The big economic news of the last week is that the Bureau of Labor Statistics’ (BLS) annual revision to the labor market erased 911,000 jobs that were allegedly created for the year ending March 2025. Stocks shrugged this off with little concern, which is a major “tell” for us as investors.
Why didn’t the stock market roll over on this news? After all, if the labor market has turned out to be much weaker than initially believed, shouldn’t stocks crater?
No. Because this data concerns what has already happened and stocks are forward-looking. If anything, the fact the jobs market is weaker than previously believed opens the door to the Fed cutting rates even more aggressively! And as far the as the economy is doing right now, the Atlanta Fed’s GDPNow shows 3Q25 GDP growth clocking in at an annualized rate of 3.1%.
Moreover, the Redbook Index, which registers the year-over-year same-store sales growth for approximately 9,000 stores is growing at 6+%!
This strength is confirmed by the Retail ETF (XRT) which is about to test its former all-time highs.
Finally, Federal Tax Receipts for the last week of August show growth of 7%! Again, the economy is growing, not rolling over.
H/T Wabuffo
So… what the heck is going on?
What is going on is that the labor market has cracks forming in it, but much of these cracks are the result of data that is backwards looking and is likely the result of the introduction of tariffs and/or the Department of Government Efficiency (DOGE) cuts during 1Q25.
Put another way, the weakness in the labor market that has shown up in the last few months is likely the result of things that have already happened. And since the stock market is more concerned about what is going to happen in the future, stocks are ignoring this stuff and rallying.
Why are they rallying?
Because the economy continues to grow, NOT contract, and the inflation data and labor market data, while mixed (some is good, some is bad), opens the door to the Fed easing sooner rather than later… and earnings continue to be strong.
The stage is set for the Great Global Melt Up. With the financial system awash in too much debt, the only solution for policymakers is to run the economy “hot.” This means cutting rates and easing monetary conditions even though the economy is still growing and asset prices are at all time highs.
Indeed, stocks are at all time highs, so is gold, bitcoin and other risk assets.
This is the Great Global Melt up: the process in which trillions of dollars in capital flees cash for risk assets.
You NEED to act now to profit from this. Because when this melt up ends, the great debt crisis of our lifetime will begin.
On that note, we just published a Special Investment Report concerning THREE investments poised to produce extraordinary gains during the Great Global Melt Up. And they’re already erupting higher!
Normally I’d charge $499 for this report as a standalone item, but we are making just 100 copies available to the public.
To grab one of the last remaining copies…
Best Regards
Graham Summers, MBA
Chief Market Strategist
Phoenix Capital Research
