As discussed at some length in “Who You Gonna Believe?,” one of the key market themes headed into September was the notion that benchmark equities were disconnected from rates, FX, commodities and even from their own internals in terms of pricing a US slowdown which, notwithstanding constructive reads on consumer spending and the services sector, is plain enough to see.

Opinions vary on the scope and severity of that slowdown, and indeed some observers claim they can’t see it at all. I can see it just fine. For example, the three-month moving average for private payrolls is now below 100,000.

If you’re inclined to strip out “government and friends” when measuring the strength of the US labor market, the picture’s even more disconcerting.

As the figure makes abundantly clear, jobs growth is decelerating and could soon flatline altogether.

Last month, a bevy of assets and markets moved to aggressively price a US downturn and a commensurate response from the Fed. Stocks followed suit. For three sessions, anyway. Then, Wall Street staged one of the most dramatic turnarounds in recent memory, leaving equities the optimistic outlier as September dawned.

Coming out of the US holiday last week, stocks suffered a rather harrowing catch down to the sobering “reality” evidenced in rates, currencies and raw materials amid a string of data which confirmed the labor market slowdown.

The figure, from Morgan Stanley’s Mike Wilson, underscores the point. He touted it on September 3, when equities were still levitating, so the refresh shown above was a bit of an “I told you so” moment for Mike.

“In the absence of a re-acceleration in the growth data, we felt that the index was trading out of sync with the fundamentals, and other markets seemed to agree,” Wilson said, editorializing around stocks’ gravity event.

Wilson keyed on the JOLTS update even more so than the jobs report. He called it “an aside,” but it felt like more than that. The figure below shows the YoY change in the headline openings print with the YoY change on the S&P.

Now that’s a disconnect. Ostensibly, anyway. I’m actually not sure it’s all that meaningful unless you think equities are about to plummet or job openings rise. Neither outcome seems especially likely, although if you look back to 2007/2008 you can see an instance in which stocks did indeed move lower to meet job openings.

Wilson posited a middle ground. “The question for investors is whether this relationship will realign from greater job openings or falling equity prices,” he wrote. “Our view is that it could be a bit of both assuming a soft landing outcome [but] under a hard landing outcome, the reset would come much more from lower equity prices, which is why the market is so sensitive to the labor data at this point in the cycle.”

Meanwhile, Nomura’s Charlie McElligott suggested the market might ultimately try to force the Fed into larger rate cuts. “The issue for the Fed is, as always, market reflexivity and its impact on US financial conditions,” he said Monday. “Because market pricing [for] a much more aggressive hard landing cutting-cycle… continues to be priced with real delta, ‘only’ going 25bps out of the gate [c]ould act as an FCI tightener versus the market’s preference for at least one 50bps cut [at] either of the next two Fed meetings at the very least.”