Today we complete the trio of power trends that I believe will reward investors the most this year.
To recap, we have already covered…
Our end power trend might be the most powerful of all; it covers already existing megatrends, even if they are just beginning.
This means that now is the best time to seize the opportunities that come with it…
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2023 Power Trend #3: Awakening of the Sleeping Dragon
My final Power Trend forecast features a resurgent Chinese economy – a sleeping dragon finally waking up.
Over the past three years, the country’s draconian “zero COVID” policies have not just put this dragon to sleep, but also thrown it into a dungeon and chained its wings to the wall.
The poor creature couldn’t do much more than draw lines on the ground to keep track of the passing days. But a new era seems to be dawning; China has scuttled its “zero-COVID” program and replaced it with a “let’s make money again” program.
This flip-flop could produce surprisingly strong economic growth in China. Already, many industries are booming in and around the country, and I expect this boom to produce a powerful “echo boom” in various industries and economies around the world…
The first eddies
Earlier this month, the World Bank released its semi-annual Global Economic Prospects Report, which raised its 2023 forecast for China’s GDP to a solid 4.3%.
That’s the report’s only positive growth forecast for a major economy this year. Unlike China, the World Bank expects the US and European economies to contract in 2023.
I don’t believe much in these projections, but I do agree that China’s economy will outperform most others this year, perhaps by a long shot.
As a result, I expect the Chinese stock market to outperform most others this year.
But instead of investing directly in Chinese stocks or ETFs, I think the best way to benefit from China’s economic recovery is to invest in specific companies that will benefit from this recovery. Many of the current positions in the Investment report portfolio matches this profile. You can learn how to get full access to my recommendations here.
China alone is fueling the double-digit growth trajectory of several renewable technology industries such as offshore wind, solar and renewables.
China is the largest additional buyer of oil, industrial metals and almost all other raw materials on the planet. Resource companies, like some of my recent Investment report recommendations, benefit directly from this purchasing activity.
You got the idea; you don’t have to “buy China” to benefit from a booming Chinese economy. The sleeping dragon is awakened.
The perfect hybrid game
One of the stocks I like that will benefit not only from our third and final 2023 power trend, but also from power trends #1 and #2, is Freeport-McMoRan Inc. (FCX).
Freeport is the largest copper producer based in the United States.
Over the past year, the company has dug up around 1.25 million tons of metal, or almost 6% of global copper production, which brings us back to China, the country that consumes more than half of the world’s copper…
In recent months, China’s monthly copper imports have hovered around the 500,000-ton level, about 20% above pre-COVID levels.
Despite these relatively robust imports, physical copper inventories in China have fallen to their lowest levels in 13 years.
Copper stocks are also declining in the Western world. As a result, combined copper stocks on major commodity exchanges in Shanghai, London and New York fell to their lowest level in 18 years.
If global copper demand were in fact as weak as some believe, inventories would not fall to multi-year lows.
Moreover, the price of copper does not show irrefutable signs of a collapse in demand… at least not yet. At $4.24 a pound, the price is 35% above its July 2022 low and more than double the COVID crisis lows of early 2020.
Granted, the price of copper could go down again, but it probably won’t stay at these levels for long; Supply and demand dynamics in the copper market continue to point to higher prices.
Copper-intensive green industries like electric vehicles, solar power and energy storage have not paused. Despite sluggish economic conditions, global demand for green technologies and products continues to grow.
The trend is undeniable…and it pretty clearly points to booming demand for battery metals like copper.
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