http://www.forbes.com/afxnewslimited/feeds/afx/2008/05/28/afx5055515.html
While I might be a bit of an alarmist, it seems to me that changes at the fed (like this) are a good sign that Mr. Berake's days are numbered.
The fed (who of course controls what we hear and enjoys keeping the market in the green) has been telling us not to worry about inflation. Meanwhile my grocery bill gets higher every week, a Starbucks plain 12 oz coffee is going north of $2, and I just filled up my gas tank at $4.19 a gallon. (On a side note, the poor bastard who used the pump before me put in $10 worth of gas which translates to about 2.4 gallons of gas. Figure maybe 18 mpg and this guy gets to drive only 43 miles on that. At almost 25¢ a mile that's really not a bad deal...but he or she is going to be stopping at a gas station again really soon.)
I'm actaully in favor of high energy prices, but don't sit there and tell me that we can continue to cut rates and not enjoy a nice bout of stagflation.
Apparently the market is expecting a quarter point increase in rates come October. This is, of course, driving up mortgage rates now. Which means the housing crash still has a ways to go... So don't be surprised if we get more rhetoric about cuts coming - to prop up housing if that's even possible at this point - now that Mishin has been given the boot.
This of course will torpedo the dollar and will make $4.19 a gallon look like a good deal.
My advice: Short stocks of companies that rely on consumer spending (Starbucks, Home Depot, Whole Foods) and keep buying oil and gas E&P (Chesapeake, XTO Energy, Apache). Shorting pure play refiners might not be a bad idea (Tesoro, Valero) but now that gas is north of the psychological $4 mark they might be able to push the input costs along and may do OK (especially given how cheap they are at this point).
