Lisa Hess, a Forbes contributor, recommended repositioning portfolios to take advantage of new world of rising oil prices, rising inflation, and uncertain monetary policy. Stocks and Bonds do poorly, according to Hess, because bond prices go down as inflation forces up interest rates and stocks go down as companies have a hard time keeping selling prices ahead of rising inputs.

What to do:

1. Short U.S. Treasurys

a. UltraShort Lehman 20+ Year Treasury (TBT)- bets against long maturities

b. UltraShort Lehman 7-10 Year Treasury (PST)- bets against shorter term maturities

2. Invest in companies that profit from rising demand of commodities

a. Titan International

- makes huge tires for agricultural machinery

b. Hemisphere GPS

- manufacturer of GPS and steering systems for tractors

- devices improve productivity

- trades at 38x but earnings could double each of next few years

- widespread adoption of GPS for large scale farming is inevitable

c. American Commercial Lines

- barge manufacturer

- operates barges moving grain,

Big Wednesday, Sandy Beach, Oahu.

With markets short-term oversold bulls were looking for any catalyst to spark a rally. Although the Fed said nothing, nothing was all it took to get things going. But, as we got on after the announcement, what rally we had save tech, fizzled.

Volume was healthy and breadth remained positive.

Naturally, positive breadth data revived the McClellan Oscillator.

…

This is my first comment since Thursday given travel and lengthy meetings. Friday’s rally action had me stumped I’ll admit since it didn’t seem based on anything substantial. All it served to do was to keep us primarily on the sidelines.

Today we got a hot PPI at 1.4% which was dismissed early as the Kool Aid drinker’s focused on the “core rate” ex-food and energy up a “mild” .2%. But, how much more of these silly core rate numbers investors can swallow is beyond any thoughtful consideration. Anyway later in the day reality hit home as Goldman Sachs issued a downbeat assessment on financials ex-themselves naturally.

Volume was on the light side while breadth was as negative as you might expect.

…

Today was a replay of yesterday with bulls doing more news cherry-picking [Durable Goods orders better than expected] while buying toward the close again perhaps from the same unknown source.

Don’t ya love headline writers? This one’s from MarketWatch.

Anyway, volume remains sluggish and breadth unimpressive.

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