The Supreme Court Killed the Tariffs, Trump Replaced Them Two Hours Later, and GDP Missed by a Mile – Market Breakdown #183
S&P surged 0.69% to 6,909 after SCOTUS struck down IEEPA tariffs 6-3. GDP printed 1.4% vs 2.5% expected. Core PCE hit 3.0%. Trump signed a new 10% global tariff under Section 122.
📊 THE MARKET BREAKDOWN
Satirical daily market intelligence for traders who think in systems, not headlines.
Issue #183 | February 20, 2026
🔥 Headlines & Hysteria (powered by Forked Feed)
Forked Feed says: The Supreme Court ruled 6-3 that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. Chief Justice Roberts wrote the opinion, joined by Sotomayor, Kagan, Gorsuch, Barrett, and Jackson. Roberts noted that “IEEPA contains no reference to tariffs or duties” and that “until now no President has read IEEPA to confer such power.” The opinion was 170 pages across multiple concurrences and dissents, which is the judicial equivalent of the Supreme Court saying “we have a lot to say about this and none of it is flattering.” Kavanaugh dissented, warning that the government “may be required to refund billions of dollars to importers.” The Tax Foundation estimates more than $160 billion in illegally collected tariffs. Penn-Wharton says $175 billion. The government says it has no plans to issue refunds because “it has to get litigated for the next two years.” The market initially dipped on the morning’s catastrophic GDP print, then reversed violently when the ruling dropped around 10 AM, surging to close at 6,909, finally breaching the 6,900 ceiling that rejected every rally attempt in 2026. E-commerce stocks exploded: Amazon +2.6%, Wayfair +1.6%, eBay +3.9%, Etsy +8.6%. Alphabet popped 4%. But then, in a move that surprised absolutely nobody who has been paying attention, Trump held a press conference where he called the decision “a disgrace,” said he was “absolutely ashamed” of Gorsuch and Barrett, called them “an embarrassment to their families,” and announced he was signing a new 10% global tariff under Section 122 of the Trade Act of 1974, a rarely used balance-of-payments provision that allows tariffs up to 15% for 150 days. Treasury Secretary Bessent said the alternative authorities would result in “virtually unchanged tariff revenue in 2026.” So the Supreme Court of the United States spent 170 pages explaining why the tariffs were illegal, and the President replaced them with different tariffs before the market closed. The tariff whack-a-mole that Wall Street feared has officially begun. Section 122 has never been used to impose tariffs before, which means it will almost certainly be challenged in court, which means we will be doing this again in six months. The cycle of tariff, lawsuit, Supreme Court ruling, new tariff, new lawsuit is now the permanent state of American trade policy, and if that doesn’t deserve its own ETF, nothing does.
Forked Feed says: The Bureau of Economic Analysis released Q4 2025 GDP this morning, a full month late because the government was shut down when it was originally supposed to come out, and the number was 1.4% annualized. The consensus was 2.5%. The prior quarter was 4.4%. That is, in technical economic terms, a faceplant. The 43-day government shutdown from October through mid-November knocked an estimated full percentage point off growth, furloughed 650,000 workers, and turned Q4 into what the BEA politely describes as “deceleration.” Trump, who was meeting with governors when the SCOTUS ruling landed, had already pre-blamed the number in a Truth Social post calling it the “Democrat Shutdown” and screaming about “LOWER INTEREST RATES” and “’Two Late’ Powell.” Consumer spending grew 2.4%, down from 3.5% in Q3. Exports fell 0.9% after surging 9.6%. For the full year, the economy grew 2.2%, down from 2.8% in 2024. The market looked at this number, briefly panicked, sent futures negative, and then the Supreme Court tariff ruling hit 90 minutes later and everyone collectively decided that a stagflation-level GDP print didn’t matter because tariffs were dying. The S&P went from down 0.3% pre-ruling to up 0.7% by the close. The GDP miss was the worst quarterly print in over a year and the market gained 47 points on the day. This is the financial equivalent of your house being on fire and celebrating because it started raining.
