| Investors bet against a recession, China reports fewer Covid cases and malaise sets into the world's factories and ports. Professional investors overseeing a total of $5 trillion are loading up on bets that a recession can be avoided, according to a study from Goldman Sachs. The positions amount to wagers that the Federal Reserve can tame inflation without creating a recession, often referred to as an economic soft landing. "Current sector tilts are consistent with positioning for a soft landing," Goldman strategists including David Kostin wrote in a note Friday. Yet the precariousness of such bets was on display in the past few days, when strong data on US labor and services sectors drove speculation the Fed will have to maintain its aggressive policies, increasing the risks of a policy error. China is reporting fewer Covid-19 cases as a wave that started to accelerate last month appears to be tailing off. Infections have fallen each of the past eight days since peaking in late November. That comes after the capital of Beijing said negative tests would no longer be needed to enter a range of public venues, following cities from financial center Shanghai to tech hub Shenzhen in dialing back testing requirements. "Risk assets may enjoy some degree of positive momentum from Asia, if developments continue to fuel optimism about a 2023 Chinese reopening," rates strategists at Mizuho International wrote in a note to clients.  | Conditions continue to deteriorate across the world's factories and ports even ahead of the peak holiday season, Bloomberg's Trade Tracker shows. All four sentiment gauges were below average as shipments decline, manufacturing activity shrinks and companies brace for worse to come. The gloomy outlook has been exacerbated by everything from higher energy bills squeezing customers in Europe, weaker currencies in Asia boosting raw material costs to strikes by truck drivers in South Korea. US equity futures traded in small ranges, with S&P 500 and Nasdaq 100 contracts little changed as of 6:10 a.m. in New York. The dollar pulled back from earlier highs to trade flat while Treasuries eked out small gains. Brent fell and gold climbed, while Bitcoin slipped for a second straight day. To catch up on the trading day in the UK and Europe, check out today's edition of City Latest. Will the US experience a mild recession next year, as JPMorgan predicts, or will it enjoy a soft landing, as Morgan Stanley expects? Which asset stands to benefit the most from the upcoming Fed decision? Let us know, fill out the MLIV Pulse survey. At 8:30 a.m., we'll get the latest trade balance figures. The Georgia Senate election runoff will also be underway. Meanwhile, Chile will deliver a rate decision at 4 p.m. New York time. Here's what caught our eye over the past 24 hours: It seems likely that the FTX disaster accelerates efforts to do, you know, something on crypto regulation. That's usually how it is with these things and regulation. That being said there's a growing argument that the correct regulatory response is for politicans to just do nothing, and enforce existing laws. This view was expressed by Columbia Law professor Lev Menand at a recent live podcast recording we did with Josh Younger (which will be out in the forthcoming weeks). Basically, rather than give crypto legitimacy by regulating it and thus making it more part of the existing financial system, better to just keep it out in the cold, separate from everything else. Menand endorsed a piece from Stephen Cecchetti and Kim Schoenholtz in the Financial Times last month, titled Let Crypto Burn. While huge sums have been lost in FTX, and the general plunge in coins prices, there's been nothing that's necessitated bailouts of the rest of the financial system. From a pure financial stability standpoint, that's not a bad outcome for regulators? Yesterday we published an Odd Lots podcast with economic historian Brad Delong, in which among other things, we talked about why some bubbles bust with systemic implications, and others do not. A big part of it is simply leverage. Follow Bloomberg's Joe Weisenthal on Twitter @TheStalwart | 
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