As we enter 2023, Wall Street appears to be shifting its focus from inflation to growth. Investors seem to believe that the Federal Reserve is keeping inflation under control after last year’s sharp increase in interest rates. Now these higher rates are fueling fears of a US recession. But the deepening slowdown in US economic growth comes just as China has abandoned its Covid zero policy and reopened its economy 3 years later. While the US has been forced to rein in its economy by decades of high inflation, China – the world’s second largest economy – has been saddled with strict lockdowns since the start of the Covid-19 pandemic. And with Beijing finally lifting restrictions, the Chinese economy has nowhere to go but grow, even as a surge in Covid cases is expected to temporarily delay reopening. As a result, Club’s China-linked shares are on the rise and their share prices, along with the company’s overall growth, could accelerate in the coming months. We have long predicted that the opening of China will be a “when, not if” scenario, and in recent months have gradually increased our China-focused positions – key among them are Estee Lauder (EL), Starbucks (SBUX) and Wynn Resorts (WYNN). ) — on the grounds that trying to pinpoint the timing of the reversal at the China open is a fool’s errand. At the Club, we believe that new connections should be made gradually, over time, to improve our cost base and stay ahead of improving market sentiment. Patience is paramount. And our investment thesis is starting to pay off as Wall Street is bullish on our three key China risk assets. Wells Fargo on Monday upgraded Wynn to overweight or buy from equal weight, while raising its price target to $101 a share from $74. Analysts at Wells Fargo cited the reopening of the China Casino Center in Macau, where Wynn operates two facilities, as “the best growth opportunity in the gaming industry.” On Tuesday, analysts at Piper Sandler reaffirmed their overvalued rating of Estee Lauder, while raising the bank’s target price to $290 per share from $255. with the discovery of China. Finally, Bank of America analysts reiterated their Buy recommendation on Starbucks stock on Tuesday, raising its price target to $125 per share from $109, saying the coffeemaker “looks poised to capitalize on China’s long-awaited economic recovery.” However, analysts warn, “the timing of this tailwind is still unknown as the economy grapples with policy fallout.” [like] weak economic growth [and] widespread COVID outbreaks. Bottom line: if you are waiting for the economic recovery and the current Covid surge to ease, you will almost certainly miss the chance to turn to China. (Jim Cramer Charitable Foundation long time EL, WYNN, SBUX See full list of stocks here.) As a CNBC Investing Club subscriber with Jim Cramer, you will receive a trade notice before Jim completes the trade. Jim waits 45 minutes after sending a trade notice before buying or selling shares in his charitable foundation’s portfolio. If Jim was talking about stocks on CNBC TV, he waits 72 hours after a trade alert is issued before making a trade. The above information of the investment club is subject to our conditions and confidentiality policy, along with our rejection of responsibility, no fiducial duties or positions exist and does not arise in connection with the receipt of any information provided by the investment club. A specific result or profit is not guaranteed.
People use their smartphones to take photos outside the Wynn Macau Casino Resort, operated by Wynn Resorts Ltd., in Macau, China, Tuesday, January 30, 2018.
Billy HC Kwok | Bloomberg | Getty Images
As we enter 2023, Wall Street appears to be shifting its focus from inflation to growth.
Investors seem to believe that the Federal Reserve is keeping inflation under control after last year’s sharp increase in interest rates. Now these higher rates are fueling recession fears in the US.
