Fed unpredictability meets rising inflation — hide out in cheap Chinese tech stocks
Rising oil prices from the Iran conflict are reigniting inflation fears right as the new Fed chair decides to stop warning the market about interest rate changes. However, Chinese tech stocks like Alibaba are rallying almost 10% because they offer massive growth at a huge discount compared to highly-valued US tech companies that are vulnerable to unpredictable American interest rates.
Idea
Bloomberg reports that the Iran crisis is pushing oil prices up, which strategist Ed Yardeni warns will reignite inflation and force the Federal Reserve to act. MarketWatch separately notes that new Fed Chair Kevin Warsh plans to surprise the markets with policy changes, guaranteeing extreme volatility for US-based assets. When you combine this unpredictable domestic rate environment with the fact that Chinese AI stocks like Alibaba are already surging nearly 10% on their own fundamental momentum, Chinese equities become a highly attractive safe haven from US interest rate whiplash. Investors are hunting for growth outside the radius of the Fed's next moves.
What happened since
| Symbol | Dir | T+1 | T+5 | T+20 |
|---|---|---|---|---|
| KWEB | LONG | -0.04% ✗ | -0.68% ✗ | — |
| BABA | LONG | +2.52% ✓ | +3.09% ✓ | — |
Price change since publication · updated Jul 15
Key details
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News sources
- Alibaba Jumps Nearly 10% As China AI Stocks Rally — Investor's Business Daily
- Yardeni Says Inflation, Fed Back in Play as Iran Crisis Returns — Bloomberg
- Kevin Warsh plans to stop scripting the Fed’s next moves. It could trigger a wild ride for traders. — MarketWatch