No Holds Barred
Strategist Jason Trennert concurs wholeheartedly. “(The) no holds barred approach might lead to a quicker rebound in the markets, if not the economy, than we might have originally thought." And he tells Fast Money that as a result he recommends inflation plays. (More dollars driving prices higher).
In support of his thesis, Trennert points to recent moves in commodities. The biggest performers in last 5 days have been commodities related to the reflation trade. “Aluminum, gold , global infrastructure /engineering/construction -- things that should be the most sensitive to inflationary expectations -- were up the most.”
How Should You Trade?
If you have a three-year-plus time horizon, playing inflation is a good trade...play the sectors that worked earlier this year: Basic materials , energy ,infrastructure, heavy-late cyclicals...and sell 10-year Treasuries.
On a shorter time-horizon Trennert suggests caution. “Be careful about being too early. Marginal companies are not going to be able to get the credit they need and right after Christmas there will be a big market share game where the strong get stronger and the weak get weaker.”
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Trader disclosure: On Dec. 1st, 2008, 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), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (WMT), (MSFT), (UUP), (DIS); Macke Is Short (YHOO), (TM); Finerman's Firm Owns (MSFT); Finerman's Firm Is Short (IYR), (IJR), (MDY),(SPY), (IWM), (COF), (BBT), (USO), (VNO), (EQR); Finerman's Firm Owns (DSX) And Is Short (GNK); Seymour Owns (AAPL), (AA), (BAC), (F), (MER); Seygem Asset Management Is Short (EEM); Seygem Asset Management Owns (EEV)
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