Outlook 07

Abby Joseph Cohen

cnbc.com staff

Abby Joseph Cohen
Chief U.S. Portfolio Strategist, Goldman Sachs

Power: you might think of presidents and CEOs. But when Abby Joseph Cohen speaks, people listen. Cohen is the chief strategist at Goldman Sachs, the investment bank that dominated the Internet and telecom booms. She began her career as an economist at the Federal Reserve in Washington, D.C. and joined Goldman as a vice president in 1990; she was made a partner in 1998. “Wall Street Week” host Louis Rukeyser lauded her as “the most influential market forecaster, period.''

In cnbc.com’s exclusive OUTLOOK '07 series, Cohen spoke with CNBC’s Maria Bartiromo about what 2007 might hold for the economy, U.S. consumers, and the investor.

The economy
The strategist says that for next year, “We think the U.S. economy will avoid recession – that’s usually good news for the stock market.” Cohen touts Goldman’s success in having “identified the reasons why the economy would slow” in recent months, citing “rotation in economic growth away from the U.S. consumer,” and toward “business fixed-investments and exports” – possibly exports to Asia.

U.S. consumers
“Some of the weakness in [U.S.] consumer spending is concentrated in certain areas,” Cohen underscores. Areas that remain strong may be doing so because individuals are “shifting spending” from goods to “discretionary service,” especially “travel, media and entertainment,” she says.

Cohen offers several morsels of advice to investors: First, large-capitalization “industrial conglomerates” with “multi-country exposure” are the best bets for “revenue growth and valuation.” The strategist recommends investors keep an eye on software and applications makers and “a whole host” of other tech firms. And she says Goldman “would be looking at energy in a “shorter-term way” than portfolio managers had in recent years. She declares that global energy “equilibrium prices should be higher than they are now” through 2007.