Vladimir Putin’s grip on Russia may be loosening, but the US labor market isn’t.

Or at least not according to the June vintage of the Conference Board’s confidence survey, which printed a consensus-topping 109.7 on the headline Tuesday. The labor differential widened, as more Americans viewed jobs as plentiful, while fewer saw them as difficult to get.

Taken in conjunction with a blockbuster read on new home sales, Tuesday’s data out of the world’s largest economy painted a picture of resilience, even if it did “little to add to the prevailing macro narrative,” as BMO’s Ian Lyngen put it.

The big beat on the confidence headline and accompanying jump in the expectations gauge (which, at 79.3, is now on the brink of clearing a threshold which historically serves as a leading indicator for recessions when breached on the downside), was notable for the juxtaposition with renewed hard landing banter. Markets are increasingly priced for a soft landing, and have “moved ahead of macro data,” as Goldman put it. Tuesday’s figures perhaps suggest markets aren’t completely crazy after all.

The improvement in the Conference Board labor differential should be considered in the context of concerns that last month’s uptick in the unemployment rate and three consecutive weeks of elevated initial claims were a bad omen. Instead, consumers harbored “sunnier views of both business and employment conditions” in June, Dana Peterson, Chief Economist at The Conference Board said, describing “upbeat feelings about a labor market that continues to outperform” and “greater confidence about future business conditions and job availability.”

If you’re a bear, there’s always the “good news is bad news” narrative to fall back on — the longer the labor market stays bulletproof, the longer rates will need to stay restrictive, and that’s ostensibly perilous for an equity market that’s re-rated to 20x. But nobody was buying that narrative on Tuesday afternoon. Instead, they were buying stocks. Again.

“Steady job creation has been the cornerstone [of] the Fed’s hawkish stance [but] investor views are starting to shift from the conviction that weaker NFP prints are inevitable to growing optimism that the US economy and the consumer might be strong enough to weather higher interest rates without collapsing,” Bloomberg’s Alyce Andres wrote.

Perhaps that’s true, and there’s a sense in which it’d better be. We seem to have reached a point where the only macro conjuncture that doesn’t end poorly for equities is a kind of “soft no landing” — I should trademark that. It’s a combination of a “soft landing” and a “no landing.”

The problem with an outright soft landing is that if inflation recedes too fast (say, if the Fed manages to engineer below-trend GDP growth), corporate top-line growth could flatline or even go negative, particularly if pricing power disappears with the last of consumers’ pandemic savings buffers. A rapid decline in revenue growth against still elevated costs could mean a prolonged profit recession, which stocks most assuredly aren’t priced for. This is the “be careful what you wish for” quandary with falling inflation — the negative operating leverage argument.

The problem with an outright no landing scenario (as it was conceived earlier this year amid a run of hot growth data preceding SVB’s collapse) is that an economy which continues to run unequivocally hot is an economy that compels the Fed to lean into the dots, if you will. Maybe everybody’s come to terms with 5.5% terminal, but what happens if it’s 6%? Nothing good from an r-double-star perspective, probably.

An honest-to-God hard landing is self-evidently no good. That’s why it’s a hard landing. In that scenario, you get the rate cuts you’re after, but the economic deterioration makes them irrelevant for the purposes of bolstering risk assets. The figure below, from Goldman, shows US equity performance around the Fed’s first cut. A hard landing looks like the green line.

A soft-ish hard landing — which is to say not a crash landing, but rather a modest recession — could be ok for stocks given the potential for rate cuts to bolster valuations, but that only works if stocks aren’t already trading on very high multiples. Which they currently are.

So, the only viable path forward appears to be a scenario where the US economy continues to run hot enough to avoid the kind of sharp deceleration in top-line growth that could prolong or deepen what, for now, is a shallow earnings recession, but not so hot that the Fed feels compelled to pursue a draconian terminal rate.

For now, valuations appear desensitized to hawkish central banks (and rising real rates), but there’s a limit to that. And as Goldman’s Peter Oppenheimer wrote Tuesday, rate cuts didn’t help equities “in the aftermath of the tech bubble collapse… because valuations were so high” to begin with.