Source: BIT Securities

Last Friday, two noteworthy events occurred. These two events may convey two significant signals of stabilization and recovery for the slightly weak U.S. stock market recently.

One signal comes from the non-farm macro data, and the other from Buffett's Berkshire.

1. Signal One: Non-Farm Data Exceeds Expectations

First, let's look at the macro side. The U.S. non-farm employment population decreased by 23,000 in July – this is not only the first decline since February, but more importantly, it is far beyond the expected level: the market originally anticipated an increase of 80,000.

From the expectation of "+80,000" to the actual "-23,000," this extreme reversal signal elicited a market reaction that was not panic, but excitement. The logic is straightforward: a noticeable weakening in the job market significantly lowers the threshold for the Federal Reserve to cut interest rates, leading to a rapid rise in market expectations for rate cuts, and a return of liquidity easing trades.

Ultimately, all three major U.S. stock indexes ended the day higher.

2. Signal Two: Berkshire's Cash Pool Decreases by $31.5 Billion

The other signal comes from Berkshire's Q2 financial report.

The most critical number in this report is not the profit, but the change in cash reserves. In the first quarter, Berkshire's cash reserves reached a record $397 billion – at that time, the market was worried: does Buffett holding onto so much cash indicate that he believes the market is too expensive? Does it mean something like a black swan event is on the horizon? After all, the Oracle of Omaha observing from the sidelines has never been a good omen for a bull market. Buffett has long proven that no matter when, he may not always win, but he will never lose, always managing to survive in the market.

By the second quarter, cash reserves decreased to $365.5 billion. In one quarter, $31.5 billion was spent.

The significance of this number is that Berkshire, this big ship, has finally started to change course. When the most cautious funds in the entire market begin to shift from "holding cash" to "taking action," this alone is one of the strongest endorsements of market valuation.

More intriguingly is where the money went – out of this $31.5 billion, almost $20 billion was poured into increasing their stake in Google.

3. From Storage Chips to Alphabet: Another Approach to AI Trading

Buffett's choice here aligns perfectly with our earlier analysis.

In the current context of AI narrative trading, we previously discussed the issues with storage stocks: expectations have already peaked ahead of the fundamentals, valuations are trading at peak levels in advance, and jumping in now could likely mean buying at the top. So, are there more reliable AI beneficiaries?

With $20 billion, Buffett provided his answer: Google.

Google's logic is completely different from storage stocks. Storage stocks profit from cyclical "demand-supply imbalances," with profit margins already soaring to high levels of 80%, and the upward slope is bound to slow; while Google profits from the ecosystem money of "AI application implementation," benefiting from cloud services, search, and large models, valuations do not overstate expectations as much. Essentially, Buffett's choice states: in the second half of AI trading, certainty is more valuable than elasticity.

4. Conclusion

However, one point needs to be reminded: whether it is the rate cut trade driven by non-farm data or the emotional repair brought by Buffett's endorsement, it's not a straight line.

Rate cut expectations will swing back and forth with each economic data release – weak data leads to increased expectations and stock market rises; strong data leads to decreased expectations and stock market falls. Every upcoming CPI and non-farm payroll report could trigger significant market fluctuations. Similarly, "following Buffett to buy Google" is not a mindless copying of homework; Berkshire's entry cost, holding period, and retail investors are completely on different scales.

Such a market condition, characterized by "directional clues and bumpy paths," is precisely a scenario where tools can demonstrate their value.

BIT Securities' newly launched options buying feature is suitable for trading this data-driven high-volatility window: whether betting on the next data to further boost expectations for rate cuts or hedging against the risk of a pullback on existing positions, it allows participation with minimal costs, with maximum losses locked at the premium at order placement – turning the uncertainty of a data blow-up into a calculable cost.

BIT's margin trading functions are suitable after the signal confirmation: when rate cuts materialize and the trend clarifies, there is no need to be limited by the size of the principal, allowing to enlarge positions to seize opportunities.

Signals have emerged, but bumps will not be absent. Using the right tools increases the likelihood of turning signals into profits.

Disclaimer: This article is based solely on public information and market data for analysis and discussion. The related viewpoints only represent the author's personal judgment and do not constitute any investment advice, securities recommendations, trading invitations, or profit promises for any securities, financial products, or digital assets. The companies, industries, and market trends discussed do not represent future performance, and past performance does not guarantee future results. Investors should fully understand the risks, costs, and trading mechanisms of related products and make independent judgments and cautious decisions based on their risk tolerance. The market has volatility risks, and using leverage tools like options and margin may amplify both gains and losses, and investors may lose some or all invested capital.

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