Last week, the Bureau of Labor Statistics released the Consumer Price Index (CPI) report for August 2025, and it surprised on the upside:
The CPI rose 0.4% month-over-month (seasonally adjusted), up from a 0.2% increase in July.
Year-over-year, inflation was running at 2.9%, an acceleration from 2.7% in July.
Core CPI (excluding volatile food and energy components) also remained stubbornly elevated, rising 0.3% month-over-month and 3.1% year-over-year.
In short: Inflation is heating up.
Now, when that happens, it usually sends stocks tanking. That’s economics 101: higher inflation typically means higher-for-longer interest rates… which puts pressure on corporate profits and pulls down valuations.
But that’s not what’s happening right now.
Instead of falling, the market is ripping higher. Tech giants are making fresh highs. Gold and Bitcoin are climbing. Even rate-sensitive sectors like housing and utilities are catching bids.
So what gives? Why are stocks rallying while inflation is still running hot?
The answer lies in the latest jobs data and the Fed’s dual mandate…
The biggest jobs data revision in history
Also last week, the BLS revised U.S. employment numbers down by 911,000 jobs for the year ending in March—the biggest annual revision since the government began tracking this data.
To put it in perspective, that’s more than 50% of the 1.7 million jobs originally reported for that period.
And in fact, excluding the healthcare sector, the U.S. has actually lost jobs over the past four months. That’s recessionary territory. And it puts the Federal Reserve in an extremely difficult position.
You see, the Fed has two primary mandates: controlling inflation and supporting employment. For months, Fed Chair Jerome Powell has leaned on the narrative of a “resilient labor market” to justify keeping interest rates higher.
But with the latest revisions, that story falls apart.
Even with inflation running hotter, the massive downward jobs revisions leave the Fed with little choice. A weaker labor market means Powell has less cover to keep rates elevated—putting deeper and faster rate cuts back on the table.
Investors are now betting on a 50-basis-point cut at the next Fed meeting—and pouring money into everything from AI megacaps to “safe haven” assets like gold and Bitcoin.
Why rate cuts are a catalyst for assets:
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What investors should do now
Don’t fight the tape. The market is forward-looking—and right now, it’s looking at easier monetary policy, not backward at inflation numbers.
Position your portfolio for cuts. Tech, utilities, real estate, gold, and Bitcoin all benefit disproportionately when rates fall.
Also, stay focused on secular growth trends. For instance, the AI boom and the coming energy crunch are still driving real earnings power—no matter what the Fed does.
Want to learn how to profit from the AI energy crisis?
On September 25 at 7 p.m. ET, Frank and Daniel go live to reveal the alarming numbers driving the coming power drought… and under-the-radar stocks poised to skyrocket.
They’ll also answer your most pressing questions during a live Q&A.
Save your spot for “AI’s Power Crisis: How to Profit Before the Lights Go Out.”
