The Mood Is Apocalyptic: Biggest Drop In S&P Non-Dealer S&P Futures Positioning On Record

One of the most frequent laments on Wall Street these days - where sentiment has turned from mere "doom and gloom" to outright "apocalyptic" and according to the latest BofA fund manager survey the majority of Wall Street professionals now expects a "systematic credit event" emerging unexpectedly out of the shadow banking sector - is how is it possible that after everything that has happened, are stock not only not lower but actually rallying?

That was the subtitle of Mike Wilson's Sunday Start note last week (see "Mike Wilson: "Why On Earth Did US Stocks Rally Last Week?"), and while the Morgan Stanley strategist is now a bearish broken record, repeating today in his latest weekly complaint what he has been saying since September, namely that earnings will collapse any minute now (if you keep repeating the exact same "thesis" for years you will eventually be right, and yes, professional subs can read his latest weekly note here) he is not alone and even banks like Goldman are publishing lengthy analyses seeking to explain how and why markets remain so propped up in the face of not only a looming recession but also a global bank crisis.

The answer to all those questions, of course, is over a decade of Pavlovian conditioning that the Fed will - at some point - break and flood the system, inflation be damned... in fact as the $400BN in Fed balance sheet expansion in the past two weeks has shown...