Here’s what Wall Street is saying about economic risks

Here's what Wall Street is saying about economic risks
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Increased anger over COVID-19 lockdown in China and rare protests against the government less weight Broad stock market rally.

Global markets settled somewhat on Tuesday after Monday’s 500-plus-point drubbing in the Dow Jones Industrial Average as protests spread in China. Not helping market sentiment are signs of major U.S. companies reeling from a controversial health-turned-political situation.

Tuesday, Disney (Dis) Shanghai closed its gates just four days after reopening. The agency said in a statement that the closures were to comply with “pandemic prevention and control requirements”.

Monday, Bloomberg Reportd that apple (AAPL) can see one A shortfall of six million units on iPhones this year amid production pressure at China Foxconn plants.

“With the zero-Covid policy scratching its head in China and protests across the country, Apple is essentially caught in the cross-fire heading into the all-important Christmas period,” said a Wedbush technology analyst. Dan Ives.

Here’s what Wall Street’s top strategists are saying about the controversial situation.

Hui Shan of Goldman Sachs

“Local governments struggle to strike a balance between quickly containing the spread of the virus and complying with the ’20 measures’ which mandate a more targeted approach. The central government will soon have to choose between more lockdowns and more Covid outbreaks. The current situation further presses “our low – Consensus Q4 GDP forecast downside risk. Our 30% subjective probability of reopening before Q2 next year has some potential for forced and disorderly exits.”

Jiangrong Yu of City

“The covid situation in China could be a cause for concern again. In our view, the direction of reopening is very clear, and we do not think that the government will double down on epidemic control measures. Whether China will go for a forced reopening will depend on the covid situation, but in our view, the government There is still plenty of room to maneuver. We maintain our base case that momentum will pick up after the reopening [National People’s Congress on March 5] Next year, and look for a high risk of reopening quickly.”

BEIJING, CHINA - NOVEMBER 29: Epidemic control workers wear PPE to prevent the spread of COVID-19 as they rest on a park bench in an area where communities are under lockdown on November 29, 2022 in Beijing, China.  In recent days, China has been recording its highest number of daily COVID-19 cases since the pandemic began, as authorities stick to their strict zero-tolerance approach to containing the virus, including lockdowns, mandatory testing, mask mandates and quarantines.  Outbreak control.  In an effort to contain the rising cases, the government last week closed most shops and restaurants for inside dining, switched schools to online studies and asked people to work from home, among other measures.  (Photo by Kevin Freire/Getty Images)

Epidemic control workers wear PPE to prevent the spread of COVID-19 as they rest on a park bench in an area where communities are under lockdown on Nov. 29, 2022 in Beijing, China. (Photo by Kevin Freire/Getty Images)

Michael Hirson of 22V Research

“The potential for a chaotic pivot scenario is increasing this winter as the population as well as local governments clearly reach exhaustion in maintaining zero-Covid policies. If protests continue to grow, or if the population becomes less compliant with the Covid restrictions, local officials may conclude that maintaining strict restrictions is politically untenable. The risk is greater than the risk of spreading the outbreak. Leadership may be forced to accept this outcome, at least in some areas, in the face of local exhaustion and high transmission of omicrons. A chaotic pivot could be extremely disruptive to the economy — possibly worse than zero-covid, at least in the near term.”

Hirson added that a chaotic pivot would be “Chinese authorities essentially abandoning — by choice or by force — hopes of stemming the surge in cases through testing and lockdowns. But that doesn’t mean China is ‘flat-lying’: local governments will need to overwhelm hospital systems.” Maintain strict restrictions on areas at risk of visitation. Moreover, a chaotic pivot situation would also hurt the economy through voluntary restrictions on the behavior of households worried about transmission. Simply put, a chaotic pivot could shorten the potential timeframe. The overall economic and social risk is high if China eventually reopens. will.”

Brian Sozzi A big editor and Anchored in Yahoo Finance. Follow Soji on Twitter @BrianSozzi And then LinkedIn.

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