One of the toughest parts of my role here at Rich Retirement Letter is bringing you bad news.

I'm an optimistic person at heart. And I believe there are many great ways for you to grow and protect your wealth — even in this challenging market.

But even with my positive perspective, it's important that you understand the risks in play...

In the economy, in the stock market, in Washington, and most importantly for your retirement.

So today, we're going to take a closer look at a warning sign that most investors have overlooked. 

And I'll explain what it means for your investments this fall.

The Job Market Points to Weakness

When the August payroll report came out last week, investors were happy with the news. Heck, I even called it a "Goldilocks report" because it wasn't too hot or too cold.

(By the way, if you'd like to follow my day-to-day thoughts on the market and your investments, check out my LinkedIn profile and my Twitter.)

In August, the U.S. economy added 315,000 new jobs. More importantly, a large number of workers re-entered the job market helping to provide companies with much needed labor.

This is important because if more people are willing to work, wage inflation will likely decline. 

Companies won't have to give employees huge raises to keep them on board and they won't have to offer signing bonuses and huge salaries just to fill positions.

That's exactly what the Fed wants to see!

Other reports that I'm reading show a rising number of continuing jobless claims... a declining number of job openings... and hiring freezes by small companies around the country.

In other words, the job market is contracting, which is good news for inflation. But it also points to a slowing economy.

So what does Jerome Powell have to say about this new data?

The Fed Continues to Talk a Tough Game

Despite clear weakness in the labor market, Fed Chair Jerome Powell has been pounding the table on interest rate hikes.

He's been making the rounds in public speeches this week, explaining how the Fed will continue to raise rates until the job is done.

And the Fed Chair has plainly told us to expect pain as America's economic recovery grinds to a halt.

To be fair, Powell is in a terrible predicament. If the Fed doesn't raise rates quickly, it could be perceived as weak on inflation.

However, if Powell and company continue to raise rates, it will hurt our economy and continue to cause pain in the market.

The employment numbers we just talked about show that the Fed has successfully slowed down the economy. But now there's a huge risk that the Fed will go too far and drive us into a terrible slowdown.

That's why even though stocks are oversold... And despite the rebound we've seen for stocks this week...

I still think you need to play defense with your investments.

Owning stocks of companies that generate reliable profits may not be as exciting as a basket full of tech stocks. But these stable investments will help protect your capital.

When you protect your capital during tough times like this, you'll be left with a larger investment account to profit from the good times when they happen — and we will have plenty of great opportunities in the future.

So please, heed the warning from our U.S. job market and make sure you're not taking too much risk.