'Oracle' spreads upbeat message

Abby Joseph Cohen's diminutive stature belies her status as a high-flying stockmarket strategist for New York investment banker Goldman Sachs. Picture / Martin Sykes

She has been named the 19th most powerful woman in the world by Forbes magazine and tipped as a long-odds candidate to take the place of United States Federal Reserve chairman Alan Greenspan when he steps aside next year.

She is quoted almost daily in the financial media and has won a reputation - and earned millions of dollars - for calling the sharemarkets right.

But Abby Joseph Cohen, partner in the Wall St investment banking powerhouse Goldman Sachs and its chief US portfolio strategist, cuts a figure that can only be described as understated - conservatively dressed, greying and diminutive in stature.

How does it feel to be an oracle? She is matter of fact.

"We take the work very seriously. We spend a lot of time sweating the details."

She is in New Zealand delivering a message to clients of the bank's local affiliate, Goldman Sachs JBWere, entirely in keeping with her reputation for optimism: the US economy is firmly in the middle.

It is in the middle of profit expansion and the economic cycle will continue for the foreseeable future; US growth will exceed that of most industrialised nations; the companies that make up the benchmark S&P 500 index are modestly undervalued, but better opportunities can be probably be found in Asia.

Top stock picks are in the IT and industrial sectors, which are investing, but are not getting the recognition they deserve.

Cohen urges investors to shy away from defensive stock like utilities.

She is also sanguine about the risks: the prospect of interest rate jumps, rising energy prices and the US current account and fiscal deficits, which have been blamed for the sharp fall of the US dollar against many currencies including the kiwi.

Cohen sees the US current account deficit as a sign of health, reflecting the fact that the US remains the single largest target for foreign direct investment.

The US is insulated from the high oil prices because it is a much more efficient user of fuel than other economies. It would take an "unlikely" super spike of a rise from the present US$68 to US$105 before the economy suffered the upheaval it suffered in the 1970s.

Rising interest rates could crimp consumer spending, but Cohen does not fear the collapse of the housing market as those most overpriced are luxury properties.

Does such optimism extend to her assuming the chair of the Fed? "I would love to be of service to my country," she replies.

She declines to comment on whether she has been approached but downplays her prospects claiming candidates such as Ben Bernake, chairman of the US president's council of economic advisers, are in the frame.