Forked Feed says: December core PCE, the Fed’s preferred inflation gauge, came in at 3.0% year-over-year, up from 2.8% in November and above the 2.9% consensus. Headline PCE hit 2.9%, also above estimates. The monthly core number was 0.4%, the hottest since February 2025. Goods prices climbed 0.4%. Services rose 0.3%. The inflation data is unambiguously bad. Core PCE at 3.0% is a full percentage point above the Fed’s 2% target. This is the exact scenario the “several” FOMC officials were worried about when they floated rate hikes in Wednesday’s minutes. The CME FedWatch tool now shows a 94% probability the Fed holds in March, with the first fully priced-in cut pushed to mid-2026. But the market completely ignored this data because the tariff ruling was a bigger dopamine hit. To be clear: the economy grew at 1.4% while inflation accelerated to 3.0%. That combination has a name. It’s called stagflation. The word nobody in finance wants to say out loud because the last time it happened, the Fed had to nuke interest rates to double digits to kill it. We’re not there yet. But we’re in the ZIP code. RSM’s chief economist Joseph Brusuelas wrote that the Fed “is not going to be comfortable reducing its policy rate with core inflation advancing by 3%.” The rate-cut narrative is not dead, but it’s on life support, and nobody noticed because the Supreme Court was handing the President his biggest policy defeat in a decade.
Forked Feed says: Anthropic announced “Claude Code Security,” a feature that scans codebases for security vulnerabilities and suggests patches for human review. It’s a limited research preview. It’s only available to Enterprise and Team customers. And it absolutely obliterated cybersecurity stocks on a Friday afternoon. CrowdStrike fell 8%. Cloudflare dropped 8.1%. Okta crashed 9.2%. SailPoint fell 9.4%. Zscaler dropped 5.5%. The Global X Cybersecurity ETF fell 4.9% to its lowest level since November 2023. The AI disruption narrative, which has spent 2026 methodically destroying software valuations, cybersecurity margins, and the career prospects of anyone who writes code for a living, has now officially reached the companies whose entire value proposition is “we protect your code.” Anthropic said the tool can find “bugs that had gone undetected for decades,” which is the kind of marketing copy that makes cybersecurity CEOs update their resumes. The broader software sell-off continued in sympathy, because on a day when the market rallied 0.7%, the message was crystal clear: AI is coming for every software vertical, including the ones that are supposed to defend you from AI. The Cybersecurity ETF is down 14% year-to-date. The Nasdaq broke its five-week losing streak. Those two facts coexisting on the same day tells you everything about the bifurcation in tech: the AI builders are winning, and the legacy software companies are being picked apart in real time.
Forked Feed says: The S&P gained 0.69% to close at 6,909.51. The Nasdaq rose 0.90% to 22,886. The Dow added 231 points to 49,626 after being down 200 points in the morning. The Dow recovered 430 points from low to close. The Nasdaq broke its five-week losing streak with a 1.4% weekly gain. The VIX dropped 5.6% to 19.09. Gold surged 2.65% to $5,130, its highest level in two weeks, because when the Supreme Court invalidates the tariff regime that was generating $130+ billion in annual revenue, the deficit math gets worse, and gold trades the deficit math. The dollar fell because IEEPA tariff revenue was considered credit-positive for the U.S., and removing it raises questions about the fiscal trajectory. Bonds fell for the same reason. On a day when the economic data was objectively terrible (GDP at 1.4%, core PCE at 3.0%), the market rallied because the tariff ruling removed an overhang that has been suppressing valuations since April 2025. Tariff beneficiaries surged: Amazon +2.6%, Alphabet +4%, Wayfair +1.6%, eBay +3.9%, Etsy +8.6%. Grail cratered 47% after a cancer drug trial missed its primary endpoint. Blue Owl fell another 3%, because the private credit panic from yesterday has a half-life longer than uranium. Opendoor surged 19% on a massive revenue beat. And somewhere in the background, Trump signed a replacement tariff that takes effect next week, which means today’s rally was built on a narrative (tariffs are dying) that was already being undermined (tariffs are morphing) before the closing bell rang. The S&P broke 6,900 resistance. The question is whether it can hold it on Monday when the market processes the fact that a new 10% global tariff is already signed.
