Former Goldman Sachs Partner Cohen: U.S. Stock Valuations Mask Risks, Insufficient Job Creation Is Concerning
Taylor Wilson
Former Goldman partner Abby Joseph Cohen warns that US equity valuations assume everything goes right, yet 2025 job creation is among the weakest non-recession years in decades — the July 2 payrolls report is the next test.
What does "priced for perfection" actually mean?
Cohen told Bloomberg TV on June 27: "Valuations are basically saying everything is perfect."
This means → stock prices have baked in the most optimistic scenario, leaving almost no cushion for disappointment.
In plain terms = the market has penciled in a perfect score; any single miss forces a markdown.
Why is job creation her biggest concern?
Cohen argued that GDP and industrial output alone are not enough — "we are not creating a sufficient number of jobs."
Overall 2025 employment is on track for one of the weakest non-recession years in decades. The May payrolls report showed stabilization in several sectors, but the improvement remains modest.
This reflects a core contradiction: equities keep climbing while the employment engine that drives consumer spending has not kept pace.
What other indicators is she watching?
Cohen highlighted corporate profitability and balance-sheet health, calling them "standard and fundamental" benchmarks.
This means → her framework bypasses sentiment and momentum, anchoring instead to earnings and leverage — two hard data points.
Is the market already flashing warning signs?
Global equities pulled back this week on valuation concerns, ending a two-month rally in risk assets.
Semiconductors took the hardest hit — several chip stocks with triple-digit year-to-date gains led the decline.
In plain terms = the hottest sector sold off first, a textbook signal that "priced for perfection" is starting to crack.
What is the next catalyst?
July 2 brings the June non-farm payrolls report — the nearest chance to test whether fundamentals can support current valuations.
This means → if job data stays soft, the "perfection" thesis faces a direct challenge and volatility could intensify.
Content is for reference only, not financial advice.