The vast majority of bank clients are confused about the resilience of stocks in 2023, even as many see no choice but to jump aboard a moving train.

Maybe this is the week equities come around to the reality of the hawkish repricing in rates, maybe it isn’t, but one thing’s for sure: Many Wall Street strategists are skeptical of the narratives supporting the case for additional upside.

You can count Credit Suisse’s Andrew Garthwaite among them, apparently. “Most clients (c. 80%) have been surprised by the rally this year and agree equity risk premiums are abnormally low,” he wrote, echoing Morgan Stanley’s Mike Wilson, who on Tuesday delivered the full-length version of his “Into Thin Air” piece discussed here.

“This is pure FOMO at its best, in our view, and we find all the hoopla and excitement about the YTD rally to be misplaced,” Wilson said, adding that “the S&P 500 is flat over the past 11 weeks and exactly in line with where we took off our tactical bullish call on December 5.”

The “main difference” between now and October, Wilson went on, is that “stocks are significantly more expensive, with the ERP at 168bps versus 216bps back then.”

In the truncated version of Wilson’s latest, he suggested the “no landing” narrative may be a mirage, at best. At worst, it might be nonsensical, he cautioned. Credit Suisse’s Garthwaite seems to agree.

While expressing his reservations, Garthwaite alluded to other, related, fanciful notions including the paradox of an inverted Phillips Curve. “New phrases from clients have emerged in the past few weeks to justify markets — ‘horizontal Phillips Curve,’ ‘a step-up in productivity’ and ‘an expansion of central bank balance sheets,'” Garthwaite wrote, adding that “the latest phrase is ‘no landing’ rather than ‘soft landing,’ but in our view ‘no landing’ is unsustainable when unemployment is 3.4%.”

Wilson cautioned that for all the “everyone is bearish” commentary, the buyside appears to be relatively sanguine, or at least compared to October, when he initiated his prescient tactical bullish call on US equities (which he was kind enough to annotate on Tuesday).

“Today we find our conversations with the buyside to be exactly the opposite in tone [versus October] with the vast majority of clients now in the camp we will not make new lows in this bear market, nor will we even test those lows,” Wilson marveled.

He said buyside conviction in that view (that the lows won’t be retested) “has grown every day,” despite an ever more ominous valuation backdrop.

If you ask Morgan Stanley, it’s still at least possible that the S&P could fall as low as 3,000 during the first half of the year. Commenting further in his own note, Garthwaite wrote that, “the fundamental problem is that the market is behaving as though we are early cycle, when in terms of full employment and profit margins, we are clearly very late cycle.”