If you’re trying to trade this market, it might not matter if the bailout passes or not. “Liquidity is going to be injected into the market one way or another and that’s going to result in monetary expansion,” says Joe Terranova on CNBC’s “Closing Bell.”
In other words, he feels we're moving into a environment of inflation but the Fed won't be able to raise rates. “As a result the dollar will be worth less, the dollar will not continue it’s bullish advance.”
If Terranova’s thesis is right, that should prove beneficial for commodities. But that’s not the only reason.
"China has lowered reserve requirements and lowered interest rates and since they’ve done that the price of oil has gone up $10,” he says.
Considering these two market forces Terranova recommends adding to your position in commodities. “I would look at copper, crude oil, coal and even natural gas,” he says. But not gold. “Gold is a safe haven from inflation and we’re not really worried about that. This is about growth.”
Karen Finerman doesnt buy it. There's pressure around the world to lower interest rates and that would counter-balance Joe's trade, she says on Fast Money. Also, the redemption of commodities funds makes me think oil will likely go lower not higher in the near-term.
We'll be watching.
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