Trump has ordered the firing of the Bureau of Labor Statistics director, and the non-farm data is once again mired in controversy!


On August 2, senior White House economist Stephen Miran suddenly stated that economic statistical agencies need a 'new perspective', which translates to: 'I don’t trust your data, change the personnel!'

Immediately, Trump ordered the firing of Bureau of Labor Statistics director Erika McEntarfer, with a more explosive reason: 'The July non-farm employment data (an increase of 73,000) is fake! The Democrats are manipulating the numbers to embarrass me!'

The Bureau of Labor Statistics has also admitted to errors, acknowledging that the actual number of jobs is 258,000 less than previously announced! This is the second-largest 'data failure' in history, following revisions made during the pandemic.

Trump has always played by his own rules, and this time he went all out, directly accusing these employment figures of being 'manipulated,' aiming to clear his name. Importantly, Trump has ordered the 'firing' of Erika McEntarfer, the director responsible for releasing the non-farm payroll data. Trump has long been skeptical of the data from the Federal Reserve and the Bureau of Labor Statistics (BLS), and this time he has directly fired shots, claiming that the employment data around the 2024 election is subject to manipulation. Although White House economist Stephen Miran emphasized the need for a 'new perspective,' the market generally believes that Trump's move is aimed at pressuring the Federal Reserve to cut interest rates quickly.

It is noteworthy that the revision of July's non-farm data is far larger than usual adjustments. Industrial Securities analysts believe this may stem from changes in seasonal adjustment models rather than purely 'political conspiracy.' Nonetheless, the revised data shows that the average number of new jobs in the U.S. job market over the past three months is only 35,000, far below the pre-pandemic level of 178,000, indicating a clear weakening of economic momentum.


But why did the probability of a rate cut in September soar while the crypto market plummeted?

Normally, weak employment data would reinforce expectations for a Federal Reserve rate cut, which would be favorable for risk assets. The interest rate futures market shows that the probability of a rate cut in September has surged to over 70%. However, the crypto market unexpectedly plummeted, with mainstream coins like BTC and ETH experiencing significant corrections. Behind this are several key factors:

Spread of market panic: The significantly revised data has made investors worry that the U.S. economy may be worse than expected, and it may even enter a recession. With expectations of an economic recession, funds may seek safety in the short term rather than flow into high-risk assets.

Short-term tightening of dollar liquidity: Despite rising expectations for a rate cut, the market is worried that the Federal Reserve may still remain cautious. If inflation does not fall significantly, the extent of the rate cut may fall short of expectations, causing funds to temporarily hold back.

Uncertainty of Trump's policies: He has recently pressured the Federal Reserve frequently, even threatening to fire Powell, amplifying market concerns about political interference in monetary policy and affecting investor confidence.



What to do next?

Although the short-term market is dropping due to panic, in the medium term, if the Federal Reserve really lowers interest rates in September, liquidity easing may still drive a rebound in the crypto market. Historical experience shows that markets often fluctuate violently at the beginning of a rate-cutting cycle, but long-term funds will continue to flow into high-growth assets.
However, investors need to be wary of several risks:

Risk of economic recession: If the job market continues to deteriorate and corporate profits decline, it may drag down overall market sentiment, making it difficult for crypto assets to remain unaffected.

Federal Reserve policy swings: If inflation rebounds, the Federal Reserve may delay rate cuts, leading to unmet market expectations and the crypto market facing a new round of selling.

Trading Strategy: How to cope with market turbulence?

Short-term observation: Before market sentiment stabilizes, avoid blindly bottom-fishing, and pay attention to speeches from Federal Reserve officials and the August CPI data.

Pay attention to policy signals: Trump's next move and the Federal Reserve's expectations management before the September decision could become turning points for the market.



Special Reminder: Political Storm + Economic Data Shock, the market has entered a period of high volatility.

Trump's firing of the Bureau of Labor Statistics director and the significant downward revision of non-farm data has thrown the market into chaos. In the short term, panic sentiment dominates the market, putting pressure on crypto assets; however, in the medium to long term, if the Federal Reserve shifts to easing, the crypto market may still benefit from the resurgence of liquidity. Investors need to remain calm and flexibly adjust their strategies to cope with the impending market storm.

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