🔎 Today’s Focus: The Day the Tariffs Died (and Were Immediately Resurrected)
The Supreme Court struck down IEEPA tariffs. GDP printed 1.4%. Core PCE hit 3.0%. Cybersecurity stocks crashed on AI disruption fears. And the S&P rallied 0.69%.
That sentence makes no logical sense, and yet it’s exactly what happened. The market opened lower on the GDP and PCE data, which told a clear stagflation story: the economy is slowing (1.4% growth) while inflation is accelerating (3.0% core PCE). The Dow was down 200 points before lunch. Then the Supreme Court ruling hit at 10 AM and everything reversed. The S&P swung roughly 65 points from low to high. The Dow recovered 430 points from its trough. The Nasdaq snapped a five-week losing streak.
The rally was driven by two things: tariff relief optimism and the mechanical removal of a multi-month overhang. Since April 2025, the IEEPA tariffs have been the single largest source of trade policy uncertainty for U.S. companies. Import costs rose. Supply chains were disrupted. Retailers ate margin compression. The ruling invalidated an estimated $160-$175 billion in tariff collections and potentially entitles importers to refunds. E-commerce, retail, and consumer discretionary stocks surged on the expectation that costs would fall and margins would improve.
But the celebration may be premature. Within hours of the ruling, Trump signed a new 10% global tariff under Section 122 of the Trade Act of 1974, a balance-of-payments provision that allows up to 15% tariffs for 150 days. Treasury Secretary Bessent said the alternative authorities would produce “virtually unchanged tariff revenue in 2026.” If true, the net economic effect of today’s ruling is zero, and the rally was built on a thesis that was already dead by 3 PM.
Forked Feed says: The market treated today like a liberation. The S&P broke 6,900. Gold surged to $5,130. The dollar fell. The narrative was “tariffs are over and we’re free.” But tariffs aren’t over. They’ve been reclassified. The President used a law that has never been used to impose tariffs before, which means it will be challenged in court, which means we’ll have another Supreme Court case in 12-18 months. The IEEPA tariffs raised $130+ billion in revenue. That revenue is now gone, replaced by a Section 122 tariff that expires in 150 days unless Congress extends it. The fiscal hole this creates is enormous: the Tax Foundation estimates the IEEPA tariffs would have raised $1.4 trillion over the next decade. Rating agencies had cited tariff revenue as credit-positive. Without it, the deficit picture darkens, which is why gold rallied 2.65% on a day when the market was supposedly celebrating. Meanwhile, the actual economic data today was a horror show that nobody processed because the tariff drama was louder. GDP at 1.4% with core PCE at 3.0% is the textbook definition of stagflation. The Fed can’t cut because inflation is too high. The Fed can’t hike because the economy is too weak. The Fed is stuck, the economy is stuck, and the only thing moving is the S&P, which rallied 47 points because the Supreme Court gave it something to be excited about for 90 minutes before the President signed a replacement tariff. Tomorrow is Saturday. By Monday, the market will have to reckon with the Section 122 tariff, the stagflation data, the cybersecurity carnage, and the question of whether 6,900 is a real breakout or a head-fake. Nvidia reports Wednesday. The pressure cooker has not been relieved, just re-pressurized.
⚡ The Setup
SPY 689.43 | BTC 67,803 | US10Y 4.086 | DXY 97.79
SPY closed at 689.43, putting the S&P at 6,909.51 after a 0.69% rally that finally broke through the 6,900 resistance ceiling that has held since early January. This is the first close above 6,900 since the S&P briefly pierced it on January 6 before selling off. The breakout was driven by the SCOTUS tariff ruling, not by economic fundamentals, which were unambiguously negative (1.4% GDP, 3.0% core PCE). The critical question for Monday is whether 6,900 holds as new support or whether the replacement Section 122 tariff and the stagflation data pull the index back below the level. Support sits at 6,862 (yesterday’s close) and 6,843 (Tuesday’s close). If 6,900 holds through Monday’s session, the next target is the January 6 intraday high near 6,950. The VIX fell 5.6% to 19.09, its lowest in over a week, signaling that the options market is pricing the tariff ruling as a de-risking event despite the replacement tariff. Nvidia reports Wednesday, which will be the defining catalyst for whether this breakout sticks or fails.
