3 inflation trades and 3 hedging strategies ahead of Fed meeting

The Consumer Price Index, which measures final prices paid for goods and services, surged 5% in May from a year ago, another 12-month record since August 2008.While Fed Chairman Jerome Powell has repeatedly described the threat of inflation as "transitory," billionaire hedge fund manager Paul Tudor Jones begged to disagree."If they treat these numbers — which were material events, they were very material — if they treat them with nonchalance, I think it's just a green light to bet heavily on every inflation trade," the founder of Tudor Investment Corporation told CNBC on Monday. "I think there are two sets of growth stocks and we lean more towards the established companies that do have strong balance sheets and do show higher growth in the market, but have the pricing power and longevity to prove that they can survive through multiple cycles."David Keller, the chief market strategist at StockCharts.com, said there is a small chance that the Fed adopts a more hawkish stance this week, which means investors should consider whether gold has a place in their portfolios."Gold is often seen as an inflation hedge, but also, we are seeing a supercycle in commodities with broad strength in crude oil and precious metals," he said in an e-mailed interview. "Gold also tends to be less correlated with stocks so can provide diversification to a portfolio during uncertain times."Ed Clissold, the chief US strategist at Ned Davis Research, said if the Fed tapers sooner and more severely than expected, it would remove one of the single biggest supporting factors for the market rally since March 2020.