As the book closed on a second consecutive stellar quarter for equities, the bear case was imprecise to the point of being nebulous.

“It just might come one day out of the blue,” JPMorgan’s Dubravko Lakos-Bujas told clients during a web event this week.

“It” was a drawdown. Or, more to the point, “it” would be a drawdown. We’re dealing in hypotheticals here. Stocks are perched at or near record highs, and those who, like Lakos-Bujas, remain wedded to a bearish outlook are hard pressed on some days to explain where the selloff’s supposed to come from with risk assets having demonstrated a remarkable penchant for defiance vis-à-vis every bearish narrative on the board.

“This has happened,” Lakos-Bujas pressed. “We’ve had flash crashes.”

He’s not wrong. We have had flash crashes. And all sorts of other kinds of crashes too. But with respect, “out-of-the-blue flash crash” feels more desperate than compelling when it comes to bear cases.

Lakos-Bujas went on to posit a kind of chain reaction scenario wherein a “big fund” starts to de-leverage, acting as the first domino in what ultimately becomes a “bigger and bigger momentum unwind,” but coming as it did from a strategist whose year-end S&P target’s ~25% OTM, Lakos-Bujos’s “next thing you know” (his words), left-field meltdown thesis felt like a reach.

To be sure, a MOMO unwind and/or a reckoning for crowded positioning (two potential selloff catalysts cited by Lakos-Bujas during the same webinar, which was originally documented by Bloomberg), seem eminently plausible. But that’s something different from imminently likely. A lot of things that never happen are (or were) eminently plausible.

Importantly, investors are convinced of a highly asymmetric central bank decision calculus. Simply put: The bar to cut rates is low, where “low” means cuts are coming as soon as June, while the bar to raise rates is high, where “high” means it’d take an out-of-the-blue (sorry) inflation re-acceleration to put additional hikes on the table. That’s supporting risk assets.

Even if the disinflation process in the US stalls right where it is, the Fed wouldn’t hike. They’d just hold terminal. And Jerome Powell’s belabored protestations aside, it’s pretty clear that terminal’s not actually restrictive, and crystal clear that it’s not an impediment to stock gains at this juncture.

It’s true that some Fed officials (including Chris Waller, whose late-November nod to 2024 rate cuts was crucial in extending what, at that point, was merely a one-month risk rally) are now less confident in the disinflation trajectory than they were in December and thereby less enthusiastic on the margins about cutting rates “early.” And yet, it’s fair to suggest a 25% meltdown on Wall Street would raise the odds of rate cuts materially.

Waller went out of his way this week during remarks prepared for the Economic Club of New York to emphasize that “there’s no rush” on the Committee. His speech, called “There’s Still No Rush,” was a sequel of sorts to a February address during which Waller wondered, “What’s The Rush?” In his Wednesday remarks, Waller described the last two US CPI releases as “disappointing” and said he needs “at least a couple months of better inflation data” to support rate cuts. That counts as cautious — hawkish, even. But do note: It’s March. June’s three months away. “At least a couple” is two, maybe three. This isn’t especially complicated: June’s still live for a cut, in keeping with market expectations. The ECB’s likely to cut in June too. And the BoE maybe in August.

And, so, stocks are bid. “Optimism has surged,” as one executive put it Thursday, citing “central banks which’ve been reassuring regarding upcoming rate cuts.”

Lakos-Bujas isn’t buying it, though. “A lot of goodies” are already in the price, he warned. And upside from the AI narrative “is becoming more and more limited.”