turning up the volume on the whole market.

The second is something called the put/call ratio. Don't let the name intimidate you. A call is a bet that prices will rise; a put is a bet that prices will fall. The ratio simply tells us which way the crowd is leaning. Looking back over ten years, we'd been sitting in a stretch where almost everyone was buying calls — betting on more upside — and barely anyone was protecting against a fall. That's the kind of one-sided optimism that often comes right before a wobble. It's started to come back toward balance now, though it probably has a little further to go.

So yes, there's a correction that's the word for a normal, temporary fall in prices, often somewhere around 10%, after a strong run up. And a correction is completely normal.

They happen all the time, they've happened before, and they'll happen again. A correction is not a bubble.

So… is it a bubble?

A bubble isn't just "prices went up a lot." A bubble is when prices climb far beyond what companies are genuinely worth. So let's check the fundamentals.

When we put company earnings (the actual profits businesses are making) next to their valuations, the picture is reassuring. Earnings have been climbing steadily. And the price-to-earnings ratio the P/E, which is simply how much investors are paying for each dollar of a company's profit has stayed stable. In plain terms: prices have risen, but so have the profits underneath them. The two are moving together. That is not what an overvalued market looks like.

I also looked at every major bubble from 1970 to today, and compared where we are now to the famous one of the late 1990s and early 2000s. Back then, valuations didn't just rise they exploded, completely detached from the profits underneath. Today we're nowhere near that. The foundations are still standing on solid ground.

That's why a pullback like this one doesn't change the bigger story. It's noise, not structure.

The other half of the picture: rates and oil

Now let's connect this to interest rates, because they drive almost everything.

But first, a small thing worth knowing there are really two different rates in this story. One is the policy rate: the short-term rate that central banks (the institutions that set a country's interest rates, like the US Federal Reserve) decide on directly. The other is the 10-year yield: the interest rate on long-term government debt, which nobody sets by decision. It's decided every day by buyers and sellers, and it reflects what investors expect over the next ten years especially where they think inflation and rates are heading.

Back at the end of February just four months ago, almost everyone expected central banks to cut the policy rate by the end of the year. Today the expectation has flipped: many now expect a slight rise.

And yet the US 10-year yield has already started falling. While the forecasts still say "rates up a bit," bond investors aren't waiting to find out they're already acting on where they think things are going. With oil easing and geopolitical fear fading, they're betting the pressure that justified higher rates is melting away. In other words, the market is quietly moving ahead of the forecasts and historically, this market often gets there first.

And a big reason is oil. With the geopolitical tensions around the Strait of Hormuz easing the threat of disruption has faded, and the oil price is coming down. When you line up a measure of global geopolitical risk against the oil price, the link is clear: less risk, cheaper oil. And lower oil tends to drag that 10-year yield down with it.

Here's the chain: less geopolitical fear → cheaper oil → lower inflation → lower interest rates → a friendlier environment for markets.

Ps: lower inflation → lower interest rates

Why does lower inflation lead to lower rates? Because raising rates is the main tool central banks use to fight inflation. Higher rates make borrowing more expensive, which cools spending and brings prices back under control. So when inflation is falling on its own, central banks no longer need to keep rates high they can ease off. Falling inflation removes the very reason rates were lifted in the first place.

That word — inflation — just means prices across the economy rising over time. And there's a detail here I found interesting. The San Francisco branch of the US central bank splits inflation into two kinds. Cyclical inflation comes from the economy running hot lots of demand, an overheating economy. Acyclical inflation comes from outside that cycle seasonal factors or geopolitical events, things not driven by the economy itself. Right now the acyclical part has ticked up, but the cyclical part keeps falling. That's actually encouraging: it suggests the economy isn't overheating. And as the tensions around Hormuz and Iran calm down, that outside pressure should ease too pulling inflation, and then rates, lower.

The bigger picture

So let's bring it back to what matters.

Are we in a correction? Yes. Is there volatility: prices swinging up and down more sharply than usual? Yes. Is there any reason to panic? No.

The market is pausing and shaking out some of the borrowed money and one-sided optimism that had built up. That's healthy. Underneath it, company profits are real, valuations are reasonable, oil is easing, and the pressures on inflation and rates are pointing in a calmer direction.

My job here isn't to tell you what to do. It's to help you understand why things are moving, so the next time you see a scary headline, you already know how to read it. That's the real edge not reacting, but understanding.

We'll keep watching this together.

If something in this felt unclear, or made you think, just let me know I read every message.

I've got you.

Francesca 🤍