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Trade Micro, Think Macro

With inflation fears gripping the market what’s the play ahead of new economic numbers due out this week?

Investors are keeping a watchful eye on two economic indicators out this week; PPI on Tuesday and CPI on Wednesday. If these numbers suggest growing inflation despite lingering weakness in the economy the Fed could find itself between a rock and a hard place

“The Fed cannot and in my view will not lower rates further to fight the credit crisis. We’re going to have to work these issues out over time, and the Fed is going to have to get back to its role in preserving price stability,” says MKM Partners chief economist Mike Darda on Fast Money.

Darda also tells us the balance of 2008 looks very weak. ”We’re in for some payback in gas prices. They haven’t been priced into the data yet because of some seasonal adjustments. We’re going to see some ugly numbers out this week,” and perhaps for quite some time to come.

If you’re looking for a trade, Darda says put-on something that works in an environment of slow growth and elevated inflation.

In that case, I’d stay with the ag names, infrastructure or any momentum play that’s working, counsels Joe Terranova.

If you don’t go with those positions then go with cash or the fetal position, exclaims Jeff Macke because in that environment you’re going to get stomped!


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Trader disclosure: On July 14, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (US), (WMT), (MSFT), (INTC), (USO); Finerman Owns (CSCO), (GS); Finerman's Firm Owns (MSFT), (SUN), (TSO), (VLO), (PDE); Finerman's Firm Is Long SPX Index Puts; Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY); Seymour Owns (TSL), (AAPL), (CSCO), (INTC), (MER), (MSFT)

Terranova Owns (VLO), (SA), (YHOO), (FCX), (IYT), (GOOG), (CME), (INTC), (BNI), (LUV), (XLF), (SU); Terranova Is Short 30 Year US Bond Futures (September); Terranova Owns Dollar Index Futures (September)

Terranova is chief alternatives strategist at Phoenix Investment Partners;Phoenix Investment Partners Owns (IGE),(DBC), (DBV), (RWX), (AAPL), (AMD), (ATI), (AW), (BA), (BAC), (BNI), (BSC), (BUD), (C), (CHK), (COH), (COP), (CSCO), (CME), (CVX), (DAL), (DNA), (DVN), (FCX), (FNM), (FRE), (GOOG), (GS), (HAL), (HOT), (IBM), (INTC),(ICE), (JNJ), (JNPR), (JPM), (LEH), (LUV), (M), (MEE), (MON), (MOS), (MS), (MSFT), (NCC), (NUE), (NYX), (NDAQ), (OC), (POT), (RBN), (RSG), (SU), (SUN), (SWKS), (TIE), (TSO), (USB), (VLO), (WB), (X), (XOM), (YHOO)

Phoenix Investment Partners Owns (AA) And Is Short (AA); Phoenix Investment Partners Owns (BHI) And Is Short (BHI); Phoenix Investment Partners Owns (DE) And Is Short (DE); Phoenix Investment Partners Owns Shares Of InBev NV; Phoenix Investment Partners Owns (MER) And Is Short (MER); Phoenix Investment Partners Owns (SLB) And Is Short (SLB); Phoenix Investment Partners Is Short (SONC); Phoenix Investment Partners Owns (WFC) And Is Short (WFC); Phoenix Investment Partners Owns Nike-Cl B Shares; Phoenix Investment Partners Owns (KMB)