Tech shares may be “over-discounting” prospective additional relief from bond yields, traders are increasingly convinced the Fed will squeeze in one more rate hike next month and hedge funds are the most net short in nearly a dozen years.

That’s a snapshot — the “lay of the land,” so to speak — as the clock ticks down to another overdramatized US inflation report.

The mildly skeptical view on tech comes from JPMorgan’s Mislav Matejka, but it could’ve come from anyone. Analysts expect to hear profits fell 16% and 18% YoY for Info Tech and Comms Services, respectively, during US earnings season, which kicks off in earnest later this week. Tech margins are seen contracting by 300bps versus the same period a year ago.

Among the FAAMG contingent, only Microsoft is seen eking out profit growth, and not by a lot. The margin picture for the heavyweights is grim indeed.

And yet, thanks in part to a decline in bond yields and (possibly misplaced) faith in the purported “defensive” characteristics of big-tech, the Nasdaq 100 will enter earnings season up nearly 20% YTD. European tech shares are likewise buoyant.

If you ask JPMorgan’s Matejka, “pure defensives,” like utilities and staples, may be preferable from here. I’d just call them real defensives. Three-quarters of market gains this year are attributable to tech, Matejka remarked.

Of course, if bonds rally into a decelerating economy or geopolitical tensions give investors a reason to hide in US duration, tech could find support, even as results will probably continue to underscore to notion that the bigger you get, the harder it can be to move the needle organically. In an environment where politicians in the US and China are skeptical of monopolies and concentrated tech power, growing through acquisitions may be more difficult as well.

Meanwhile, Fed-dated swaps reflected near 80% odds of another 25bps hike at the May meeting. Bloomberg’s Ven Ram ran through the very simple math on the neutral rate Tuesday. Assuming a real neutral of 50bps, nominal neutral is 2.5%. “So, if the Fed does hike next month, its head room for rate cuts would amount to 275bps if the neutral rate is a floor for interest rates,” he wrote. “And it is that cushion that the Fed may seek to bolster ahead of any impending storm in the US economy.” Of course, we’re assuming r-star hasn’t moved. John Williams thinks it’s still “very low.”

Speaking of Williams, he implausibly dismissed the notion that Fed policy had anything to do with SVB’s collapse. “I personally don’t think it was the case that the pace of rate increases was really behind the issues at the two banks back in March,” he told a moderated panel hosted by the Economics Review at New York University. “I think it’s well understood there were some pretty idiosyncratic issues with those institutions.”

Yes, that’s “well understood,” and there were some “idiosyncratic” issues. But notwithstanding those issues (and the underlying issue, which is just that banking is the business of maturity transformation), the fact is, Fed policy was in part responsible for the unrealized losses in SVB’s bond portfolio. It’s not the Fed’s fault that SVB didn’t hedge it properly, but SVB didn’t create a dearth of yield, forcing everyone into longer duration assets. The Fed did that. And SVB didn’t get so far behind the macro curve that they had to hike rates at a breakneck pace, igniting the rate-risk kindling scattered around portfolios. That was the Fed too.

Finally, the net short in S&P futures as of last Tuesday (the most recent available data) represents the most bearish positioning since late November 2011.

At the same time, hedge funds are apparently ditching tech longs at the swiftest pace in more than a year, according to Goldman.

That’s just more gambling — chasing lines around on a screen. Maybe you’ll win this week, but you’ll probably lose next week. Over time, only the house and a handful of whales win, though.

If you take anything away from the reloaded shorts, it should probably be that lopsided positioning can be fuel for a swing back in the other direction.