Goldman Sachs partner and chief investment strategist Abby Joseph Cohen spoke with Bloomberg TV’s Sara Eisen Tuesday morning. Cohen said “our feeling is that the next recession is some significant distance off in the future” but the numbers will “not be quite as vigorous” this earnings season.
Cohen also said she sees signs of a continuing bull market.
On investing in the U.S.:
“It’s clear that many people have forgotten that the U.S. is still by far the world’s largest economy. Even with its outstanding growth over the last decade, the size of the Chinese economy is only about 40% of the United States. So clearly what happens in the United States has a significant impact on the rest of the world. Right now the U.S. economy is growing. Not as rapidly as we would like but it seems to be good, solid, steady growth.”
On investing in China:
“We do think there is deceleration underway in China. On a long-term basis, we think growth there will be good. But when we look at the other industrial economies, clearly the U.S. at this point seems to have a cyclical advantage and in some ways a structural advantage.”
“U.S workers are the most productive in the world, more productive than those in other industrial economies and of course, the developing economies. Our economy is doing better. I’d also point out that our financial system in the United States seems to be much further on the road to recovery than is the comparable system in other parts of the world.”
On U.S. stocks outperforming Europe and China:
“This is something that’s also been driven by valuation. At the end of 2011, what was priced into the U.S. equity market was five years of profit declines – never really a probable scenario, but investors were so nervous about so many things, that’s the way our market was priced.”
“Even after these rallies, the market offers good value but not as good as it was previously. But our feeling is the next recession is some significant distance off into the future. What we know is, bear markets can be sustained not by the most vigorous of growth but by growth that investors believe will hang on there for quite a while.”