The slowing U.S economy will avoid falling into recession, while energy, large-cap industrial conglomerates and software will likely outperform the overall market in 2007, Goldman Sachs strategist Abby Joseph Cohen told CNBC’s Maria Bartiromo in an exclusive live interview on cnbc.com’s home page.
In a wide-ranging interview, Cohen, chief U.S. portfolio strategist at Goldman Sachs, shared her views on the economy, inflation, the dollar and attractive sectors in which to invest, as part of cnbc.com’s “Outlook 07” series focusing on the year ahead.
Cohen said Goldman Sachs “expects a good year” for U.S. stocks in 2007, but “maybe not as robust as this year.” As for Europe and Japan, Cohen said she had “some reservations” about valuations there.
Cohen cited company legal restrictions in naming individual stocks, but did signal out several sectors. An improving capital sending environment will help tech firms focusing on software and applications. Cohen said Goldman was “enthusiastic” about the energy sector, despite its two-year rally, citing strong global demand. She also said the firm was a “long-term fan of financial stocks,” saying their large-size, multi-national structure and good management made them attractive.
On the economy, Cohen said the U.S. economy will grow below trend in 2007, around 2.0%, but Goldman does not think core inflation rises in a notable way”, implying that the Federal reserve will not need to raise short-term interest rates. She added that recent signs of wage pressures were some cause for concern.
Cohen is not concerned about the falling U.S. dollar, however, saying “ a decline in the dollar is better news for us, than other nations” because it helps the U.S. export sector.