You don’t need me to tell you this, let alone any “chief equity strategist,” but stocks are unbothered by the demonstrable deterioration in the US labor market.

Just like you don’t need a “professional” to tell you that (all you need is at least one eye or, failing that, someone to quote the S&P to your hopefully still-functioning ears), you don’t need one to tell you why either. Or at least not if all you’re after is a simple macro-policy explanation.

Although the slowdown in hiring could prove a false alarm (as it did last autumn), it’s difficult to escape the feeling that it’s “for real” this time. That the “normalization” process wherein the conditions which prevailed during the post-pandemic nominal growth boom (i.e., acute labor shortages and red-hot wage growth) give way gradually to better balance and cooler pay gains, is complete. And that the situation’s poised to morph imminently into something less benign.

I’ve used the figure below several times by now, including late last week, but because this is a point worth belaboring, it’s a graphic worth re-using.

That’s the component breakdown for Bloomberg’s US Economic Surprise Index. Downside misses are most pronounced in the labor market data.

When the jobs go, the rest of it tends to go too, which is to say when the hiring impulse downshifts (or goes negative), households retrench, spending slows and that’s more or less that.

But, as noted above, stocks are unbothered. For now, anyway. The figure below’s simple enough: It plots the three-month moving average for the NFP headline with the six-month rolling return for the S&P.

If you didn’t immediately recognize the American cinema reference from the chart header, you need to correct that posthaste by looking up the quote and watching the film. Do it tonight. You can thank me tomorrow.

The discrepancy circled in red is a source of consternation for some market participants. Thankfully, Goldman can explain it. “We see a few explanations for the seeming contradiction,” David Kostin wrote, in his latest. “Stocks typically benefit from lower yields as long as the economic growth outlook remains solid.”

The implication — and he’s clear on this in the note — is that the labor market slowdown, disconcerting as it is, may actually be a boon to equities if it compels the Fed to cut rates more aggressively than they otherwise might and the economy manages to keep its footing.

On Goldman’s (needlessly complex) measure, trend jobs growth has stabilized (that’s the figure on the left, above) and leading indicators of wage growth point to a deceleration (see the figure on the right).

Assumptions about the read-across for wage growth from slower hiring are the second reason Goldman cited for stocks’ resilience.

“In addition to spurring Fed easing, another way weaker jobs data help equities is because slower wage growth should boost corporate profit margins, all else equal,” Kostin went on. “Our economists expect the US economy will continue to expand in H2 2025 and 2026, but slow job growth will keep a lid on wage growth.”

That’s a pedestrian observation, but it’s somewhat important in the context of tariff price pressures (if your input costs are already rising due to the trade levies, the last thing you need is rekindled wage growth) and also given company analysts’ rather rosy expectations for margins going forward.

The figure above’s a reminder: Margins slipped in Q2, but bottom-up consensus expects 100bps of margin expansion over the next half dozen quarters. That’s a tall order in light of the trade war. Cooler wage growth in the presence of slower hiring would help.

Circling back, exactly none of the above’s complicated. That’s not to say it’s necessarily correct, it’s just to note — gently — that despite the prevalence of next-level geniuses on Wall Street, you don’t actually have to try very hard to pen the commentary that passes for professional market strategy. Hell, I’ve been doing it for a decade now.

There are, in fact, actual rocket scientists working in finance (if perhaps not often on the equity research side), but you don’t have to be one yourself to editorialize around the intersection of macro and markets. Indeed, there’s a good argument to be made that past a certain point, that sort of intelligence — “book smarts,” so to speak — can be detrimental to your performance.