(Bloomberg) -- Abby Joseph Cohen says that the market volatility from investors repositioning in the face of higher inflation will be countered by continued corporate earnings growth, since the U.S. will not tip into a recession.
While equity markets will come under pressure with price-earnings ratios “compressed somewhat, I think there’s some offset in terms of continued improvements in earnings growth,” she told Bloomberg Surveillance in her first TV interview since the former senior investment strategist retired from Goldman Sachs Group Inc. “Because I certainly don’t see a recession.”
Cohen is now a professor at Columbia Business School, teaching a global economics and financial markets course. Her comments come one day after figures were released showing that the consumer price index climbed 7% in 2021. The index’s biggest annual gain in nearly four decades has set the stage for the Federal Reserve to begin hiking interest rates as soon as March.
Cohen said that she’s particularly concerned about individual investors, “many of whom haven’t yet figured out the damage that could occur to their personal portfolios as interest rates begin to rise.”
The ongoing Covid-19 pandemic also continues to be a risk and investors should be concerned about what’s happening in countries where vaccine distribution has been limited, she said.
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