Tonight's data is released, and now the US economy is like a seriously ill person, but the stock market is opening champagne because everyone is convinced that doctors (the Federal Reserve) are about to increase their medication (cut interest rates). 1. The number of employed people in October is a sinkhole The scariest thing about the non farm payroll this time is not the November data (adding 64000, which is actually decent), but the October data has been corrected to a "disaster movie" - directly reducing 105000 jobs! This is the largest decline since the end of 2020, indicating that the overall US labor market has experienced a net outflow in the past two months. This is a very clear signal of economic contraction. 2. The market's brain circuit: the worse, the happier In theory, if the economy is not doing well, the stock market should fall, but the logic has reversed. The previous tightening policy of the Federal Reserve may have caused excessive damage to the economy, and the market will immediately reprice the significant interest rate cuts. US stock market gains: Since the economy is so poor, the Federal Reserve dare not maintain high interest rates and may even have to cut interest rates early and significantly to save lives. The futures market immediately bet that the probability of a rate cut in January next year will increase to 25%. As long as there is an expectation of water release, the stock market dares to rise. 3. The only good news: labor force participation rate Why hasn't the surge in unemployment rate to 4.6% triggered a comprehensive panic? A 4.6% unemployment rate is typically seen as a high point for triggering the 'Sam's Rule' recession warning. Because the labor force participation rate has rebounded. Simply put, the high unemployment rate is not only due to layoffs, but also because people who used to lie flat and not work are now running out to find jobs. This makes the Federal Reserve feel that perhaps the labor market has not yet reached an irreparable state. In summary, the US economy is on the brink of a hard landing, but Wall Street is betting that the Federal Reserve will go crazy with blood transfusions to prevent a plane crash. The current market logic is very simple and crude: the worse the economy, the faster the interest rate cut, and the hotter the US stock market.