If you ask JPMorgan’s Mislav Matejka, equities are a risky proposition right now. And not just because they’re risk assets.

The complacency on display across stocks is “evident,” he warned, describing a market trading without a “safety net” and still in thrall to animal spirits, like FOMO. “Positioning has increased,” Matejka said.

That latter contention (about positioning) depends on which metric you consult and what time frame you’re discussing. Discretionary investor positioning increased in June and July, catching up to months of systematic re-leveraging as fundamentals-based investors (i.e., humans) were forced off the sidelines by a melt-up that refused to abate.

However, sentiment and flows deteriorated last month. As discussed here on Sunday and late last week+, individual investor sentiment as measured by AAII gave back all of the Nvidia/debt ceiling deal euphoria over the course of August, and although flows to US equity-focused ETFs and mutual funds rebounded in the week to August 30, nearly $10 billion exited such funds on net last month.

For what it’s worth, Deutsche Bank’s aggregate equity positioning indicator saw only a “slight” rebound last week, according to the bank’s Parag Thatte, who reminded markets that discretionary positioning “had tumbled to slightly below neutral” during August’s mild equity swoon.

Certainly, some systematic cohorts (vol control especially) added a lot of equity exposure in the months leading up to August. But there was never an “all-in” moment for discretionary investors, whose enthusiasm for this rally is (still) best described as begrudging, in my view.

The figure on the right above illustrates the point. Deutsche’s measure for discretionary positioning sits in just the 53%ile.

Still, it’s easy to sympathize with Matejka’s view which is, in part anyway, predicated on the still glaring disconnect between elevated US reals and equities. 10-year reals rose more than 30bps from July 31 to September 1.

You could argue stocks “should’ve” sold off more than they did. Reals are, after all, the highest in a dozen years.

I’m sympathetic to the argument that reals are simply pricing in a better outlook for the US economy — that economic resilience in the face of 525bps of Fed hikes plainly suggests a higher equilibrium rate is warranted.

But if elevated multiples are predicated on rock-bottom real rates, and if the rapidity of real rate increases matters more than the absolute level, then equities “should” de-rate. At least a little bit.

None of this is new, of course. It’s not news (with an “s” either). All of us (myself included) are to an extent just recapping familiar arguments on both sides while we wait on something to happen. August was livelier than it could’ve been, but I wouldn’t describe it as an out-and-out thriller either.

If you go by the seasonal, September could be interesting. Septembers have a bad reputation for US shares.

HSBC’s Max Kettner thinks you shouldn’t lose any sleep over that, though. US equity drawdowns over the last quarter century were generally attributable to events and fundamentals, not any late-summer blues, Kettner wrote, in a new note, arguing that the market is set to move on from last month’s worries, particularly given that Jackson Hole was, as he put it, “rather uneventful.”

Kettner’s constructive on equities. Matejka not so much. “There is no cushion anymore,” he said. “Sentiment is now fully signed up to a soft landing.”