Stocks just hit fresh record highs, while the number two at the European Central Bank went on TV to say a sell-off is more likely than the market thinks.
Both of those things are true at the same time, and that gap is the story.
Luis de Guindos, the ECB's vice president, told CNBC on Wednesday that the risk of a stock market correction is "elevated." He pointed to high valuations, geopolitics, and Europe's shaky public finances as the three big worries.
His other concern is one most investors do not hear about often: non-banks. That is private credit and private equity funds, which now move huge amounts of money but sit outside the rules banks have to follow.
The ECB published its Financial Stability Review the same day, with a report warning that downside risks tied to geopolitics, government debt, and the broader economy "appear underestimated." Translation: the market is not pricing in what could go wrong.
The review also flagged thin liquidity buffers and concentrated bets across private markets, which it said could force quick asset sales in a downturn. Those sales tend to make a normal sell-off worse.
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De Guindos said the duration of the war in Iran could change everything, because markets are currently betting the conflict ends quickly. If it does not, that bet gets repriced fast.
The ECB's review also flagged spillover risk from U.S. private credit into the European system, which it called a reason to closely monitor what happens outside the regular banking world. Think of it as a fire in a neighbor's house, where the houses are connected by the same set of pipes.
The ECB's review also warned that more government spending in already-indebted euro area countries could push up borrowing costs. That would hit government bond markets first, then ripple into stocks.
The ECB has kept its key interest rate at 2% even as inflation runs at 3%, which sets up a real test of patience. Bank of France Governor Francois Villeroy de Galhau, who sits on the ECB's Governing Council, told CNBC the ECB will do "what is necessary" to get back to its 2% target.
De Guindos himself was careful to leave the next move open. He said, "There is not any sort of fait accompli with respect to the evolution of rates."
In plain English, the ECB has not picked a side yet between fighting inflation and protecting growth. That is exactly the kind of fence-sitting that makes markets nervous.
The next inflation print lands June 2, and the next ECB meeting falls on June 10 to 11. For investors weighing a recession playbook, the next two weeks are the ones to watch.
When central bankers start using words like "elevated" on live TV, investors usually listen.
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