Looking Past the Shutdown

The Weekend Edition is pulled from the daily Stansberry Digest.

The White House ramped up the pressure...

After Day 1 of the partial government shutdown this week, Republicans publicly blamed Democrats for the funding stalemate and promised to cut programs and lay off workers. President Donald Trump called it an "unprecedented opportunity."

But the stock market behaved like it had rarely been happier – with investors seeing through the political charade.

The benchmark S&P 500 Index and tech-heavy Nasdaq Composite Index traded at new all-time highs this week. And bitcoin – originally designed as an alternative to U.S. political dysfunction – soared more than 10% back toward a record around $123,000.

So far, this government shutdown seems like it will go down as just another brick in the "wall of worry" that this bull market has been climbing.

That said, there is a different, growing risk to note. And it might be more than just a brick...

Today's jobs market is in increasingly bad company...

Earlier this week, a barrage of jobs data came out. Job openings and hiring have fallen, and the economy has lost jobs in three of the past four months (according to payroll processor ADP).

U.S. companies announced 54,064 layoffs in September, according to a monthly report from consulting firm Challenger, Gray & Christmas. That's down 37% from August (and down 26% year over year). But the year-to-date data confirms that we're seeing a generally weakening labor market.

From the Challenger report...

So far this year, companies have announced 946,426 job cuts, the highest [year to date] since 2020 when 2,082,262 were announced. It is up 55% from the 609,242 job cuts announced through the first three quarters of last year and is up 24% from the 2024 full year total of 761,358. The 2025 year-to-date total is the fifth highest in the 36 years Challenger has reported.

Put another way, companies are laying off workers at the highest rate since the global COVID-19 pandemic shut down the economy for months. And the hiring picture is even worse...

So far this year, businesses have only announced plans to add about 205,000 jobs, according to Challenger. That's less than half of the announced hiring plans for the first nine months of 2024.

And it's the lowest year-to-date total since 2009.

Companies are laying off workers at the fastest pace since the unemployment rate hit 15% – the highest level since the Great Depression. And they're hiring workers at the lowest rate since the Great Recession.

That's a telling sign for the labor market – even if the unemployment rate is still around historical lows today. It's time to turn the "recession watch" radar back on, though it might be tough to get a complete picture for the foreseeable future.

The Bureau of Labor Statistics ('BLS') still doesn't have a leader...

Two months ago, Trump fired the BLS commissioner after a huge downward revision in the jobs numbers.

E.J. Antoni was Trump's pick to take over the job.

But late Tuesday, the White House withdrew its nomination for Antoni.

No official reason was given. But reports suggest the decision stems from a variety of concerns – even from Republicans – about his qualifications... old social media posts he made (that have since been deleted)... and images that showed Antoni as a "bystander," according to the White House, during the January 6, 2021 breach of the Capitol building.

When Antoni was nominated back in August, one of the changes he suggested for BLS operations got more attention than others. As we wrote on August 12...

Antoni has proposed suspending the release of the monthly jobs report until the data gets "fixed." He suggests that the BLS only publish the "more accurate" quarterly jobs reports.

Antoni (and Trump) wanted to do away with the revisions that have shown the labor market is on much shakier ground than initially reported.

But even without Antoni heading up the BLS, the White House is still keeping the government agency in its crosshairs. As a White House official told NBC News...

President Trump is committed to fixing the longstanding failures at the BLS that have undermined the public's trust in critical economic data. The President plans to announce a new nominee very soon.

Of course, as we noted in that same August 12 Digest, switching to a quarterly jobs report may smooth out the revisions. But it could cause a different problem...

The market may not like seeing revisions. But uncertainty from not knowing the health of the economy could be just as bad.

Still, Antoni got his wish...

This week, while the government was shut down, the BLS was in a "blackout"... preventing it from releasing its regularly scheduled data.

That means weekly jobless claims and, more importantly, monthly nonfarm payroll and unemployment rate reports weren't published.

And it's not just the releases that pause during a shutdown... data collection does, too.

The BLS's Consumer Price Index ("CPI") for September is scheduled for release on October 15. With prediction markets pricing in a two-week shutdown, the CPI release could be delayed to the end of October or possibly early November.

So we may not get an update on inflation before the Federal Reserve's next policy announcement on October 29.

Last week's Personal Consumption Expenditures ("PCE") release showed inflation rising at a 2.7% rate. Based solely on that data, inflation is running hotter than the central bank's supposed 2% target.

Typically, the Fed wouldn't cut rates in that type of environment. But as Fed Chair Jerome Powell has made clear over the past month, the central bank is more focused on the jobs market – probably for good reason.

For now, though, stocks are still climbing...

A delayed "hot" inflation report on the heels of another Fed rate cut could be a catalyst for markets to turn lower. Investors may start to question the central bank's policy and the path ahead for the economy.

But we likely won't know if that's the case for another few weeks.

We're not saying it's time to go "all out" of stocks right now. But this isn't the ideal time to load up either.

Good investing,

Corey McLaughlin

Editor's note: Wall Street's biggest firms are sounding the alarm... But according to Stansberry's Credit Opportunities analyst Mike DiBiase, this exact setup has created some of the best buying opportunities in history – allowing investors to scoop up quality assets for pennies on the dollar. And he just released an urgent new briefing explaining what he calls "two-way payout opportunities."