Jason Brady, president and CEO of Thornburg Investment Management, said Tuesday that the market has gotten “ahead of itself” in the early weeks of 2023.
Speaking to CNBC, Brady argued that companies spent 2022 attempting to get their operations back to normal following the COVID disruptions. Now, the focus has shifted to the ability of companies to execute in the current economic environment.
“2022 was about normalization,” he said, while “2023 is all about the earnings themselves.”
Citing the uncertain earnings picture, he contended that banks and the consumer sector is doing better than industrial names. Spotlighting mixed earnings from GE (GE) and 3M (MMM), released before Tuesday’s open, the Thornburg chief contended that companies are facing new challenges headed into 2023.
“Strong dollar challenge to a lot of earnings over 2022 has reversed quite a lot,” he said. “You will see less of that excuse and more of the excuse not only of weather, travelers, but more of the excuse of a slowing economy, a tough macroeconomic environment.”
Elsewhere, Brady is bullish on opportunities outside the United States. He predicted that “dollars can be less of headwind globally,” while the reopening of China will have favorable impact.
Looking at the recent earnings performance, 3M (MMM) slipped more than 6% in intraday trading after mixed earnings results, a weak outlook and job cuts amid macroeconomic pressures. General Electric (GE) is moving up slightly in Tuesday’s intraday session after mixed Q4 results and a positive outlook.
Meanwhile, looking at the broader market, in Tuesday’s intraday action, the SPY (NYSEARCA:SPY) and S&P 500 (SP500) fell -0.2%, Nasdaq Composite (COMP.IND) -0.2% and Dow Jones (DJI) is down fractionally.
For more on China’s growth, see why Seeking Alpha contributor Frank Holmes says, “Shares of Chinese companies are forecast to beat their emerging market peers in 2023.”