Stock market bulls just might be back

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.