“For lack of better words, our outlook is negative,” JPMorgan’s Marko Kolanovic told a conference in Frankfurt last week.

Kolanovic, an erstwhile bull, joined the ranks of Wall Street’s more cautious strategists late last year, as central bank tightening proceeded apace and geopolitical headwinds refused to abate.

He’s been more or less adamant about the scope for additional risk-asset stress since then. Last week, he was especially pointed, describing Fed policy as “likely already past the point of no return,” on the way to characterizing the economy as an “airplane in a tailspin” with the “engines about to turn off.” “The possibility of a Minsky moment has increased,” he wrote.

Fast forward a week and analysts led by Kolanovic retained a foreboding cadence. Q1 likely marked the “high point” for equities in 2023, they said, adding that “unprofitable companies that depend on steady flow of equity capital to fund operations and tight carry trades implemented over the last 10-20 years” are especially vulnerable. They again cautioned on commercial real estate, where “stresses appear to be compounding, amplified by banking shocks that could complicate their debt roll.”

They pointed to the still-elevated MOVE, calling current levels “disturbing,” and warned that “the banking crisis is far from over.” Money market funds are grabbing assets, and insult to injury for anyone competing with money funds is the Fed’s obstinance. “The Fed’s latest hike would likely make it even more difficult for US banks to compete,” JPMorgan said.

Ultimately, Kolanovic cited two reasons for JPMorgan’s defensive stance. First, rampant uncertainty brought on by the banking crisis “should put upward pressure on risk premia embedded in asset prices and increase the need for precautionary savings among investors.” Second, economic forecasts haven’t adjusted to the new macro reality yet.

In JPMorgan’s view, economic forecasts are likely to be lowered over the near- to medium-term, and that could undermine sentiment further. The bank pointed to the sharp repricing of the Fed trajectory and noted the disparity with year-end median policy rate forecasts. “While market pricing… has shifted significantly, economist forecasts for year-end rates have if anything increased modestly,” the bank remarked.

Relatedly, Bloomberg consensus forecasts for 2023 growth so far betray “little impact” from recent events in the financial sector, despite what many observers insist is a clear and present danger to growth from tighter lending standards at small- and mid-sized banks.

As for any policy pivot to outright easing, JPMorgan worries rate cuts might come too late. Developed market policymakers aren’t likely to ease “before they recognize that the expansion has ended,” Kolanovic said. He also called attention to “several geopolitical crises.”

The good news is, the proverbial sidelines haven’t been this attractive in 15 years. As Marko put it in Germany last week, you “get paid to wait for the situation to clear up.”