Dec 7, 2022 - Economy

Stock market bulls just might be back

Illustration of a bull leaning ever so slightly into the image.

Illustration: Aïda Amer/Axios

What goes down must go up. That's the message being sent by big global investors managing trillions of dollars in savings and retirement funds.

Why it matters: Most investors think we're either in a recession already or that one is inevitable — but that doesn't mean they're pessimistic when it comes to the markets.

By the numbers: The economic prognosis is mediocre at best. Less than 15% of U.S. investors think we're going to be able to avoid a recession, according to a new survey from Natixis.

  • They don't see a recession as being particularly harmful, however. More than half of global investors see a "safe landing," per the survey.
  • Stagflation — stagnant economic growth combined with resurgent inflation — is an even bigger risk than recession, according to the survey.

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

  • There's one asset class almost no one wants to be in, however. 82% of investors believe crypto will continue to underperform in 2023.

What they're buying: A Goldman Sachs analysis of hedge funds and mutual funds with $5 trillion of assets under management shows them positioned for a bounce back. They're betting the bear market is over.

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

The bottom line: Even if a recession arrives in 2023, that doesn't necessarily mean the market will fall.

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