Stocks have come roaring back since Brexit. So everything's fixed, right?

Reuters / Russell Boyce

According to the market's latest response to the Brexit vote, everything is fine.

After a sharp drop in the immediate aftermath of the UK's vote to leave the EU, stocks have rallied the past few days with some equity benchmarks trading right where they were before the referendum.

Oleg Melentyev and Daniel Sorid at Deutsche Bank, however, are not impressed.

In a note out Thursday, the duo lay out the simple conclusion one could draw from stocks with some snark:

Only a few days into the post-UK referendum world, the market is back on its feet, fearing nothing and laughing at skeptics. So what if a 30yr socio-economic alliance at the heart of post-WWII world has ended? Politicians will figure out a Swiss-like arrangement for the UK, and the ECB will throw the capital keys out of the window. Everything's gonna be all right.

Yes, but also no.

They add (emphasis ours):

Such an optimistic narrative does not surprise us in and of itself. What surprises us is zero value being put on a probability of this scenario not playing out. We tend to like markets that present either a discount for uncertainty or a convincing case for improving outlook. It is hard to argue that either one is here today.

They point out that while equity markets have rallied, bond yields remain close to recent lows (about $10 trillion in debt around the world has a negative yield), suggesting the market is expecting central bank action. Mark Carney, the governor of the Bank of England, suggested Thursday the BoE will likely cut interest rates this summer.

But Melentyev and Sorid are of the view that the market is overestimating the impact of central bank action. In short, the central banks are running out of options and easing is no longer as effective as it once was.

"Who of the big boys of central banking can realistically make a difference here is unclear to us," Melentyev and Sorid write.

They added:

"The Fed was caught wrong-footed in all of this, between domestic news (weak non-farms) to international. It is unlikely to turn its thinking around right away. The ECB and BOJ are tapped-out; as in, their actions at this point are delivering more harm than benefit (underperforming equity and credit markets, lower credit issuance, substantial pressure on bank equities)."

They go on to argue that their case for a turn in credit cycle "has gotten incrementally stronger following the events of last week."

Many of the metrics they look at, including implied volatility, AA spreads and the performance of financials, have deteriorated.

So stocks may make the post-Brexit fallout appear limited, or even over, but look a little closer and this story is far from over.