DCLA managing partner Sarat Sethi said Thursday that he thinks 2023 could be a “normal year” after the black swan events that have led to massive volatility in recent years.
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Speaking to CNBC, the analyst contended that, although corporate earnings are coming down amid the Federal Reserve’s hawkish policy, there are positive factors that should help well-positioned companies succeed.
“Balance sheets are really strong in the corporate world. They have refinanced at low rates. The consumer, even if they stop spending at the rate they’re doing, they still have a strong balance sheet. Housing values are strong compared to where they were even a decade ago,” Sethi said.
In terms of investing focus, Sethi said he is bullish about the healthcare, consumer staples and commodity sectors.
On specific stocks, the analyst said he favors names with earnings resilience and highlighted examples like Nestle (OTCPK:NSRGY), Haleon (HLN) and Diageo (DEO).
Looking at the intraday action for ETFs tied to the sectors that Sethi highlighted, iShares U.S. Healthcare ETF (IYH) -0.30%, Consumer Staples Select Sector SPDR ETF (XLP) -1.12%, and iShares Commodities Select Strategy ETF (COMT) -0.15%.
Turning to the overall market, the major market indices were in red during Thursday’s intraday session, Nasdaq Composite (COMP.IND) -1.02% S&P 500 (SP500) (NYSEARCA:SPY) -1.02% and Dow (DJI) -1.17%.
For more on broader market action, see why Seeking Alpha contributor Ricardo Fernandez says, “As the market incorporates potentially lower earnings for 2023, the SPY could become more expensive or correct further.”