Inflation

While stock indexes are still not doing anything, I think markets are nuts! Most of people think we'll see the Jan low again in stocks, so basically they are sitting on their hands until something happens. From what I've learned, when things are too obvious, markets tend to do the exact opposite. Take a look at bonds. Ever since it made 122 or so, it came down significantly now trading around 116. If bonds head lower, economy picks up and stocks rise, which is exactly what Bernanke wanted.

Now the problem is inflation. I trade grains keeping my eyes on other commodities such as metals, energies and softs. They are all screaming high. CPI and PPI numbers are not good at all. We have an FOMC coming in mid March. The current markets are implying another rate cut, but my guess is that this will be the first time that the FED will not cut the rate since last year. Rather, they will hold the rate to see what happens. If this happens, stocks will not like it, but probably not panic either but commodities will stabilize.

I will enter short trades in the first week of March to take advantage of this.