The lead-up to Wednesday’s US CPI release wasn’t the most exciting tape to watch.

Any lack of conviction from traders isn’t down to CPI anticipation anyway. It’s the waiting game before the September FOMC.

Yes, this week’s inflation updates (plural, because PPI matters too) are ostensibly pivotal in determining the size of the first Fed cut, but at this juncture, it almost feels like the market’s resigned itself to 25bps as the chalk.

That’s probably not wrong. Although the constellation of mainstream Eccles coverage (i.e., articles penned by Fed reporters who hear the whispers) suggested 50bps remained on the table ahead of the inflation data, it does seem as though the Committee’s reluctant to go big out of the gate absent enough “air cover” (i.e., unequivocal evidence that the labor market’s in imminent peril) to dispense with accusations of politicization. Never mind what it says about the character of the GOP candidate when Republicans have to be concerned that a Fed chair from their own party who made his fortune in private equity might be conspiring to keep a Democrat in the White House.

We should be honest about one thing: There’s something incongruous about Jerome Powell’s explicit pledge to leverage monetary policy in the service of preventing any additional softening in the labor market and what I perceive to be the Committee’s default inclination to eschew 50 in favor of 25 out of the gate this month. The figure on the left, below, shows the Bloomberg US economic surprise index specifically for labor data — so, the trend in misses and beats.

As Morgan Stanley’s Mike Wilson put it, “Here, the message is quite clear.” That message: The jobs market is underwhelming versus expectations, and even as stocks are inclined to indifference and apathy on some days, other assets aren’t, and last week’s trade was a testament to what can happen when equities decide to “look down,” as it were.

The figure on the right, above, also from Wilson, shows the Conference Board’s employment trend metric. He called it “a fairly objective aggregate measure of the labor market’s direction.” As Wilson’s annotations make clear, the most recent downtrend on that index looks everything like a recession and nothing like historical “mid-cycle slowdowns.”

If you ask UBS’s Rebecca Cheong — she runs equity derivatives strategy, which is to say she’s a tactician, not a Wilson — the next month or two could be dicey for stocks. “August was a bad quality rally,” she wrote. “Investors are on edge and vulnerable to any bad news.”

The figure on the left is an indicative metric and it bodes ill, according to Cheong’s model. On the right is just another visualization of the looming buyback blackout.

Cheong said investors are “ready to cut some risk two months before the election.” Additional “disappointments” from the US macro data (and to reiterate, the plummeting Bloomberg gauge shown above is, quite literally, a rolling record of disappointments) could “accelerate modest profit taking behavior” on the way to triggering a “massive unwind,” she went on.

For clarification: Research-side analysts wouldn’t use the word “massive” with the word “unwind” in the context of stocks unless one (a massive unwind) had already happened. Tactical strategy notes from folks like Cheong are different in kind from tedious weekly research pieces. The latter are rivaled only by televised golf tournaments in their capacity to induce drowsiness, which is why I vastly prefer the livelier cadence of the former.

Cheong drove home the message. Market internals, she warned, have deteriorated, leaving equities vulnerable to “any small external shock or slight disappointment,” which is why she’s “tactically bearish for the next two months.”

Meanwhile, JPMorgan’s Thomas Salopek said that as long as the S&P stays above support, it’s a range trade. “But as we get closer to the precipice of the 200-day moving average, there is no looking back,” he wrote Tuesday.

Fortunately, the US benchmark’s “nowhere near” the line, as Salopek put it. The 200-day’s way down at ~5150 SPX.

Of course, as we were reminded early last month, stocks can cover a lot of ground in a hurry on the way lower in modern markets. So, “nowhere near” is relative.

If you ask Cheong, the S&P could be “-10% from the peak within one month and -15% within two months.”