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End Of An Era: No More Easy Money?

From our very own Federal Reserve to China’s Central Bank, chatter of rate increases intensified this week. Now market pros are bracing for the end of easy money around the world.

Earlier in the week, Federal Reserve Chairman Ben Bernanke set the stage for higher interest rates here in the US; explaining in written testimony that in “due course” the Fed will “begin to tighten monetary conditions to prevent the development of inflationary pressures.”

Although Bernanke did not say when he will put his plan into action, Beijing clearly believes there’s no time to waste.

On Friday the People's Bank of China boosted reserve requirements for the second time in as many months -- a move that caught the Street completely off guard.

The China policy move immediately boosted the U.S. dollar and knocked commodity prices and resource stocks; in turn both the Dow and S&P went tumbling.

What must you know before you trade Tuesday?

Strategy session with the Fast Money traders

I’d start to own stocks that benefit from a rising rate environment, counsels veteran trader Gary Kaminsky. In order for Bernanke to have credibility on the global stage he has to err on the side of higher rates. Investors should adjust their portfolio to reflect that.

I'm focussed on the market at hand and there was every reason for it to sell-off Friday before the long week-end, but the market came back. There's a lot of noise out there but it seems to me that fundamentals are improving, says Karen Finerman.

When I look globally at central banks moving to raise interest rates, it's a signal that quantitative easing is working, adds Joe Terranova. And that's bullish.

I agree that the market held up rather well on Friday, adds Guy Adami. Given the news out of China I thought stocks would be down more. But it's not just China in a vacuum or Greece in a vacuum or the 'good news bad price action.' It's a cocktail and that cocktail is telling you the market wants to go lower. If you’re looking for a trade, stick with things that are working, Adami adds. For me that’s Raymond James.

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PROP DESK: WATCH EURO FOR MARKET CLUES

Weakness in Europe is another factor dragging down stocks with investors worried about any ripple effect stemming from an EU bailout of Greece.

Brian Kelly of Kanundrum has been watching the euro closely for clues. What does the EU currency reveal?

I’m watching the 136 level on the euro closely, say Kelly. It was support and now its resistance. What happens from here will be very telling

I think the play is long Bank of Greece, he adds, because I expect the EU will stand behind Greek bonds.

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SECTOR TRADE: COMMODITIES

Perhaps the one group that lies at the epicenter of the global economic uncertainty is commodities. Nominated in dollars, they become more expensive to buyers using other currencies when the dollar gets stronger.

What’s the trade?

The one trade I’d stay with is oil , counsels Joe Terranova. Of all the commodities I wouldn’t give that one up.

In the space, I’m watching Freeport McMoRan, says Guy Adami. If you’re a bull I’d wait for FCX to close above $75.50 and then establish a long position. Or if you’re a bear I’d go short with a stop above $75.50.

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INVESTING IN HIGHER RATE ENVIRONMENT

If an interest rate hike is on the horizon, how should you be putting money to work? Find out from Neuberger Berman's Charles Kantor. Watch the video now!




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Trader disclosure: On February 12, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (BTU), (NUE); Kaminsky Owns (LULU); Finerman's Firm Is Short (IJR), (MDY), (SPY), (MDY), (USO), (UNG); Finerman Owns (AAPL); Finerman's Firm And Finerman Own (CVS); Finerman's Firm And Finerman Own (GOOG); Finerman's Firm Owns (MSFT); Finerman's Firm And Finerman Own (RIG); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm And Finerman Own (JPM); Finerman's Firm Owns (STJ); Finerman's Firm Owns (BSX); Terranova Owns (JPM), (RIMM), (IBM), (QCOM), (PALM), (GOOG), (EMC), (AAPL), (DELL), (MSFT); Terranova Is Long Oil Futures (Dec. 2010 Contracts, Dec. 2011 Contracts)

For Joe Terranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (SKT)

For Charles Kantor
Neuberger Berman Owns More Than 1% Of (EEQ)
Neuberger Berman Owns More Than 1% Of (VRSK)
Kantor's Clients And Kantor Own (V)
Kantor's Clients And Kantor Own (ENB)
Kantor's Clients Own (VRSK)

For Brian Kelly
Kelly Owns (FXE) Puts
Kanundrum Capital Is Short EURUSD
Kanundrum Capital Owns (JPM), (C), (VMW)
Kanundrum Capital Owns (NBG)
Kanundrum Capital Owns (EWA)

For Zachary Karabell
Karabell Owns (FCX)
Karabell Owns (FLR)
Karabell Owns (VALE)
Karabell Owns (CSCO)
Karabell Owns (SINA)
Karabell Owns (EWA)

For Mike Khouw
Cantor Fitzgerald & Co. Is A Market Maker In (DELL)
Cantor Fitzgerald & Co. Is A Market Maker In (AAPL)
Cantor Fitzgerald & Co. Is A Market Maker In (GOOG)
Cantor Fitzgerald & Co. Is A Market Maker In (RIMM)
Cantor Fitzgerald & Co. Is A Market Maker In (INTC)
Cantor Fitzgerald & Co. Is A Market Maker In (IBM)
Cantor Fitzgerald & Co. Is A Market Maker In (QQQQ)



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