JPMorgan’s Marko Kolanovic worries investors are exhibiting signs of irrationality.

“For a rational investor, we think this makes little sense,” analysts led by Kolanovic wrote Monday.

“This” was the rather stark juxtaposition between the rally in risk assets and a series of adverse events, including what JPMorgan described as a “significant” global banking crisis, signs of slower growth, a generally recalcitrant Fed and, now, a surprise supply shock for crude.

On Monday, Jim Bullard told Bloomberg a prolonged increase in oil prices could “feed into inflation and make [the Fed’s] job a little bit more difficult.” He’s not a voter, but his voice does matter.

“The Fed [has] indicated no intention to cut rates this year,” Kolanovic said, on the way to suggesting market participants are misreading the recent decline in yields which “is not a sign that the Fed is about to bring a punch bowl for tech stocks” in JPMorgan’s opinion, “but rather a sign that recession probabilities have increased.”

Earlier Monday, Morgan Stanley’s Mike Wilson likewise cautioned against+ interpreting recent events as a green light for tech. The March vintage of ISM manufacturing, which Kolanovic cited, missed estimates, tipping a deteriorating growth outlook at the margins.

For at least the fourth week in a row, JPMorgan’s assessment felt overtly cautious. The bank adopted a judicious approach to risk assets late last summer, when Kolanovic began to warn on central bank over-tightening and the prospect of protracted geopolitical rancor. But recently, the tone seems to betray heightened concern.

On Monday, JPMorgan recapped recent events. “As the days went by without bad news on banks, volatility ground lower and mechanically raised stock prices,” they said, adding that a sub-20 VIX and a MOVE that’s well off the GFC-esque spike from last month may be a false dawn.

“The banking crisis appears to have quieted down, though we would characterize this as the calm before the storm,” Kolanovic wrote, adding that “mean-reversion implies non-negligible odds that bond yields could retrace higher in the short-term, and with market expectations for terminal rates below our house forecasts, second half cuts already in the price and inflation headaches persisting in some regions, an up move in bond yields does not look unreasonable.

He attributed recent gains in equities to systematics, a short squeeze and falling volatility, and described “the accordion-like nature of risk sentiment, where restrictive rates produced an issue for various carry trades [until] the ensuing pullback in yields mitigated some of the stress.”

One issue going forward (and I talked about this extensively over the weekend) is the very real prospect of a return to “higher for longer” rhetoric from Fed officials as they get more comfortable with the idea that the acute phase of the banking stress is behind them. Jerome Powell was pretty adamant after the March meeting that rate cuts aren’t likely in the back half of the year. The market isn’t convinced.

“There is ground to cover on fighting inflation and pushing back against the market’s assumption of cuts, so the original source of stress, rates higher for longer, can re-enter the picture,” Kolanovic cautioned.

Admittedly, it’s tempting to join Marko (and Wilson and BofA’s Michael Hartnett) in suggesting that equities are indeed irrational and detached from any sort of reality. To describe the risks as “myriad” would be an early candidate for understatement of the year.

On the “pure markets” side (if you will) the yield curve inverted a year ago, and the re-steepening started last month. You could scarcely conjure a more foreboding signal from the most reliable recession indicator we have if you tried. From a geopolitical standpoint, this is arguably the most dangerous period for the world since the Cold War.

Obviously, I could go on. And Kolanovic did. “The impact of monetary tightening historically worked with a lag, and we’ve never had a sustained rally before the Fed has even stopped hiking,” he wrote. “To be positive on equities at this stage, one has to have a very bullish set of assumptions on growth/ rates/ China/ politics etc., as there’s an alternative [with] the main risk-free rate offering 5%.”

In JPMorgan’s view, stocks are likely to “weaken for the remainder of the year.” The bank still expects the market to re-test last year’s lows “over the coming months.”