Rate Cuts Are Coming... And Stagflation Could Be Next
The Weekend Edition is pulled from the daily Stansberry Digest.
"Poof!" go the jobs again...
On Tuesday, the Bureau of Labor Statistics "revised" the number of new jobs it says were added to the U.S. economy in the 12-month period ending in March.
The agency does this annual "benchmark revision" exercise every year. Some years, the numbers end up looking better. Some years, they look worse. This time, it cut the number of new jobs created from April 2024 to March 2025 by 911,000.
That's a lot of what Tony Soprano would call "no-show jobs"... And it means the labor market is much weaker than Uncle Sam told us.
Originally, the government reported close to 2 million new jobs over this period. Now, nearly half of those have suddenly vanished from the record. It's not unlike a mob racket after all.
It's even worse than last year. From April 2023 to March 2024, the number of jobs added was later slashed by 818,000... or 30% of the 2.9 million jobs originally reported. As we wrote last August...
Without getting too far in the weeds, this is a yearly thing the government does after it looks at state unemployment-insurance tax records and applies its findings retroactively to its monthly "nonfarm payroll" survey data.
Last year, the change lowered America's total nonfarm payrolls by 0.5%, the largest revised decline since 2009. But this year was even more extreme. Total employment in the U.S. was 0.6% less than initial estimates.
This "revision" is basically rewriting history, year after year...
Wall Street tends to hang on these monthly nonfarm numbers, despite dwindling survey responses. Today's report proves that, once again, they should be taken with a grain of salt.
But, to no surprise... perception – based on surveys and instant gratification – still moves the market more than the reality of more accurate, more slowly generated numbers. While this week's report got attention from truth-seeking market observers, the effect on the market itself appeared muted.
The S&P 500 Index finished the week at a new record high.
That's because these jobs-number revisions are from the past... And investors are focused on the present and future.
Plus, the updates fit with the current trend. Right now, the labor market is weakening, even by the current numbers and surveys.
And, as the market has focused on, this will likely lead the Federal Reserve to cut interest rates at its meeting next week.
The question now is by how much...
The market expects 25 basis points, based on the federal-funds futures market. The market is putting less than a 10% chance of a 50-basis-point cut right now.
But the release of both the Consumer Price Index ("CPI") and Producer Price Index ("PPI") could change the picture...
Inflation data for August was reported earlier this week. And it only bolstered those bets. While core CPI came in at 3.1% year over year and headline CPI grew 0.4% – both above the Fed's 2% annual inflation target – fed-funds futures traders are still betting on a rate cut of some kind with 100% certainty.
If inflation numbers continue to come in "hot" in the months ahead, though, the Fed may face a new quandary – the dreaded "s-word." As our Ten Stock Trader editor Greg Diamond wrote on Tuesday...
Any big surprise to the upside [in the PPI or CPI] would certainly give pause to an aggressive rate-cut cycle from the Federal Reserve because of one thing...
Stagflation.
A declining labor market with rising inflation puts the Federal Reserve in a tough spot...
We looked at interest rates [on Monday] and despite this report of a massive revision lower in jobs – interest rates [were] UP on the day.
Not something you would expect to see if the market was pricing in huge interest rate cuts on the horizon.
If PPI and CPI come in lower then yes, this likely gives the green light for more cuts, but almost everyone is expecting this outcome and when everyone is piled into the same trade it usually doesn't end well.
We'll see, but this could be a trigger for volatility on the horizon.
But here's some better news: The world keeps on spinning, and there are still investment opportunities to be had – confusing jobs numbers or not.
A $50 Billion Merger to Power the AI Boom
This week's big news from the mining sector...
Anglo American (NGLOY) and Teck Resources (TECK) announced a "merger of equals" on Monday.
This is a huge deal. The combined company – for now being called Anglo Teck – would have a market cap of more than $50 billion.
Both companies have diversified mining portfolios covering a few metals. But this deal's sole purpose is to build a copper giant...
In the first half of 2025, 60% of Anglo American's business was copper. The rest came from iron ore. Copper also made up 61% of Teck's revenue in 2024, with zinc accounting for the rest. The combined company targets an increase to 70% copper exposure.
Altogether, the companies said that Anglo Teck would be the fifth-largest copper miner in the world... and the second-largest that's publicly traded.
There's a clear reason why this deal is getting done now – and why it's so focused on the companies' copper assets...
Artificial intelligence ("AI") needs copper...
When President Donald Trump announced tariffs on copper imports in July, we explained how it's a critical commodity for conducting electricity.
That makes copper important for just about every industry – from electronics to power generation and even construction. As we wrote in the July 10 Digest...
We use a lot of it here in the U.S. Last year, the U.S. consumed about 1.6 million metric tons of copper. That put us just behind China in terms of total copper consumption.
But with AI, we're going to need a whole lot more. As editor Whitney Tilson and our Commodity Supercycles team recently explained, data centers can't get enough copper...
A conventional data center might use between 5,000 tons and 15,000 tons of copper. The most advanced hyperscale AI data centers can use tens of thousands of tons of copper per facility.
That means that AI data centers could require twice the amount of copper that a traditional data center would. And that's going to add up to a lot more demand. More from Whitney and the team...
Commodity research firm BloombergNEF ("BNEF") expects copper demand from new data centers to average around 400,000 metric tons ("MT") a year over the next decade and peak at 572,000 MT in 2028.
At the low end, that's a 25% boost from the U.S.'s 2024 copper consumption. At the high end, it'll cause demand to surge 36%. That's huge growth in just a handful of years.
Teck and Anglo American see the chance here to become a huge copper producer and supply the AI boom.
And that creates an incredible opportunity for both companies in the sector and investors...
The labor market may wobble, and Fed policy may shift. But the rise of AI will ensure global demand for more copper. And for investors, that means the real opportunity may just be beginning.
All the best,
Corey McLaughlin and Nick Koziol
Editor's note: In case you missed it... Joel Litman, founder of our corporate affiliate Altimetry, is going public with what he calls "the greatest moneymaking anomaly in the market today." His study shows it's directly linked to the hundreds of stocks that have already doubled this year. And until September 17, you can test his breakthrough "Doubles Scanner" system for free.