BTC traded at $67,803, bouncing from yesterday’s near-$66,000 lows and holding the $65,000 support level that we flagged as critical. Bitcoin showed some relative strength on Friday, rallying modestly while the dollar fell on the tariff ruling’s fiscal implications. The weaker dollar is mechanically supportive for BTC, but the hot PCE data and rate-hike rhetoric from the Fed are headwinds. Bitcoin dominance remained at 58.82%. ETH held just under $1,960. Total crypto market cap recovered to $712 billion. The tariff ruling is theoretically bullish for crypto because lower tariffs mean lower inflation over time, which means rate cuts become more plausible. But the replacement tariff partially offsets this, and core PCE at 3.0% keeps the Fed firmly on hold. BTC remains range-bound between $65,000 and $70,000 until the macro picture clarifies. A break above $70,000 requires a clear catalyst, and nothing on the calendar provides one before Nvidia earnings.
The 10-year yield settled at 4.086%, essentially flat on the day despite massive cross-currents. The GDP miss (growth-negative, pushing yields down) was offset by hot PCE data (inflation-positive, pushing yields up), and the tariff ruling created a third force: fiscal concern. IEEPA tariffs generated $130+ billion annually, and the ruling potentially eliminates that revenue stream, widening the deficit. Rating agencies had cited tariff revenue as credit-positive, and removing it raises the term premium on long-dated Treasuries. The net effect was a wash, with yields barely moving despite one of the most eventful days in recent market history. The bond market is now focused entirely on whether Trump’s Section 122 replacement tariffs will produce the “virtually unchanged revenue” that Bessent promised. If they don’t, the fiscal math deteriorates, long-term yields rise, and the dollar weakens further. The March FOMC meeting is now a non-event: 94% probability of a hold.
DXY fell to 97.79, its first meaningful decline in three sessions, as the tariff ruling raised fiscal concerns that weighed on the greenback. The dollar had been rallying on hawkish FOMC minutes and strong labor data, but the removal of IEEPA tariff revenue changes the fiscal equation. The dollar’s best week since mid-November may now unwind if the Section 122 replacement tariffs face legal challenges or produce less revenue than projected. Gold surged 2.65% to $5,130, its best day in over a week, as the combination of fiscal uncertainty, geopolitical risk (Iran), and safe-haven demand drove buyers into the metal. Silver jumped to $84.63. Gold analysts are projecting $7,000-$10,000 based on the rate-cut cycle and geopolitical risk premium. The dollar-gold divergence today was notable: the dollar fell and gold surged, both driven by the same tariff ruling, both pricing the same fiscal deterioration.
🧩 Market Archetype: The Plot Twist
Yesterday we called this market a Pressure Cooker, with every major input converging on a single 24-hour window. The pressure was released, but not in the direction anyone predicted. The GDP missed badly. Core PCE came in hot. The stagflation data was real. And the market rallied because the Supreme Court invalidated the tariff regime, which was a bigger story than the economic fundamentals. This is The Plot Twist: a market where the narrative that was supposed to matter (stagflation data) was completely overwhelmed by a narrative nobody could trade in advance (the exact timing and market impact of a constitutional ruling). The S&P broke 6,900 on a day when the economic data said it should have gone down. The breakout is real in a technical sense but fragile in a fundamental sense. The replacement tariff, the fiscal hole, and the stagflation print are all still there on Monday morning. Plot Twists resolve one of two ways: either the new narrative sustains and the breakout holds, or the old fundamentals reassert themselves and the breakout fails. Nvidia earnings on Wednesday will determine which.
