The New Normal, Pt. 2


With housing sales picking up, the labor market stabilizing and Wall Street paying back bailout bundles, you’d think our future looked bright. Wrong!

The days ahead are full of as much misery and pain as the pages of any Charles Dickens’ novel. Well, at least according to Steve Cortes or Veracruz.

He tells Fast Money that a likely consequence of the financial crisis will be lower growth, lower employment and lower wages, something he calls the new normal. And for consumers the new normal is a trap of higher food and energy costs and higher interest rates.

Can you profit from your own pain?

Buy energy on dips, counsels Cortes. The government is issuing a massive amount of debt to finance the stimulus and that should trigger serious inflation. In turn, inflation should send the prices of commodities such as gas and oil soaring. You can play it be getting long the XLE .

And bet against retail stocks, counsels Cortes. If my predictions play out, consumers will get squeezed by higher energy costs on one end and lower pay on the other. You can play it by shorting the XLY .

Read More:
The New Normal, Pt. 1

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Trader disclosure: On June 10th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Is Long (USO), (AGU), (SKF); Najarian Is Long (AAPL) Call Spread; Najarian is Long (FCX) Calls And Puts; Najarian Is Long (JPM), Short (JPM) Calls; Najarian Is Long (PALM) Call Spread; Finerman Is Long (NOK); Finerman Is Short (USO); Terranova Is Long (RIMM) And Short (RIMM) Sept. Calls; Terranova Is Long (MS) And Short (MS) July Calls; Terranova Is Short (XOM) Call Spread; Terranova Is Short (FCX) And Short (FCX) Puts

Terranova Works For (VRTS); Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV); Virtus Investment Partners Owns More Than 1% Of (ABD), (CAL), (CLB), (DLR), (EPR), (EXR), (IGE), (MEE), (DBC), (DBV), (DBA), (SKT), (UA), (WBMD); Virtus Investment Partners Owns More Than 1% Of St Mary Land & Exploration Co; Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights with wires