It's All About What Comes Next

The labor market is weakening... Bets on interest-rate cuts are rising... Stocks are on a different timeline... Real-world consequences... The antidote to inflation... How high can gold go?...

The latest jobs report underwhelmed...

On Friday, Uncle Sam reported that only 22,000 "nonfarm payrolls" were added in August. And the unemployment rate ticked higher to 4.3%.

As of today, the acting Bureau of Labor Statistics ("BLS") commissioner is still at his post, but the monthly numbers for August were worse than the 79,000 jobs added in July. (Revised up from 73,000 originally reported a month ago.)

Regular readers will remember that President Donald Trump fired the previous BLS head after the July report, which notably included big downward "revisions" for the previous months. As far as we know, there aren't plans to do that again, but the numbers tell essentially the same story...

It's getting harder for more people to find a job. And some sectors (like trade and manufacturing) are losing jobs. Both of those sectors lost 12,000 jobs in August. And the federal government reported a decline of 15,000 jobs.

Generally, the labor market is weakening – and by more than what Wall Street has been anticipating. Consensus expectations were for 75,000 new jobs last month. The reported number for August was less than a third of that.

Yet the market reaction has been muted and even somewhat favorable...

The major U.S. indexes were mixed on Friday and slightly higher today. Stocks aren't resoundingly up, but they aren't falling across the board, either. And the benchmark S&P 500 Index is just a few trading days removed from setting a new all-time high.

Why?

It's all about what comes next.

I (Corey McLaughlin) am reminded about a simple idea that Stansberry Research founding partner Dr. Steve Sjuggerud frequently wrote about – the stock market and the economy run on different timelines...

As Steve wrote in the free DailyWealth e-letter in May 2020, two months after the start of the COVID-19 pandemic created large-scale uncertainty in the world, including about the prospects of the labor market...

You've probably been worried about rising unemployment numbers over the past several weeks... but the stock market didn't care. The S&P 500 is up 28% since bottoming in March.

But there's an important truth you need to understand. It's simple and perfectly explains what's happened in recent weeks...

The U.S. stock market operates on a different time cycle than the U.S. economy.

Stocks tend to move much faster than the economic environment. They anticipate what's coming. That means stocks are the first to fall during tough times... And they often rally before the economy even begins to recover.

In fact, stocks can rally even when the economic outlook seems to be worsening.

In 2020, Steve used March 2009 as an example. It was the thick of the financial crisis and the end of one of the worst bear markets since the Great Depression.

In hindsight, it was a fantastic time to buy stocks – even if it didn't feel that way.

The unemployment rate worsened for another eight months, and by October 2009, 10% of the U.S. workforce was out of a job for the first time since 1982. Yet over the same time span, stocks were up roughly 55% from their bottom in March. As Steve wrote in May 2020...

Markets were rallying and had been for months. Meanwhile, the U.S. economy looked like it was still going down the tubes.

If you were sitting on the sidelines waiting for the market to "make sense" based on the economy, you missed out on one of the best stock rallies in history.

The same thing seems to be setting up this time around. Stocks crashed 34% in a little more than a month as the reality of the coronavirus set in. By the time stocks bottomed in late March, the economic damage was just beginning.

Stocks were forward-looking then. They saw how bad it was going to get. But they've been forward-looking over the last seven weeks, too... as the economy begins to open back up.

Stocks are up 28% since that March bottom. They're completely disconnected from the economy at this point, just like in 2009. It might not seem to make sense on the surface. But history shows this is exactly the kind of thing we can expect.

What happened in 2009 happened again in 2020. And there are similarities to this year.

Stocks fell into a near bear market in April amid fears about tariff impacts. They started to rebound once the situation appeared "less bad" with various trade deals, exemptions, and the possibility of most reciprocal tariffs being thrown out on legal grounds.

Now, there's more going on in the world besides tariffs. Indications of a weakening labor market have been showing up in formal data over the past several months. Youth unemployment (ages 16 to 24) is at 10.5%.

It's possible the outlook could worsen. But right now, many stocks are going up... and the broader market isn't going down – at least, not yet. That is in part because the market also believes that "help" is on the way to "fix" the labor-market situation – with lower interest rates and economic "juice" from the Federal Reserve.

After Friday's jobs report, the majority of federal-funds futures traders think the Fed will cut rates at its September 16 and 17 meeting. Some even expect the central bank could "go big" and lower its fed-funds rate by 50 basis points (or half a percentage point), rather than the 25-basis-point cut that has been anticipated.

Fed-funds futures traders have put 12% odds on a 50-basis-point cut as of today, according to the CME Group's FedWatch Tool. That may not seem like much, but the expectation was zero last week.

Longer-term bond yields have also fallen significantly this past month as more labor-market weakness has shown up, with the 10-year Treasury yield at 4.05% today.

This trend lower is similar to what we saw ahead of the Fed's meeting last September, when the central bank ended up cutting rates by 50 basis points due to the weakening labor market.

Of course, lower rates aren't the elixir to solve all our problems...

Central banks around the world tried lower, near zero, and, in some cases, negative rates for about 15 years after the financial crisis… and here we are.

A cheaper cost of money may sound great in the short term to kick problems down the road and juice market sentiment, but there are real-world consequences...

For starters, lower rates certainly won't solve our long-term debt problems.