💧 Flow Pulse
The tariff ruling drove the day’s flows with surgical precision. E-commerce and import-heavy consumer names were the clear winners: Amazon gained 2.6%, eBay rose 3.9%, Wayfair added 1.6%, and Etsy surged 8.6% (combining the tariff tailwind with its Depop sale). Alphabet jumped 4%, its best day in weeks. Micron advanced on AI-memory demand optimism. These are all companies that either import heavily (and benefit from lower tariffs) or operate consumer-facing platforms where lower costs translate directly to better margins.
Cybersecurity was the day’s biggest casualty despite the broader rally. Anthropic’s Claude Code Security announcement triggered a sector-wide wipeout: CrowdStrike fell 8%, Cloudflare dropped 8.1%, Okta crashed 9.2%, SailPoint fell 9.4%, Zscaler dropped 5.5%. The Global X Cybersecurity ETF hit its lowest level since November 2023. The AI disruption narrative has now metastasized from general software into the cybersecurity vertical, which was supposed to be “AI-resistant” because security requires human judgment. Anthropic just demonstrated that AI can find bugs that humans missed for decades, and the market repriced the entire sector in a single session.
Gold was the other notable flow. The metal surged 2.65% to $5,130 as the tariff ruling’s fiscal implications drove safe-haven demand. The IEEPA tariffs were generating $130+ billion annually, and their removal creates a fiscal hole that has to be filled or accepted. Gold is pricing the “accepted” scenario. Silver jumped to $84.63. Energy remained elevated on Iran fears, with WTI at $66.48 and Brent above $71.
Private credit continued bleeding with Blue Owl down another 3%, extending yesterday’s cascading panic. Grail collapsed 47% on a failed cancer drug trial. Opendoor surged 19% on a revenue blowout.
Forked Feed says: The flows told two completely different stories depending on which monitor you were watching. On one screen: the S&P breaking 6,900, e-commerce surging, Alphabet up 4%, gold at $5,130, VIX collapsing. On the other screen: cybersecurity getting eviscerated by an AI company that made a tool that finds bugs better than the entire cybersecurity industry, private credit still hemorrhaging, and Grail losing half its value because a cancer drug didn’t work. The market is not bifurcated anymore. It’s trifurcated. There are stocks benefiting from tariff relief, stocks being destroyed by AI disruption, and stocks being crushed by credit stress. These three stories are happening simultaneously, in the same index, on the same day. The S&P gained 0.69% and the Cybersecurity ETF fell 4.9%. That’s not a market. That’s three markets wearing a trench coat pretending to be one index.
🔮 Forked Forecast
Bull Case (30%): The SCOTUS ruling marks a genuine inflection point. The S&P’s break above 6,900 holds through Monday and becomes new support. The Section 122 replacement tariff is seen as weaker and more limited than IEEPA (150-day cap, 15% max rate). Importers begin pricing in $100B+ in refunds, boosting balance sheets. Consumer stocks rally further. The GDP miss is dismissed as shutdown-distorted. Nvidia earnings on Wednesday beat expectations and reignite the AI trade, lifting the entire tech complex. The S&P targets 6,950-7,000. Gold continues higher on fiscal uncertainty. Oil stabilizes as Iran rhetoric cools over the weekend.
Base Case (45%): Monday opens with a modest pullback as the market digests the Section 122 replacement tariff and Bessent’s claim that tariff revenue will be “virtually unchanged.” The 6,900 level is tested but not conclusively broken. Core PCE at 3.0% reasserts itself as the dominant macro narrative, keeping rate-cut expectations pushed to mid-2026. The market trades 6,870-6,920 (SPY 687-692) through midweek, waiting for Nvidia earnings to break the range. Cybersecurity continues to underperform. Private credit stabilizes but doesn’t recover. Oil stays elevated on Iran. Gold holds above $5,000 on fiscal and geopolitical uncertainty.
