Tags: Goldman | Cohen | 2012 | Start

Goldman's Cohen: 2012 Will Be Off to ‘Difficult’ Start

Thursday, 08 Dec 2011 08:09 AM

The first half of 2012 "will be difficult" for both U.S. and European markets, says Goldman Sachs senior investment strategist Abby Joseph Cohen.

Tighter fiscal policies in the U.S, could keep stock prices a little undervalued, but things will pick up during the second half once confidence returns to the markets.

"There's still many problems that need to be resolved. Although we think there is not a global recession in 2012, by many measures there are already several countries in Europe already in recession," Cohen tells CNBC.
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"Whether it's a year from now [or] a few quarters from now, interest rates most likely will be on the way up," Cohen adds, recommending long-term investors to focus on equities and commodities.

cohen200.jpg
Abby Joseph Cohen
(file photo)
Even though stocks may stay undervalued for a while, they won't for long.

"Valuations are already quite appealing," Cohen says adding stocks have been "pricing in this gloomy economic and profit scenario."

Europe, meanwhile, continues to roil in uncertainty as the debt crisis threatens to spread from southern European countries like Greece and Italy to the entire continent itself.

The Standard & Poor's ratings agency has said it may strip Germany, France, the Netherlands, Austria, Finland, and Luxembourg of their coveted AAA ratings unless they tackle the problem now, which could include politically sensitive reforms such as dictating tax and spending policies to all nations from one central authority.

Currently, the eurozone runs a single central bank and common currency but each country determines its own fiscal fate.

"It is our opinion that the lack of progress the European policy makers have so far made in controlling the spread of the financial crisis may reflect structural weaknesses in the decision-making process within the eurozone and European Union," S&P analysts conclude, the Financial Times reports.

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The first half of 2012 will be difficult for both U.S. and European markets, says Goldman Sachs senior investment strategist Abby Joseph Cohen. Tighter fiscal policies in the U.S, could keep stock prices a little undervalued, but things will pick up during the second...
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Thursday, 08 Dec 2011 08:09 AM
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