Three Winners from China's Collapse

by Andrew Zatlin August 25, 2023 3:00 pm ET

At the moment, I'm crammed inside a hotel room...

But I had to send you this video.

You see, earlier this week, I revealed China's disastrous situation, including the potential "losers."

Now I want to tell you who's in position to come out on top.

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

Three Winners from China's Collapse

A few days ago, I revealed to you that China is about to collapse.

The country's economy is a wobbly stool. And all three legs propping it up are close to crumbling.

I also warned you about the "losers" amidst this pending collapse. (Did you miss my latest video? Be sure to check it out here.)

Today, I want to shift gears and talk about who's going to win.

A Trio of Winners

I'm primarily focused on three specific opportunities. The first is the U.S. bond market.

You see, China depends on exports. But exports have fallen 14% year over year already, and there's more turmoil ahead.

How can the country put a stop to this bleeding? One way is to get its goods out there on the market – in other words, increase exports...

And to do that, China will need to cheapen the prices of its goods.

The quickest way to lower these prices is simply to devalue the renminbi, the Chinese currency. To date, the renminbi has fallen 7% against the U.S. dollar. But here's what happens next...

To further devalue the renminbi, China will need to start buying another currency – in this case, the U.S. dollar. In the end, that will create much higher demand for U.S. Treasurys and create a robust bond market.

Speaking of bonds, keep this in mind: As demand for bonds goes up, bond yields start to go down. How come?

Bonds prices and yields feature an inverse relationship. If bond prices are going up due to demand, there isn't as great a need to pay lofty interest rates to encourage people to buy them. That's why when prices go up, yields go down.

But here's the thing: If yields go down, that translates to softening inflation! And who's set to benefit from this? That leads us to our other opportunities...

Good for Companies... And Consumers

Two beneficiaries of softening inflation are U.S. consumers and U.S. companies. Let's start with consumers...

Consumers will benefit from having a bit more money in their pockets. And you can bet that they'll be ready to spend it. The question is, where?

You might think retail is set to profit from this extra spending. And while that may be the case, be careful before investing here. Not all retailers stand to benefit from a little extra spending. (In fact, Moneyball Pro subscribers learned about a specific retail business I think falls under the "loser" category but has the chance to triple the money of those who bet against it.)

Instead, look to sectors like travel and leisure. After all, if the average consumer has an extra $100 in his pocket, he's likely to treat himself to a nice dinner, a few drinks, and maybe a trip to the casino.

As for companies...

Huge Savings Incoming

Manufacturers depend so much on Chinese goods being shipped in. And if China has to lower the cost of these goods to increase export traffic, that'll translate to huge savings for U.S. companies.

A key decision for these companies will be how they use these savings to their advantage. Among other possibilities, they could either keep the savings as extra profits to present as an earnings surprise, lower prices on the things they sell, or keep prices the same but pass the savings along in the form of rebates – another savvy way to encourage more foot traffic.

Bottom line: Companies that rely on Chinese goods to build the products they make are sitting pretty and definitely make my list of "winners."

In fact, I'll reveal a winner I believe has the potential for almost 30% gains in the shortterm...

But only to my Moneyball Pro subscribers. So don't miss out.

We're in it to win it. Zatlin out.