Lower rates make debt cheaper to finance in the short term, but "We the People" will be left holding the bag for ever-increasing government spending.

Then there's inflation. Longtime readers might recall my dream about a crocodile taking a bite of me in 2021. My worries about inflation eating away the value of the dollar proved true when inflation hit a 40-year high the following year.

Now, the pace of price increases has come down from 40-year highs, and falling longer-term bond yields seem to indicate a lack of concern for rising prices again.

But last September, longer-term Treasury yields moved higher, not lower, after the Fed cut rates. It was an early sign that the rate-cutting run might be short-lived (which it was).

We'll be watching next week for the market's reaction to what the Fed actually does this time around...

Meanwhile, one inflation hedge is thriving...

Last week, gold broke out to a new all-time high. And today, it traded at another fresh record above $3,600 per ounce. Gold is up 36% since the start of this year alone.

We've been talking about the fundamental case for gold for years.

The precious metal has long been viewed as an antidote to inflation and "chaos" in general. It's a centuries-old store of wealth that has proved itself during a global pandemic... the institutional responses to it... and an ensuing bout of decades-high inflation.

That's why central banks around the world have been buying gold in increasing amounts... especially with policy signals in the U.S. (such as the "Mar-a-Lago Accord") pointing to a weakening dollar and a higher value of hard assets like gold and other assets denominated in those dollars.

We frequently suggest having at least some gold as part of a well-diversified portfolio, and right now is certainly no exception. As I've written before, often the very best time to get bullish on gold (and gold stocks) is when central banks like the Fed signal that they're planning on loosening monetary policy – like by cutting rates.

As we shared here via Gold Stock Analyst editor John Doody near the end of 2023 – when gold was around $2,000 per ounce – history shows that gold has achieved 4 times the return of U.S. stocks during the Fed's easing periods.

And the setup could play out again – especially with today's technical outlook for gold...

As Ten Stock Trader editor and Certified Market Technician Greg Diamond wrote in his Weekly Market Outlook to subscribers today...

Gold just spiked to a new all-time high. It's the latest in a powerful breakout over the past year.

Based on what we're seeing now, that bull run isn't over yet.

You might find it hard to believe after the rally we've seen already. But as I've said before, bull markets can last longer and rocket higher than you might think. That's true of all kinds of assets... including gold.

Out of fairness to paying subscribers, we can't give too much away. But I do want to show one chart that Greg shared to help make his case. He said it's "straight out of classical technical analysis"...

Gold just broke out of a falling wedge pattern (marked by the dotted lines below)...

This is a bullish signal. When an asset breaks above the upper line of a falling wedge – as gold just did – the trend is likely to reverse to the upside.

Greg said this gives us a potential price target near $4,000 per ounce. That would be 10% to 15% higher than today's level, with gold already at all-time highs. But, based on more analysis, Greg says gold could potentially soar much higher.

Ten Stock Trader subscribers and Stansberry Alliance members can find all the details here, including Greg's latest game plan for a bullish gold-related trade he recommended in July. And if you want to learn more about Greg and his strategy, visit TenStockTrader.com.

Now, gold isn't the only thing that can help you beat inflation. Owning shares of high-quality stocks and other "hard" assets can also protect and grow your wealth. But don't overlook the precious metal right now.

New 52-week highs (as of 9/5/25): ABB (ABBNY), Agnico Eagle Mines (AEM), Alamos Gold (AGI), Arista Networks (ANET), Atmus Filtration Technologies (ATMU), Broadcom (AVGO), Barrick Mining (B), Alpha Architect 1-3 Month Box Fund (BOXX), WisdomTree Japan SmallCap Dividend Fund (DFJ), Western Asset Emerging Markets Debt Fund (EMD), Equinox Gold (EQX), Franco-Nevada (FNV), VanEck Gold Miners Fund (GDX), VanEck Junior Gold Miners Fund (GDXJ), SPDR Gold Shares (GLD), Alphabet (GOOGL), iShares Convertible Bond Fund (ICVT), Kinross Gold (KGC), Lumentum (LITE), Mueller Industries (MLI), Newmont (NEM), New Gold (NGD), Annaly Capital Management (NLY), Novartis (NVS), Omega Healthcare Investors (OHI), OR Royalties (OR), Pan American Silver (PAAS), Sprott Physical Gold Trust (PHYS), Rithm Capital (RITM), Construction Partners (ROAD), Roivant Sciences (ROIV), Sandstorm Gold (SAND), SSR Mining (SSRM), TKO Group (TKO), ProShares Ultra Gold (UGL), Valero Energy (VLO), Vanguard Short-Term Inflation-Protected Securities (VTIP), and Wheaton Precious Metals (WPM).

In today's mailbag, feedback on Dan's Friday essay "Get the Gold, Not the Arrows"... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Back in 2002 I was a fledgling investor. I read an article about how much 'dark fiber' there was as a result of the internet bubble implosion. Shortly after that I read another article about a company that was working on ways to exploit all that unused cable. I invested in that company and got a nice return on my money...

"I'm not invested in AI but, after the AI bubble implodes, I may start looking for a company working on ways to exploit the unused data centers..." – Subscriber R.F.G.

All the best,

Corey McLaughlin with Nick Koziol
Baltimore, Maryland
September 8, 2025