TO: Anyone still pretending they understand what's happening
FROM: Your friendly neighborhood macro desk
DATE: September 27, 2025
RE: Cognitive dissonance as an asset class
Let me walk you through Thursday's little parlor trick, because if you blinked you missed the punchline.
Jobless claims for the week ending September 20: 218,000. Consensus was 235,000. Beat by 17,000. Labor market looking robust. No signs of cracks. The "concerning labor market signals" the Fed was worried about earlier this month? Evaporated like morning dew.
What did equity futures do? Fell to session lows. S&P futures hit 6,653.50, Nasdaq-100 futures dropped to 24,545.75. Treasury yields climbed. Because strong labor data means the Fed has less reason to cut rates aggressively, which means higher-for-longer becomes the base case again, which means equity valuations predicated on easy money suddenly look stretched.
Except hold on. By Friday, the S&P 500 rebounded after a three-day slide. Swap traders kept pricing in around 40 basis points of Fed cuts before year-end. The dollar fell. Everyone shrugged and went back to buying.
Let me translate: good news is bad news is good news is who the hell knows anymore.
We're operating in a market where the internal logic has completely collapsed. On Tuesday, the S&P hit a new all-time intraday high, then closed down 0.55% as AI names like Nvidia, Oracle, and Amazon led the selloff. Peak euphoria followed by immediate profit-taking. A market that can't even hold its own highs for a full session.
Energy has climbed almost 3% this week, bringing its quarter-to-date gain above 6%. Meanwhile, Bitcoin sank and Bitcoin is struggling around $109,629, Ethereum is trying to hold the $4,000 range. Solana down 2.7% to $196.27, XRP down 3.6% to $2.74. Crypto—the supposed leading indicator of risk appetite—is bleeding while traditional equities grind higher.
This is the part where I'm supposed to tell you what it all means. Construct a narrative. Draw a through-line from jobless claims to equity valuations to crypto weakness to Treasury yields and package it into something coherent that fits your mental model of how markets work.
But here's the thing: there is no through-line anymore. We're watching liquidity chase returns in real-time with no underlying thesis beyond "line goes up." The Fed cut 25 basis points earlier this month because they were worried about the labor market. Two weeks later, jobless claims come in at multi-month lows and swap markets don't even flinch on their cut expectations.
That tells you everything. The market has decided that rates are coming down regardless of what the data says. The economy can be strong, the labor market can be tight, inflation can be sticky—doesn't matter. Cuts are happening because cuts must happen. Because without the promise of easier money, valuations don't work. The whole tower comes down.
The S&P 500 is up more than 2% in September—a month that typically pulls back 4.2% based on the last five years. We've broken seasonal patterns. We've broken the relationship between economic data and market reaction. We've broken the link between crypto and risk-on sentiment.
What we haven't broken is the collective delusion that central banks can keep this going forever.
The U.S. economy in late 2025 is "a study in contrasts"—Q2 GDP revised up to 3.8%, jobless claims at 218,000, signaling underlying economic resilience. And what are we doing with this resilience? Pricing in more rate cuts. Demanding easier policy despite clear evidence the economy doesn't need it.
This is the memo I wish someone would send to the trading floor: we're all playing a game where the rules change mid-hand, the dealer is making it up as they go, and the only winning move is to keep betting because everyone else is still at the table.
All of the Magnificent Seven stocks are positive year-to-date. Apple—the last holdout—finally wiped out its 2025 losses on Monday with a 4% jump. Tesla's up. Nvidia's up. Everything's up. And nobody wants to ask the obvious question: what happens when the music stops?
Because here's what Thursday and Friday taught us: the market will rationalize anything. Strong labor data? Bullish, because the economy is fine. Weak labor data? Bullish, because cuts are coming. Stocks hit new highs? Buy. Stocks pull back? Buy the dip. Crypto sells off? Ignore it. Treasury yields rise? Temporary noise.
We've built a self-reinforcing loop where every data point confirms the pre-existing bias, and the pre-existing bias is "stay long." This works until it catastrophically doesn't.
I'm not calling a top. I'm not saying sell everything. I'm saying we're operating in a regime where traditional analytical frameworks have stopped functioning, and that should concern you more than any single data point.
The numbers don't lie. But they've stopped mattering. And that's the most dangerous market environment there is.
— End memo —