Stock market bulls may be back

What goes down must go up. That is the message being sent out by major international investors who manage trillions of dollars in savings and retirement funds.

Why it matters: Most investors think we’re already in a recession or that it’s inevitable, but that doesn’t mean they’re pessimistic when it comes to the markets.

By the numbers: The economic outlook is mediocre at best. Less than 15% of US investors believe we will be able to avoid a recession, according to a new survey from Natix.

• However, they do not see a recession as particularly harmful. More than half of global investors see a “safe landing” according to the questionnaire.
• Stagflation, stagnant economic growth in combination with rising inflation, is an even greater risk than a recession, according to the study.

The other side: The market is not the economy, and investors are beginning to think that stocks have already bottomed out. Stock market investors expect a return of around 8% next year, while bond investors expect a growth of around 7%.

• However, there is one asset class that hardly anyone wants to be in. 82% of investors believe crypto will continue to underperform in 2023.

What they buy: A Goldman Sachs analysis of hedge funds and mutual funds with $5 trillion in assets under management shows they are positioned for a recovery. They are bet the bear market is over.

• The funds are betting on so-called growth stocks that should outperform if the economy completely avoids a recession.

It comes down to: Even if a recession comes in 2023, it doesn’t necessarily mean the market will collapse.