Are you still awake? Is this thing on?

It’s easy enough to fall asleep on markets right now. Given what’s going on in Washington, not to mention in Moscow and Kyiv, things should be exciting. Instead, we’ve settled into what feels a lot like a lull on some days.

But the rangebound trade in equities and conspicuous lack of fireworks belie high geopolitical drama, acute domestic discord in America and ongoing tension across the US banking sector.

“Complacent” may not be the right word. Folks are hedging in equities again, albeit only because they have something to hedge. Skew is 99%ile on a six-month lookback, for example. And there’s no shortage of daily hand-wringing over the debt ceiling.

But it’s all a stalemate. The war, the macro, the bull/bear debate — all of it. And stalemates, if they go on for long enough, can be boring, irrespective of the stakes, which have virtually never been higher on all fronts.

In equities, any regular reader knows the story. There are two key factors behind this year’s resilient trade. The first is mega-tech, and while I’ve said just about everything I can say about it, the figure below adds a bit of nuance which I think is useful.

As Morgan Stanley’s Mike Wilson noted, the top 10 index weights in the US are outperforming their 2023 consensus net income and sales weights (which are quite large) by a country mile.

The second major factor is systematic buying. Reader fascination with systematics never ebbs, which is handy — it’s the editorial gift that keeps on giving and fills what might otherwise be empty space.

The four-panel shown below gives you some additional context for Deutsche Bank’s systematic positioning measure discussed here on Tuesday in “Quants And Mortals.”

As you can see, all three cohorts within the systematic universe have re-leveraged, re-allocated and otherwise raised their equity exposure simultaneously in 2023.

Those charts do suggest scope for additional exposure adds, although it depends on volatility. On Wednesday, Nomura’s Charlie McElligott suggested vol control could add another $37 billion+ in equity exposure if spot stays in the “dull” range mentioned above.

This is, I’d argue, a very uneasy calm. Some investors have adopted, without saying so, an incongruous view of the macro. “The equity market continues to expect the best of both worlds — rate cuts and stable growth,” Morgan Stanley’s Wilson said.

That’s a bit uncomfortable. But not nearly as uncomfortable as the shrill Beltway cacophony, the oppressive concussions of war in eastern Europe and the frightening specter of a larger conflict between the world’s two superpowers.