The real loss in the market is not confidence, but the calculability of the future. The danger of this non-farm data does not lie in the data itself, but in the way it destroys the sense of a traceable path.

Tonight's data has been released, and the U.S. economy is like a seriously ill person, but the stock market is popping champagne because everyone is convinced that the doctor (the Federal Reserve) is about to increase the dosage (cut interest rates).

1. October's job numbers are a disaster
What is most shocking about this non-farm payroll report is not the November data (an increase of 64,000, which is actually not bad), but that the October data has been revised to a 'disaster movie'—with a direct reduction of 105,000 jobs! This is the largest decline since the end of 2020, indicating that the overall U.S. labor market has been in net outflow for the past two months. This is a very clear signal of economic contraction.

2. The market's mindset: the worse it is, the happier they are
Logically, a poor economy should lead to a falling stock market, but the logic has reversed; the Federal Reserve's previous tightening policies may have excessively harmed the economy, and the market will immediately reprice a significant interest rate cut.

U.S. stocks are turning up: Since the economy is so bad, the Federal Reserve dares not maintain high interest rates and may even have to cut rates significantly and ahead of schedule to save the situation. The futures market immediately bets that the probability of an interest rate cut in January next year has risen to 25%. As long as there are expectations of liquidity, the stock market dares to rise.

3. The only good news: labor participation rate
Why hasn't the unemployment rate soaring to 4.6% triggered widespread panic? An unemployment rate of 4.6% is usually seen as a high level that triggers the 'Sam Rule' recession warning. This is because the labor participation rate has rebounded.

In simple terms: a high unemployment rate is not only because people are being laid off but also because those who were originally doing nothing are now coming out to look for jobs. This makes the Federal Reserve feel that perhaps the labor market is not yet beyond rescue.

In summary: the U.S. economy is testing the edge of a hard landing, but Wall Street bets that the Federal Reserve will go all out to prevent a crash.

The current market logic is very simple and brutal: the worse the economy → the faster the rate cuts → the more excited the U.S. stock market.