Investors have gone all in on a global growth rebound for 2026, and Goldman Sachs says that enthusiasm may already be fully baked into prices. The bank’s proprietary Risk Appetite Indicator tied to global growth expectations has climbed to levels seen only a handful of times over the past two decades.
That kind of extreme optimism can be a warning sign rather than a green light.
When Everyone Agrees, Risk Goes Up
According to Goldman’s Cullen Morgan, markets across asset classes are rapidly pricing in stronger economic growth this year. The issue is that when expectations get this elevated, they leave less room for positive surprises and more room for disappointment.
Historically, peak optimism has often marked high points for trades that are closely tied to the economic cycle, especially small-cap stocks and other cyclical sectors compared with more defensive names.
Still Bullish, But Watching the Runway
Goldman is not turning outright bearish just yet. The bank still favors select cyclical stocks that could benefit from an early-2026 growth acceleration, arguing the market has not fully priced in its economists’ above-consensus forecasts.
But the tone is clearly more cautious. With so much good news already reflected in prices, the margin for error is shrinking, and the runway for cyclical outperformance may be getting shorter.