Financial Connectivity Society News on November 1st (Editor: Shi Zhengcheng) As the US non-farm employment data for October unfolds dramatically, market participants have interpreted the data itself and various derived topics from various angles.

First, as a preface, the non-farm payrolls just announced on Friday were only a mere 0.012 million. Despite the impact of two major hurricanes and the Boeing strike, this figure completely missed the market's expectation (0.113 million). What's even more interesting is that the unemployment rate rose from 4.05% to 4.14%, rounding up to "4.1%".

For the capital markets, it is also pleased to see data that solidifies the Federal Reserve's rate cut cycle. As of the time of publication, the three major US stock indices all rose by over 1%.

What's even more interesting is the different interpretations of the same data by various parties.

Biden: Remember! I created 16 million jobs

In accordance with tradition, President Joe Biden's office continues to make statements regarding the non-farm data. This piece lightly brushes over the issue of "0.012 million" with just a mention of "slow job creation".

In his statement, Biden stated that the unemployment rate remained unchanged at 4.1% in October, but slow job growth due to hurricanes and strikes is expected to rebound in November. Moreover, the soon-to-retire Biden deliberately emphasized that a total of 16 million jobs were created during his tenure, an average of 0.18 million jobs per month, while the unemployment rate during his tenure was also the lowest in nearly 50 years.

Without a doubt, the Trump team wasted no time waving the employment report at Harris. Trump spokesperson Caroline Levitt stated in a declaration that Friday's job growth was a "disaster," with the report clearly showing how "Kamala Harris serious damaged the U.S. economy."

While investors are well aware that the reason for the poor data is due to larger disasters, Trump's allies have been accusing the Biden administration of "manipulating employment data" for political gain, a claim the White House vehemently denies.

However, there are indeed a series of coincidences in this employment data that are worth evaluating.

Let's not forget about the "American-style downward revision."

It is worth noting that while emphasizing factors such as hurricanes and strikes, the vast majority of institutions aware of these two major factors all made mistakes - according to statistics, the market's consensus expectation was 0.113 million. Among all public forecasts, only Bloomberg Economics (-0.01 million) and Rabobank (0 million) had expectations lower than the final value.

What habitually confuses the market is the US Department of Labor once again revising down the employment data for the previous two months, down 0.081 million in August and 0.031 million in September. According to statistics, after the Biden Labor Department announced non-farm data for the first nine months of this year, subsequent revisions were made in 7 out of 9 months, cumulatively erasing 0.818 million jobs.

This also means that the non-farm reports for November and December will have a highlight - the data for October is just a mere 0.012 million, so if it gets revised down again, it could turn negative!

The more important detail is that, although the October non-farm data barely turned positive, if excluding the 0.04 million government additional positions, the actual private employment is still negative, and it is the first time it has turned negative since December 2020.

As for the labor statistics department's special emphasis on the 'unquantifiable hurricane impact,' the well-known financial blog ZeroHedge made a somewhat conspiratorial 'translation': when the data is released next month, if Trump becomes president, it will maintain the downward trend in employment, equivalent to 'acknowledging the true state of the labor market'; but if Harris wins, there will be a 'magical rebound' in the data, even if more intense 'downward adjustments' are needed.

Common sentiment: First confirm the rate cut for next week.

For Wall Street analysts, Friday's data was more of a 'one-time surprise,' unable to extract further insights regarding the economy and rate cuts.

Seema Shah, Global Chief Strategist at Allianz Investment Management, suggests that a deeper analysis of the numbers indicates that beneath all the noise and disruptions, the labor market is essentially slowing down. The consensus forecast of adding 0.1 million new jobs has already taken into account the impact of hurricanes, so the significant downward surprise indicates potential weakness. This reiterates that the Federal Reserve must stick to its easing cycle, and a 25 basis point rate cut in November and December is likely.

Charlie Ripley, Deputy Portfolio Manager at Allianz Investment Management, states that overall, this report does not provide much information to assess the trend of the labor market, making it likely for the Federal Reserve to cut rates by 25 basis points next week. It appears that we need to wait for another month of economic data to better evaluate the Fed's monetary policy direction.

Anna Wong, Chief U.S. Economist at Bloomberg Economics, who successfully predicted tonight's data, suggests that by excluding temporary factors and adjusting for exaggerated sources in the data, underlying job growth may be lower than the speed needed for a stable unemployment rate, and the unemployment rate is expected to resume its rise in the next few months. The October employment report will prompt the Federal Reserve to proceed with the planned 25 basis point rate cut on November 7.

Jason Pride, Chief Investment Officer for Private Wealth Management at Glenmede, advises investors to remain cautious about this report, as there may be significant revisions in the coming months. While the Federal Reserve does not have clear indicators, some fundamental data seems good enough for them to proceed with a 25 basis point rate cut next week.

Pride predicts that in the absence of significant disruptions, the future benchmark situation should see another 50 basis points rate cut within the year, followed by a further cut in 2025, stabilizing in the range of 3%-3.5% by mid-year.