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Two Ways To Play: Fed Heads Chime In

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Strengthen your portfolio in good times and bad.

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Kansas City Fed President Thomas Hoenig warned that central banks around the world face a "major challenge" in containing inflation, according to Bloomberg.

In a speech in Oklahoma City, Hoenig said "Inflation has increased" to "unacceptable" levels and the real danger is that the psychology around inflation is starting to change.

Meanwhile, earlier today Fed Chairman Ben Bernanke said in a speech in Atlanta that the financial markets were "far from normal" but the Fed remained ready to increase the size of the auctions if further deterioration in the markets continued. The news helped reverse early morning weakness in stock futures prior to the opening bell.

Elsewhere San Francisco Fed President Janet Yellen agreed with Chairman Bernanke that the credit markets were far from normal. Yellen gave her comments late in the trading session in a speech to the CFA Institute conference in Vancouver and added that the current Fed Funds target is at an acceptable level. Though inflation is currently disappointingly high and the current economy is weak across all sectors, she expects the Fed to gradually increase the Fed Funds target to moderate growth as the economy grows towards the back half of 2008.

Get a global perspective in Professor Prieur du Plessis' Global Markets Scorecard.

From the Bull Pen: Inflation unacceptable? Bulls are considering gold plays such as the Gold ETF (GLD), or the gold miners: Harmony (HMY), and Gold Fields (GFI). Platinum plays are also on the menu such as the E-tracs UBS Bloomberg Long Platinum ETN (PTM).

From the Bear Cave: Bears are testing the downside in oil and commodities using the oil ETF (USO) or the drillers: Transocean (RIG) and Schlumberger (SLB). For those that don't like the platinum play, the inverse platinum (PTD) can be an option.

Have a great night.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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