Bear Case (25%): The Section 122 tariff takes effect next week and the market realizes that “virtually unchanged tariff revenue” means the tariff burden on the economy hasn’t actually decreased. The Section 122 tariff faces immediate legal challenges, adding more uncertainty rather than removing it. Monday’s session reprices Friday’s rally as a head-fake. Core PCE at 3.0% and GDP at 1.4% dominate the narrative as genuine stagflation signals. The cybersecurity sell-off spreads into broader software again. Blue Owl’s private credit contagion resurfaces. The S&P fails at 6,900, slides back to 6,850, and the range that has held all year tightens. If Iran escalation accelerates over the weekend, oil spikes and the inflation doom loop from yesterday’s analysis re-engages.
Triggers to Watch:
Section 122 tariff implementation: Trump said “effective almost immediately” and “next week.” Markets need to see the actual rate schedules and country coverage to assess whether this is truly equivalent to IEEPA tariffs or a watered-down replacement.
Nvidia earnings (Wednesday February 25): The biggest single-stock catalyst in the market. Meta’s data center deal raised the bar. Jensen Huang said Blackwell demand is “off the charts.” The AI trade lives or dies on this print.
IEEPA tariff refund litigation: The Court didn’t establish a refund process. $160-175 billion in potentially illegal collections needs to be adjudicated. Companies have already been selling refund claims to hedge funds at 40-50 cents on the dollar.
Iran weekend escalation: Trump said “within 10 days” yesterday. Military assets are positioned. Any weekend strikes send oil parabolic on Monday’s open.
Monday market reaction: Does 6,900 hold or fail? The answer determines whether the SCOTUS ruling was a real catalyst or a one-day event.
Cybersecurity follow-through: The Global X Cybersecurity ETF is at its lowest since November 2023. Watch for earnings revisions and analyst downgrades early next week.
March FOMC (March 18-19): A non-event at 94% hold probability, but any Fed commentary on the 3.0% core PCE reading will shape the rate narrative through Q2.
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💬 Final Thought
Today was the most consequential single session of 2026 and the market’s reaction was both perfectly logical and completely insane.
The Supreme Court struck down the IEEPA tariffs in a 6-3 decision, invalidating the legal foundation of the most aggressive trade policy in modern American history. Chief Justice Roberts wrote that IEEPA “contains no reference to tariffs or duties” and that “until now no President has read IEEPA to confer such power.” The ruling potentially requires the government to refund $160-175 billion in illegally collected revenue. It was, by any measure, a historic rebuke of executive overreach.
The market rallied 47 points.
Then the GDP report showed the economy grew at 1.4% in Q4, less than half the 2.5% consensus, dragged down by the longest government shutdown in history. Core PCE hit 3.0%, a full point above the Fed’s target. The data screamed stagflation.
The market ignored it.
Then Trump called his own Supreme Court nominees “an embarrassment to their families,” announced a new 10% global tariff under Section 122, and declared that the decision “made a president’s ability to impose tariffs more powerful, rather than less.”
The market held its gains.
Then Anthropic released a cybersecurity tool and CrowdStrike lost 8% of its value in six hours.
This is the market in February 2026. The Supreme Court can dismantle trade policy, the economy can flash stagflation signals, the President can sign replacement tariffs before the closing bell, an AI company can wipe out an entire software vertical with a press release, and the S&P closes at 6,909, above the resistance level it hasn’t held since January, with the VIX at 19. The range has been broken. But the reasons for the range haven’t gone away. They’ve multiplied.
Next week: Nvidia earnings on Wednesday. The Section 122 tariff takes effect. Iran is still in the crosshairs. Core PCE is at 3.0%. Private credit is still stressed. And the S&P just broke out to a seven-week high on a day when every piece of economic data said the economy is deteriorating and inflation is accelerating.
Either the market knows something the data doesn’t, or the data knows something the market hasn’t priced yet. Nvidia will tell us which.
There was a technical issue with FiboSwanny’s Threshold Lens series this week. We will pick up with his Issue #8 next Friday.
-- Forked Feed
Forked Feed is a satirical financial newsletter and should not be construed as investment advice. We're just here to point out the absurdity. Past performance of our snark does not guarantee future sarcasm.
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