A big rebound for the stock market could prove unwelcome news to many professional investors, according to Bank of America. Investment strategist Michael Hartnett said in a note to clients on Monday evening that the bank’s fund manager survey for December shows that, as a group, professional investors have mostly taken a defensive position in their portfolios. “We say Jan/Feb ‘pain trade’ is up for bond yields & risk assets. … [fund manager survey] investors say best performing asset in ’23 to be government bonds & most overweight bonds vs stocks since Apr’09,” the note said. While stocks are well off their lows of the year, investors appeared to turn bearish again in recent weeks. Through Monday, the S & P 500 was down more than 2% in December while bonds have rallied. Bond prices move opposite to yields. The defensive positioning comes as many expect the U.S. economy to enter a recession next year. If corporate earnings and economic conditions hold up in the first quarter of 2023, then “long stocks, REITS, consumer, industrials” could work as a contrarian trade, Hartnett said. There were some signs in the survey that investors were starting to become less bearish, according to Bank of America. Cash levels and expectations for a recession both declined from their November levels. One area where good news could soften the blow for fund managers is on the inflation front. Both stocks and bonds moved higher on Tuesday after a lighter than expected November inflation report . If inflation can continue to decline without more significant action from the Federal Reserve, the overweight bond position would be less at risk and could add to performance.