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Good morning. Stocks and futures are rebounding on Tuesday. That’s despite little to no progress on stimulus negotiations in Washington, or on Brexit trade talks in Europe.

Elsewhere, investors are so far brushing off the latest lockdown news, which threatens to put the clamps on Christmas on both sides of the Atlantic.

In today’s essay, I get into the loneliest trade in the market: shorting the S&P 500.

Let’s check in on what’s moving markets.

Markets update

Asia

  • The major Asia indexes are mostly lower in afternoon trading with the Shanghai Composite down 0.1%.
  • The Chinese economy is finishing 2020 with strong momentum. Factory output and retail sales figures for November grew in line with analyst estimates, and unemployment fell.
  • Equities analysts at Citigroup, Goldman Sachs, and Nomura Holdings are all fairly bullish on Asian stocks for 2021, saying equities should climb at least 20% over the next 12 months.

Europe

  • The European bourses started off in the red, before rebounding, with Germany’s DAX up 0.2%. With just 10 days before Christmas, tough new lockdown measures will go into effect in London, Germany and the Netherlands this week, and Italy too is mulling new measures for the holiday period—grim news for economies teetering on recession.
  • Another day has passed with no progress on Brexit trade talks, but that’s not stopping the region’s biggest companies from sounding the alarm. Yesterday it was Airbus CEO Guillaume Faury saying a disruptive divorce would force it to mull a big scale-back in the U.K.
  • Big tech could be facing tough new data usage rules, or get slammed with a fine of up to 10% of annual sales, according to EU draft regulation seen by Bloomberg.

U.S.

  • U.S. futures have been gaining much of the morning. That’s after the S&P 500 fell for a fourth consecutive day on Monday. The mighty Russell 2000, meanwhile, continued its impressive run; the small cap index is up 19% since Election Day.
  • Newly minted IPO darlings Airbnb and DoorDash fell sharply on Monday, and are trading lower in pre-market trading. As my colleague Aaron Pressman wonders, did their stock market debuts just break the IPO market?
  • A fascinating story to watch for 2021 will the streaming wars. Disney shares on Friday hit an all-time high even after it revealed its huge investments in Disney+, Hulu and other steaming services would take a big bite out of earnings.

Elsewhere

  • Gold is up, trading near $1,850/ounce.
  • The dollar is flat.
  • Crude is down on vaccine hopes, with Brent futures trading around $50/barrel.
  • Bitcoin is flat again on Tuesday, trading around $19,200.

***

The loneliest trade

Since the March nadir, U.S. stocks (as measured by the S&P 500) are up a startling 66%. And that bull rally is giving investors a sense of invincibility.

Just look at short positions. With the uncertainty of Election Day well and truly behind us—remember all those worries of a disputed election?—investors are long stocks. Long with a vengeance.

According to Morgan Stanley, the short interest on the median S&P stock is well below 2%, the lowest level in nearly two decades, as the chart below shows. (A little plug: in the most recent issue of Fortune, I wrote about the new breed of short-sellers that is disrupting the investment world. It’s worth checking out.)

This long-everything phenomenon is but the latest indicator that investor exuberance for stocks is running off-the-charts hot. Morgan Stanley Wealth Management chief investment officer Lisa Shalett, for one, sees reason for concern. This everything-is-awesome stance, she says, “suggests complacency, which always becomes its own Achilles’ heel.”

For starters, the S&P is trading a mere 6.5% shy of Morgan Stanley’s year-end 2021 target, she points out. “Near-term catalysts are mostly exhausted, fiscal and monetary policy are at maximum accommodation levels, and sentiment and positioning indicators have highly bullish readings. Thus, we are signaling caution,” she writes.

Morgan Stanley is hardly alone. Equities analysts see a solid economic recovery in 2021, and a surge in earnings. But stocks are so expensive today that we’d need to see a wave of bottom-line beats to bulk up those relatively puny denominators, and bring P/Es back to their historical range.

***

Correction: In yesterday’s Bull Sheet, I incorrectly characterized the mood of investors. As was abundantly clear, it was a risk-on day before the opening bell in New York. Apologies for the confusion.

Have a nice day, everyone. I’ll see you here tomorrow. 

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

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