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Halftime: 2 Key Bernanke Comments for Traders

Published: Tuesday, 1 Mar 2011 | 1:40 PM ET

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By: Lee Brodie
Producer

Halftime Report

On Tuesday, both the Dow [.DJIA Loading... () ] and S&P [.SPX Loading... () ] moved lower as investors looked to take risk off the table spooked by comments from Ben Bernanke as well as spreading unrest in the Mideast.

Demonstrations overseas sent oil prices [CLCV1 Loading... () ] surging with varying degrees of violence in Libya, Yemen, Bahrain, Oman, Iran and Iraq. Investors now worry that oil workers in these nations may strike.

Meanwhile, in testimony before Congress, Ben Bernanke showed little concern about the move in oil, and again called the risk of inflation ‘modest.'

Although all of Bernanke's comments are meaningful, for traders who game day to day moves in the market CNBC's Steve Liesman says there are two key take away points.

- Bernanke appears likely to continue with QE2 through June as planned but there’s no plans to do more.
- Bernanke doesn’t seem to be flinching on inflation which he considers modest.

In other words the recent spike in oil and other commodities will not lead to a broad policy response from the Fed, at least for now.

How should you position now? What’s the trade?

Instant Insights with the Fast Money traders

Fast trader Joe Terranova thinks developments suggest inflation is squarely on the table. In fact he sees the move higher in oil not only as a consequence of geo-political unrest but also as a flight to quality amid expectations of inflation in the same vein as gold [GCCV1 Loading... () ] and silver [SICV1 Loading... () ].

As a result, Terranova thinks it’s time to scale back on risk-on trades; “Stay long equities” he says but scale down on risk. Maybe take a look at health care [XLV Loading... () ] or consumer staples such as Pepsi [PEP Loading... () ].”

Trader Patty Edwards agrees. She’s particularly concerned about how inflation will impact the consumer. If you’re looking for long ideas, she also suggests looking at health care as well as food and beverage names . “These are things that people can not do without. People should keep spending there.” She also suggests long Abercrombie [ANF Loading... () ] because it’s “a niche business that can pull dollars.”

Fast trader Jon Najarian is keyed into the energy sector, but not only as a beneficiary of Mideast unrest. He also likes it because the US government issued its first deepwater drilling permit since the BP catastrophe. He suggests playing it long the drillers and suppliers to oil exploration companies with ATPG [ATPG Loading... () ] one of several names on his radar.

Ever the contrarian, Steve Cortes is not worried about wide-spread inflation in the economy. He thinks unemployment is still too high for broad price increases to sustain.

To illustrate his thesis he points to action in the softs. “Prices have come down substantially over the last 3 weeks,” he says. He takes that as a sign of demand destruction. “I’m short wheat [WCV1 Loading... () ] but if you want to play it long, look at grocery stores,” he counsels, ”because margins should expand (as input costs go down).”

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Trader disclosure: On March 1, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova owns (VRTS); Terranova owns (C); Terranova owns (UPL); Terranova owns (ABT); Terranova owns (MS); Terranova owns (PBR); Terranova owns (BAX); Terranova owns (TEVA); Terranova owns (CVI); Terranova owns (RSX); Terranova owns (SU); Terranova owns (CNQ); Cortes is short (LVS); Cortes is short (DBA) vs. S&P long; Cortes is short (C); Cortes owns (PM); Cortes owns (SDY); Cortes owns (EXC); Cortes is long Crude; Cortes is short Wheat; Cortes is short (UNP); Edwards owns (SPY); Jon Najarian owns (ATPG), is short (ATPG) calls; Jon Najarian owns (CBOE), is short (CBOE) calls; Jon Najarian owns (CEG), is short (CEG) calls; Jon Najarian owns (DNDN), is short (DNDN) calls; Jon Najarian owns (FRO), is short (FRO) calls; Jon Najarian owns (CME), is short (CME) calls; Jon Najarian owns (NYX), is short (NYX) calls; Jon Najarian owns (NBR), is short (NBR) calls; Jon Najarian owns (PAAS), is short (PAAS) calls; Jon Najarian owns (M), is short (M) calls; Jon Najarian owns (YOKU), is short (YOKU) calls; Jon Najarian owns (GLD), is short (GLD) calls; Jon Najarian owns (SLV), is short (SLV) calls; Jon Najarian owns (V), is short (V) calls; Jon Najarian owns (FCX) PUTS

Comcast Is The Parent Company Of CNBC
Comcast Is The Parent Company Of NBCUniversal
GE Owns 49% Of NBCUniversal
GE Owns 49% Of CNBC

For Patty Edwards
Edwards owns (SPY) for clients
Edwards owns (XLB) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (BA) for clients
Edwards owns (AMZN) for clients
Edwards owns (TTM) for clients
Edwards owns (V) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (VZ) for clients
Edwards owns (MSFT) for clients
Edwards owns (C) for clients
Edwards owns (GE) for clients
Edwards owns (TGT) for clients
Edwards owns (CME) for clients
Edwards owns (PM) for clients
Edwards owns (AZO) for clients
Edwards owns (FXI) for clients

For Joe Terranova
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (NCRI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (DOM)

For Steve East
East has no disclosures

CNBC.com with wires.

Topics:Stock Market | Stock Picks

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