Powell Surrenders … Year-end Blow-off Ahead

BY BILL GRIFFO

August 25, 2025

Hey Income Hunters,

Every August, the world’s central bankers gather in Jackson Hole, Wyoming—a place where the mountains are tall, the trout are plentiful, and the economic jargon is even thicker than the pine forests.

This year, all eyes were on Jerome Powell, who dropped the big hint: the Fed is leaning toward more rate cuts:

“Situation suggests downside risks to employment are rising”
“Shifting balance of risks may warrant adjusting policy”

This all adds up to yet another melt-up, rally into the end of the year … However, click through to see the cracks in the system and watch for a bust to begin in 2026 …

1) Powell Caves in – triggers a cutting cycle

Powell acknowledged that downside risks to employment are rising and that inflation is moving closer to target. Translation: the economy is slowing, maybe toward recession.

To put it bluntly:

Growth is weakening → the trend is down.
Tariffs aren’t the inflation driver → they’re an economic drag.
Markets are in bubble territory → timing the pop is anyone’s guess.

2) Trump Piles on Liz Cook

Trump takes another shot at adding a dove into the mix by calling for Liz Cook to resign after Federal Housing Finance Agency Director Bill Pulte alleged she misrepresented mortgage-occupancy status on two loans.
Pulte urged Attorney General Pam Bondi to investigate. Trump seized on it, saying Cook “must resign now.”

3) The Market Angle

If Cook were forced out, Trump could nominate a new governor—possibly someone more dovish on rates—though confirmation would take time and isn’t guaranteed.
This may be more like political pressure than an actual policy pivot. However, headlines alone can move markets—especially in an environment where traders are hypersensitive to Fed politics.
As you can see even with cook in the mix the balance of power has shifted so watch for the conclusion and if Cook is out we may see another leg higher in stocks

The Rich will Get Richer … All the money created since 2020 has flowed straight into asset prices—stocks, real estate, crypto, you name it. And who owns the bulk of the assets? The wealthiest households.

In 2020, U.S. billionaires’ wealth equaled 14% of GDP.
Today, it’s closer to 22%.
The top 1% are pulling away, while younger and middle-class families face higher costs for housing, education, and daily living.

Put simply: if you had assets, the Fed’s policies made you richer. If you didn’t, you just got stuck with the higher grocery bill.

What to Watch

Tariff Effects: Slowing trade = weaker growth, NOT necessarily higher prices.
Market Positioning: Retirees now hold record levels of equities in portfolios—Power Income readers know this last blow-off is the time to rebalance?
Neutral Policy Failure: The Fed’s actions haven’t been neutral; they’ve favored asset owners. That distortion eventually corrects.

Read last week’s AI article on the coming collapse in White Collar Worker jobs – The coming White Collar Shake out

Income Hunter Takeaway

The Fed may be shifting to cuts, but that doesn’t mean “party on.” It means the economy is weakening, bubbles are stretched, and the wealth gap is fueling dangerous instability.

Stay patient. Diversify across assets that can hold value when bubbles deflate—income stocks, gold, select real estate, and yes, some cash on the sidelines.

Remember John Hussman’s quote: bubble markets force you to make a choice—look like a genius now or look like a genius later.

We prefer later, meaning allocate away from financial assets (stocks and bonds) now and into gold, bitcoin and real estate now before while the bubble still exists because:

Rallies go up on the escalator and down in the elevator ,,,

Because when the bust occurs, the question will be who actually protected their wealth when the rules of money were re-written.

Live and Trade With Passion My Friends,

Bill Griffo