Goldman Sachs trader: Global stock markets are singing all the way, turning a deaf ear to the risk of a U.S. recession

Turning a deaf ear to the risks of a U.S. economic recession, how long can this round of the global stock market bull run last? Goldman Sachs macro trader Paolo Schiavone stated, "Despite the probability of a U.S. recession being as high as 30%, the global stock market remains strong, as it seems almost irrational to short in the face of current market momentum." In his latest report to clients, Schiavone pointed out: "The key is that the market cannot see far enough into the future, which is why it ignores the risks of a recession." He believes that investors may overlook the possibility of a slowdown in the labor market and instead focus on strong liquidity and structural growth themes such as artificial intelligence and fiscal credit expansion. U.S. stocks are currently close to historical highs, with strong corporate earnings and bets on interest rate cuts outweighing concerns about the impact of comprehensive tariffs. As signs of a potential slowdown in economic growth emerge, investors are flocking back to tech giants and artificial intelligence trades. Ample Liquidity Fuels Market Optimism Swap traders currently expect the Federal Reserve to cut interest rates by more than 100 basis points by mid-2026. A large issuance of short-term government bonds injects liquidity into the money market, ensuring ample supply of funds. Meanwhile, fast-money investors have poured into the market after the S&P 500 rebounded from the tariff-driven sell-off in April. Schiavone noted that these trend-following investors or Commodity Trading Advisors (CTAs) currently control most of the fund flows into "hot" stocks. The Goldman Sachs trader stated that due to the prevalence of short-term strategies and suppressed volatility, few are willing to go against the still intact upward trend. He pointed out, "The market is showing signs of short-sightedness, as the 'single playbook' of trend-following investors ('let winners run') leaves little room for fundamental bears." In this environment, Schiavone believes the path of least resistance remains upward, which explains why the market can maintain strength against the backdrop of rising recession risks