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After ratcheting the Fed Funds rate down from 5.25% to 2.00% in less than a year, it seems abrupt to me how quickly the Fed's tone has changed. Bernanke now wants to fight inflation, and Fed Funds futures are actually predicting a 30% chance of an increase in rates at the August 5th meeting. So what does this mean to investors?

1) The U.S dollar may actually stop declining. Investors who have been profiting by betting against the U.S. dollar may need to find a new strategy.

2) Commodity price increases may slow. Many investors have been benefiting from the combination of a weak US dollar and growing international demand for commodities (e.g. energy and agricultural commodities). Taking the weak dollar out of the equation may curb commodity price increases.

3) The risk profile changes for certain international exposures. For example, as the dollar has steadily decreased in value against the Euro over the last several years, many investors have moved investment dollars to Euro currency investments. The appeal of these investments may become less attractive if the dollar strengthens.

4) Since the rate cuts of the last year were supposed to give a shot in the arm to a struggling U.S. stock market, it seems only intuitive that a rate increase could make short term growth an even bigger challenge. From a long term standpoint, I think fighting inflation is the best thing for the economy, however, it's the short term impact that I'm worried about.

So how do you play our current market environment? I'm sure there are almost as many opinions as there are investors. Personally, I like global, decent dividend, cheap stocks with some room to grow. Two stocks that I believe fit this bill are Procter and Gamble (PG) and Raytheon (RTN).

Both PG and RTN are global companies which I feel reduces the impact of the Fed's dollar policy (i.e. if the dollar appreciates then input costs become cheaper for both companies, and if the dollar continues to slide then both companies benefit from stronger international sales), both stocks have decent dividend yields (dividends are nice in a sideways market; PG is around 2.4% and RTN around 1.9%), both stocks are cheap (both stock prices have dipped over the last several months, and P/E ratios are attractive), and both stocks have room to grow (top line revenues are increasing for both companies, earnings estimates continue to rise, and PEG ratios are low for both companies which indicates the prices are cheap based on expected earnings growth rates).

Certainly there is a lot more research that goes into investing in either of these companies (more on PG, more on RTN), and with out question the Fed's dollar policy will have some impact on the stocks (likely less so than on most other stocks in my opinion). To be completely honest, I believe Bernanke may be bluffing on his dollar policy (I'll believe the rate hikes when I see them). Regardless, I like both companies right now.

Disclosure: Long Procter & Gamble and Raytheon.

Source: Low ''Bernanke-Beta'' Investing: Procter & Gamble and Raytheon