Inflation, stagflation, recession, deflation.........

The arguments in market can be summarized on a spectrum from inflation to deflation. So here is your handy summary of each scenario and who is championing what.

Inflation: A rising price expectation is being built in. The factors driving this are high oil prices, tight labor markets and the falling dollar. So inflation will rise above the current levels and feed on itself.

Stagflation There will be some inflationary pressure, growth slows down but nothing major happens. We muddle through for many years.

Recession The combination of rising interest rates, rising oil prices, a fading housing market is going to produce a slump. The GDP growth will drop precipitously from the 5 per cent-plus pace of the first quarter to near-recession levels by the end of the year and the beginning of next year.

Deflation Don't forget China, India, Vietnam, Bangladesh, Africa, and the Middle East. All these countries have one simple idea- export. So this should drive down cost.
We remain of the view that the primary threat to the global economy comes from deflation, not inflation.
The combination of freer trade, tech-driven productivity gains and deteriorating demography across the industrial world argues for sustained deflationary risks on a scale not seen in a century. The next recession, —whenever it comes, —will drive long-term interest rates to levels not seen since the Depression.

The question is how do you profit from the four likely scenario. As a trader all that I am interested in is, how to be consistently profitable. None of these scenario affect my core trading philosophy. I look for 25 good trades in a year. At some stage the market will have multi week rally and that is sufficient for me to make enough money. I am up about 35% for the year so far and do not have the pressure of trying to achieve some monthly target.

Stocks with all time high volume
BOBE,Bob Evans Farms Inc
COGO,Comtech Group Inc
DLIA,dELiA*s Inc
ELGX,Endologix Inc
EN,Enel Spa Ads
GDX,Market Vectors Gold Miners ETF
HOM,Home Solutions Of America
IFO,Infosonics
IHG,Intercontinental Hotels Grp Ad
QTEC,First Trust Nasdaq 100 Technology Sector Index Fund ETF
SCC,Security Capital Corp A
VIG,VIPERs Vanguard Dividend Appreciation ETF
XHB,SPDRs Homebuilders ETF

Expert do not agree on market direction
One mans bull market is another mans bear market. There is an interesting debate about both side of the case. As the mass media starts noticing bear market, it might be time to dip toe on the long side.

Interviews with nearly a dozen economists and market analysts turned up widely varying views on whether this particular market correction will develop fur and claws. That's partly because each one looks at different signals to determine where the equity markets are going.

Wimps and testosterone

Bernanke tough stance on inflation is getting noticed. It is coordinated campaign to talk down the inflation. Currently it is verbal intervention. The market will soon test the Fed manliness talk.

Ben S. Bernanke rattled world financial markets Monday with his tough talk about combating inflation, but he also buffed up his image as a strong Federal Reserve chairman committed to the fight, analysts said yesterday.

"He reintroduced testosterone to the inflation-fighting resolve of the Fed," said Diane Swonk, chief economist of Mesirow Financial Inc., an investment management firm. "This is a pure male thing. He said to the markets, 'You think I'm a wimp? Take me on.' "

This trend has legs

If I have to bet on one long term trend, the trend of mass migration of advertisers to online media is what I would bet on. I have done lot of work on media adoption and media buying behavior in my earlier career and based on that I am a bull on online advertising. Do not worry about click fraud, the marketers at the end of day look at total return on advertising spend.

IN the matchup between the print and online versions of newspapers, signs of the Internet's ascendancy are growing stronger. As Colby Atwood, a newspaper analyst and a vice president at Borrell Associates, put it, "The tail is beginning to wag the dog."

According to estimates released on Friday by the Newspaper Association of America, newspaper print ad spending in the first three months of 2006 increased only 0.3 percent, to $10.5 billion, over the corresponding period last year. At the same time, spending for online advertising surged 35 percent.

"I think the handwriting is kind of on the wall that there is a large migration to the Web," Mr. Atwood said. "Increasing amounts of revenue and focus should be on the online properties. This is a transition that's taking place over several years here. It's not happening overnight, but it's definitely happening."