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Illustration: Aïda Amer/Axios

Doom and gloom abounds in the market, thanks to deteriorating economic data and growing global uncertainty, but many top fund managers and analysts remain bullish — and it's not just a case of rose-colored glasses.

The big picture: All the talk about recession related to market indicators like the inverted yield curve is becoming a "hysteria," says Sonal Desai, Franklin Templeton's CIO of fixed income.

  • That hysteria is causing investors to ignore clear signs of strength for the U.S. economy, such as the continued robust pace of jobs growth even with unemployment at a 50-year low, she argues.
  • Plus, there's the fact that wages and salaries grew 5.1% in the first half of the year with the household savings rate at a healthy 8.1% as of June, she adds.
  • Furthermore, the Fed also has ignored the data and started easing monetary policy, which is bolstering bond prices (and pushing down yields) while also cushioning the economy.

"Certainly, ongoing trade tensions are weighing on the parts of the manufacturing sector exposed to international trade and have contributed to market volatility," Desai tells Axios. "However, I do not see consumers panicking when we have record [high] levels of employment despite market volatility."

What's happening: Jim Paulsen, chief investment strategist of the Leuthold Group, agrees. He recently argued on CNBC that the market is caught in a "fear bubble" pushing investors into bonds with historically low yields instead of stocks that are near record highs.

  • "If we are headed for an imminent recession, it will likely be the most widely anticipated and best predicted recession ever," Paulsen tells Axios in an email.

He points to the substantial amount of government spending buffeting the economy — "one of the largest non-recessionary fiscal accommodations in the post-war era" — and the accelerating annual growth of real U.S. money supply as factors that should give the stock market a boost for at least the rest of the year.

Watch this space: Investor fear has tipped Bank of America Merrill Lynch's flagship positioning model to a contrarian "buy signal" for risk assets for the first time since Jan. 3, analysts said in a recent note to clients.

  • This implies the S&P 500 and MSCI's All-Country World Index are set to again push toward their all-time highs and drive Treasury yields and commodity prices higher.

Yes, but: Weak manufacturing data Tuesday (see below) capped a spate of declining economic indicators over the past several weeks, including falling U.S. consumer sentiment and imploding manufacturing surveys around the globe.

  • “The deterioration referred to has largely been in sentiment and survey-based indicators," Desai says. "I would need to see some more softening in hard data to start worrying about an imminent recession."

Go deeper

By the numbers: Leaving House

Expand chart
Data: House Press Gallery; Table: Danielle Alberti/Axios

Rep. Anthony Brown (D-Md.) is the latest House lawmaker to announce he won't seek re-election next year, bringing the total number of Democratic retirements to 13, compared to nine Republicans.

Why it matters: The increasing number of Democratic retirements — put against the backdrop of President Biden's sagging approval ratings and uncertainty about redistricting — is adding to concerns the party may not be able to keep its slim majority in the House.

Ohio sues Biden admin over reversal of Trump-era abortion referral ban

Ohio Attorney General Dave Yost. Photo: Justin Merriman/Getty Images

Ohio Attorney General Dave Yost filed a lawsuit against the Biden administration Monday over a Trump-era ban on abortion referrals that President Biden overturned earlier this month.

The big picture: The lawsuit aims to reinstate two measures included in the 2019 legislation that required federally funded family planning clinics to be "financially independent of abortion clinics," and refrain from referring patients for abortions.

Oklahoma Supreme Court temporarily blocks abortion restrictions

A pro-choice activist demonstrates outside the U.S. Supreme Court on Oct. 4, 2021. Photo: Stefani Reynolds/Bloomberg via Getty Images

The Oklahoma Supreme Court on Monday temporarily blocked three abortion restrictions set to take effect on Nov. 1.

Why it matters: The laws would place new limits on medication-induced abortions and require doctors who perform abortions to attain board certification in obstetrics and gynecology.