Alright, when this data came out last night, I guess many people were dumbfounded.

The U.S. economy now resembles a patient, gasping after every couple of steps, but what about the stock market? The champagne is popping. Why? Because everyone is certain that the Federal Reserve, seeing the patient in such a state, will have to take drastic measures immediately.

The scariest part is that 'pit' in October.

Don’t be fooled by the addition of over 60,000 jobs in November, it seems okay. The key is that the data from October has been reexamined, and it turns out it’s not what was previously reported, but instead, they directly cut 105,000 jobs! What does this mean? This is the harshest cut since the end of 2020, which means that in the past two months, the number of employed people in the U.S. has net decreased. This is no longer a 'slowdown'; this is the signal gun for 'contraction'.

But the market's logic is quite peculiar.

According to the old theory, when the economy is this bad and companies aren't making money, the stock market should fall. But now it’s different; people are thinking: 'Oh snap, it seems the Federal Reserve had been too heavy-handed before, crippling the economy, and now they are scared themselves.'

So you see the U.S. stock market, the data comes out, first it trembles, then it immediately rebounds. The traders’ logic is simple and crude: the economy is failing? Then the Federal Reserve surely won’t dare to maintain their stance; they must lower interest rates immediately to save the day! The probability of a rate cut in January next year has suddenly surged. As long as there’s a thought of 'liquidity', the stock market dares to continue playing music and dancing.

The only thing that prevented panic from completely erupting is something called 'labor participation rate'.

The unemployment rate has soared to 4.6%, which used to be a recession alarm level. Why can everyone stay calm this time?

Simply put: the increase in unemployment is not only because companies are laying off staff, but also because many people who previously 'lay flat' and did not look for jobs are now coming out to find work. This makes the Federal Reserve feel that the situation may not be at its worst yet, and the labor market still has some 'vitality'.

The U.S. economy is crazily testing the edge of a 'hard landing' cliff, but Wall Street bets that the Federal Reserve won’t dare to watch it fall down; they will definitely do everything to provide support.

The current market is simply a crude gamble: the worse the economic data, the stronger the expectation of interest rate cuts, and the more excited the stock market gets. What people are playing with is not value, but expectations.