If you’re like many long-term investors, you probably have a piece of your portfolio in China.
And the latest inflation data, may have you a little worried - at 3.6% it came in above expectations, driven by higher food prices.
The conventional wisdom is that, unlike the West where a little inflation is viewed positively, in China even the smallest uptick is met with skepticism because the government worries that inflation can lead to social unrest.
(According to that line of thinking, for millions of Chinese poor the cost of food makes up a large chunk of household spending. Inflation, of course, leads to higher food costs.)
However, top trader Zach Karabell of RiverTwice tells us, that kind of thinking is old school.
He says China now wants some inflation, just like the West. “With inflation comes wage growth, increased corporate profits and an ability to manage outstanding debt,” Karabell explains.
And he says, the way to play the theme is with US listed consumer names that benefit from modest inflation in China. In other words, companies that benefit from wage growth and increased corporate profits.
Karabell says “that’s Ralph Lauren, Coach, Tiffany , LVMH and Yum!”
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Trader disclosure: On Apr 9, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long HPQ; Karen Finerman is long SPY; Karen Finerman is long IWM; Karen Finerman is long MDX; Karen Finerman is short SPY; Joe Terranova is long VRTS; Joe Terranova is long IBM; Joe Terranova is long MED; Joe Terranova is long GS; Joe Terranova is long EMC; Joe Terranova is long MSFT; Joe Terranova is long HFC; Joe Terranova is long JOY; Joe Terranova is long OXY; Joe Terranova is long HPQ; Joe Terranova is long LQD; Joe Terranova is long COG; Steve Grasso is long ASTM; Steve Grasso is long AVAV; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long MHY; Steve Grasso is long NUAN; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long PRST; Steve Grasso is long S; Steve Grasso is long XLU; Steve Grasso is long ZAZA; Brian Kelly is long USG; Brian Kelly is long IWM; Brian Kelly is long KRE; Brian Kelly is long US DOLLAR; Brian Kelly is short HYG; Brian Kelly is short YEN; Brian Kelly is short EUROSTOXX; Scott Nations is long SPY; Scott Nations is long C; Scott Nations is long BAC
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