As we enter 2023, Wall Street appears to be shifting its focus from inflation to growth. Investors apparently believe the Federal Reserve has brought inflation under control after dramatically raising interest rates throughout the past year. Today, those higher rates are fueling fears of a recession in the United States, but the deepening economic slowdown in the United States comes as China decided to abandon its zero-Covid policy and reopen its economy after 3 years. While the United States has been forced to rein in its economy due to high inflation for several decades, China – the world’s second-largest economy – has been weighed down by strict shutdowns since the start of the Covid-19 pandemic. And with Beijing finally rolling back restrictions, China’s economy has nowhere to go, although a rise in Covid cases is expected to temporarily delay reopening. As a result, the Club’s China-exposed shares are on the rise, with the potential to accelerate their share price, as well as the company’s overall growth, in the months ahead. We’ve long predicted that China’s reopening will be a “when, not if” scenario, and we’ve gradually strengthened our China-focused positions in recent months, including Estee Lauder (EL), Starbucks (SBUX) and Wynn Resorts. (WYNN) — on the premise that trying to time an exact pivot on China’s reopening is a dumb errand. At the Club, we believe in gaining new exposure slowly over time, to improve our cost base and outpace improving market sentiment. Patience is paramount. And our investment thesis is starting to pay off, with Wall Street expressing bullish optimism on our top 3 China-exposed holdings. Wells Fargo on Monday upgraded Wynn to overweight, or buy, at equal weight, while raising its price target to $101 a share from $74. Wells Fargo analysts cited the reopening of China’s Macau casino center – where Wynn operates two properties – calling it “the best growth opportunity in gaming”. On Tuesday, analysts at Piper Sandler reiterated their overweight rating on Estee Lauder, rising as the bank’s price target to $290 per share from $255. Analysts believe the shares should be bolstered by the cosmetics giant’s $2.8 billion deal to acquire Tom Ford. with the reopening of China. Finally, Bank of America analysts on Tuesday reiterated their buy rating on Starbucks shares, raising their price target to $125 per share from $109, saying the coffeemaker “appears poised to benefit from the China’s long-awaited economic reopening”. Still, analysts warned, “the timing of this tailwind is still uncertain as the economy grapples with policy fallout.” [like] weak economic growth [and] widespread COVID outbreaks. Conclusion: If you wait for the economy to rebound and the current Covid surge to abate, you will almost certainly have missed the opportunity to pivot to China. (Jim Cramer’s Charitable Trust is long EL, WYNN, SBUX See here for a full list of stocks.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive a trade alert before Jim makes a trade . Jim waits 45 minutes after sending a trade alert before buying or selling a stock. in the portfolio of his charitable trust. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
People use their smartphones to take photos outside the Wynn Macau casino resort, operated by Wynn Resorts Ltd., in Macau, China on Tuesday, Jan. 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 apparently believe the Federal Reserve has brought inflation under control after raise interest rates throughout last year. Now those higher rates are fueling fears of a cut in the US
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