On Tuesday, investors were wondering if it was time to re-think global growth trades after China said it was raising retail gasoline and diesel prices by between 6 and 7 percent, the biggest increase in nearly three years.
"The move might sap demand growth. Higher prices tend to discourage wasteful consumption," says Gordon Kwan, head of energy research at Mirae Asset Management in a Reuters interview.
Adding to concerns, BHP Billiton, the world's biggest miner, said it’s seeing signs that iron ore demand from China is becoming flat. Chinese demand for iron ore has been the driving force behind years of expansion among the world's mining companies.
How should you position now?
“This isn’t new,” says Fast trader Pete Najarian. “We knew that 10 years of 24% growth in China wasn’t sustainable.”
In fact, Najarian thinks pullbacks in the materials names are buying opportunities. Right now he has Caterpillar and JoyGlobal on the radar. When Najarian sees a lot of call buying, or institutional interest in the space, he’ll pull the trigger.
Trader Mike Murphy isn’t waiting. “I purchased Joy Global today (Tuesday) around $75.30,” he says. “Drill down through today’s headlines and you’ll see Rio Tinto said it remains confident that China is due for nothing worse than a soft landing.
Trader Zach Karabell feels much the same. “I’m long Vale ,” he says. “Iron ore consumption will double by 2020. Even if demand is modest in China – there’s still India and Brazil.”
Trader Patty Edwards also likes China, however, she can’t get behind the materials names. “Instead, I’d look at Starbucks , Yum, Philip Morris – play the consumer – I expect the emerging middle class to continue emerging.”
Trader Josh Brown is on the other side. “I’d avoid things with heavy China exposure,” he says. “Instead, I’d look at stocks that are not related – such as the financials and health care.”
Brown thinks any stock with heavy China exposure can be bought later – for less.
Trader Steve Cortes is also bearish on China. “The data has deteriorated significantly,” he says. “Exports are weak, foreign investment is falling, I think Wall Street is finally waking up to the fact that a hard landing is no longer a matter of debate.”
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Trader disclosure: On March20, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long XLF; Josh Brown is long INTC; Josh Brown is long IBM; Pete Najarian is long AAPL; Pete Najarian is long BAC; Pete Najarian is long C; Pete Najarian is long JPM; Pete Najarian is long INTC; Pete Najarian is long YHOO; Pete Najarian is long COP; Pete Najarian is long PEP; Pete Najarian is long HPQ; Pete Najarian is long SCCO
For Patty Edwards
Patty Edwards’ company is long AAPL
Patty Edwards’ company is long GLD
Patty Edwards’ company is long INTC
Patty Edwards’ company is long ORCL
Patty Edwards’ company is long CSCO
Patty Edwards’ company is long SBUX
Patty Edwards’ company is long COP
Patty Edwards’ company is long RIG
Patty Edwards’ company is long VLO
Patty Edwards’ company is long AMZN
Patty Edwards’ company is long PEP
Patty Edwards’ company is long JOY
For Shaw Wu
Sterne, Agee & Leach makes a market in the shares of AAPL
For Dan Dicker
Dan Dicker is long APA
Dan Dicker is long VALE
Dan Dicker is long oil futures
CNBC.com with wires.