The stock market may be pricing in a recession, but such a severe slowdown in the U.S. economy is an "unlikely scenario," well-known stock market guru Abby Joseph Cohen told CNBC Friday.
"Let’s be very clear, there are some fundamental worries," the Goldman Sachs senior investment strategist told CNBC Friday. "But our feeling is the valuation of the U.S. stock market is already pricing in a rather ugly scenario."
She added, "There are many different ways to look at the mathematics of valuation, but one of them is to say at these levels on the [Standard & Poor's 500] what’s priced in is many years of no earnings growth. That does not seem to us to be the most likely scenario."
She said there are several potential catalysts to spark the market higher including improving retail sales, some job creation and the strength of U.S. companies.
"You do see strong corporate balance sheets, lots of cash and the financial wherewithal to hire more workers, do more investment and participate in things like share repurchases and [mergers and acquisitions] activity," she said.
As she has before, Cohen stressed the importance of taking a longer-term view of "months and quarters, if not longer" and focus on "what’s really happening in the economy, the companies and how securities are priced" rather than reacting to short-term pressures.
From that perspective "it’s not quite as frightening as the minute-to-minute analysis that many other people need to be paying great attention to."