It’s been a frustrating year for equity bears.

The earnings recession was supposed to be deeper, the economic recession never showed up, the worst banking sector turmoil since Lehman ended up a non-event (a rally catalyst, even) and just when it looked like a three-month run of losses for the major US benchmarks might yet save the year for naysayers, a sudden about-face for bond yields rekindled the rally, driving a nine-session streak of gains for big-cap US tech.

A new record high for Microsoft this week was insult to injury for smirking bears, who in many cases blame OpenAI for their bad luck in 2023.

The figure above is a pedestrian chart. The “pros” among you will forgive me: Wednesday wasn’t exactly a carnival of market notables outside of the 10-year sale.

If you’re an equity bear, you really need for the bond rally to fizzle. The US stock market is heavily weighted towards stocks which “like” falling yields. And bond yields are down sharply from last month’s “since 2007” highs.

It’ll be very difficult to get a meaningful selloff in big tech in the presence of lower real rates. 10-year reals are nearly 35bps lower from October’s highs.

The simple chart above illustrates a meaningful financial conditions easing impulse. Note also that lower reals are conducive to re-rating in equities.

Recall that when it comes to real yields, the rapidity of a given move often matters just as much, if not a lot more, than any actual level. A sharp increase over a short period of time can be expected to weigh on stocks. And sharp drop over a compressed window is spinach for a depleted Popeye — adrenaline to a dying Mia.

And it’s not just a rates story. Uneven post-earnings performance aside, big tech results were generally fine. If not valuations, it isn’t obvious what the bear case is, and if yields are receding and the Fed’s done, the key avenue for multiple compression is closed.

Plenty can go wrong, of course. Nvidia could disappoint later this month, for example. Bad news could cease to be good news — it’s “difficult to distinguish between a healthy slowdown and the initial stages of recession without the benefit of hindsight,” as Marko Kolanovic put it earlier this week. Or recent macro softness could be another head fake — things could pick up again imminently, starting with next week’s inflation update, prompting a hawkish escalation from the Fed.

But as we’ve seen over the past several sessions, months of “progress” towards downside year-end targets can evaporate in a matter of days, leaving briefly vindicated bears in the lurch all over again.