Tags: Goldman | Cohen | Stocks | Soar | Economy | Stalls

Goldman's Cohen: Stocks to Soar Even If Economy Stalls

Friday, 28 May 2010 07:55 AM

Even if the U.S. economy continues to falter, equities will not stop their ascent, says Goldman Sachs strategist Abby Joseph Cohen.

The economy is on a rebound even if its pace of growth is anemic, she says.

“Our feeling is that the recession is likely over. Even so, we think that economic growth may decelerate in the second half of this year," Cohen said.

"The inventory boost is likely over. We think we start to see a lessening impact of the fiscal stimulus we've enjoyed the last two quarters,” Cohen told CNBC.

Goldman Sachs estimates that the 10-year yield will fall to 3.25 percent, but predicts equities will trend higher. The Standard & Poor's 500 will reach 1,250 by the end of 2010, said the investment banking firm.

Goldman’s predictions “doesn't mean we get there right away, doesn't mean we there in a straight line. But we think that gives us a sense of the general direction,” she said.

China will still continue its upwards growth pattern, said Cohen, which is a sharp contrast to predictions by other analysts who are estimating mild growth due to inflation and real estate woes.

“While we certainly recognize that the government there is making adjustments on its rates and lending policy, we do think the intermediate- to long-term (outlook) will be for good growth,” she said.

Commodities such as metals and energy are also good buys with world growth increasing to 4.5 percent, Cohen said.

Worries about further risk in Europe have pushed down stock and Treasury prices, Reuters reported.

“It has been a wildly shifting level of risk aversion," said Guy LeBas, fixed income strategist at Janney Montgomery Scott in Philadelphia. "There are two camps fighting it out, one fearful, and the other the value investors.”

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Even if the U.S. economy continues to falter, equities will not stop their ascent, says Goldman Sachs strategist Abby Joseph Cohen. The economy is on a rebound even if its pace of growth is anemic, she says. Our feeling is that the recession is likely over.Even so, we...
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2010-55-28
Friday, 28 May 2010 07:55 AM
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