Ow! What happened to the market? I wrote just recently that inflation would begin to be a problem, but I didn't believe it would start happening this week.

The 1990s were unusual: The economy and the market were roaring, but inflation was tame. I believe one thing that happened in the rate increases of 1997 was that while several nations followed suit, inflation didn't increase because commodities prices didn't follow.

The world is working right now, and many economies are raising rates to prevent overheating of their respective countries. The difference this time is commodities are on a huge bull run, which is stoking inflation.

There is a ton of money on corporate balance sheets; raising rates will not affect these companies. What inflation does to the consumer will affect the economy, and the consumer is being affected right now.

I do not believe this will be a hard landing, but I do believe certain sectors will underperform, like airlines, shipping and retail. Housing stocks to me are priced almost at liquidation values and will not underperform.

One thing that generally does not underperform in a soft economy is entertainment companies.


(CBS) - Get Report

is a content company and a content provider that I believe will do well.

Content will always be king; only how it is delivered will change.

The Da Vinci Code

, for example, will do well.

I love to watch movies in the theater with a huge tub of buttered popcorn and a super-sized Coke, but I watch movies in other ways, too, as do most Americans. Although I believe cinemas and music-only radio are on life support, content, content providers and content enablers are going to do well no matter what the economy does.

CBS faces some headwinds.


(TIVO) - Get Report

and losing Howard Stern to its radio division are two very big ones. A positive is Les Moonves.

Replacing Howard Stern with unproven middle-aged rocker David Lee Roth was a bad idea. Opie and Anthony, two other shock jocks, is a good idea. CBS also has plans to divest itself of smaller, less profitable radio stations.

CBS has welcomed technology change with the new advent of downloading content and the Internet. This provides two revenue streams, one for the content and one for the ads on it.

CBS and



were split into two companies last year with CBS becoming what a lot of people would view as the slower-growing company. However, the one important variable is Moonves. CBS has produced a strong lineup for the fall, which is personally overseen by Mr. Moonves.

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CBS is trading at a forward multiple of 13.5 times earnings estimates of $1.85 a share. CBS has a projected long-term growth rate of just under 10%. Even with the radio network in a slump, the numbers are decent. And with online programming producing a new revenue stream, this should be as low as they get.

CBS actually has a better P/E-to-growth ratio than


(DIS) - Get Report

, another great content company that will do well in the new-media age.

Fast Markets

As soon as I got my article up on the Web

last weekend, the news came out that an investor, Zachary Schreiber of Duquesne Capital Management, had written a letter protesting the costs of


(EXC) - Get Report

buyout of New Jersey-based


(PEG) - Get Report


The protest centered on the fact that because Exelon shares had increased since the initial valuation of the deal was announced, the deal had become dilutive for Exelon. The stock that Exelon offered to buy PSE&G with was worth $12 billion at the time the deal was announced and is now worth $16 billion, according to Mr. Schreiber, who owns 5 million shares of Exelon.

There must be something to these charges because management at EXC has said that this will be an important element in the transaction. My advice: wait and see. I love the nuclear field here, and Exelon is a well-run company. If it can renegotiate the deal at current valuations -- as it has hinted it might try -- it is still a home run.



(MO) - Get Report

won a $150 million reversal on one of its "light" cigarette cases. This should clear the way for future litigation to go the way of the cigarette maker. I still believe we will see MO split into three companies and the value will be over $100 for this stock. Until then, hold on to that 4.5% dividend and wait.


being poor is bad, staying that way is stupid.

At the time of publication, John Layfield was long MO.

A former All-American offensive lineman at Abilene Christian University, Layfield played professional football for the then-Los Angeles Raiders and later in the World League. After wrestling in Japan, Mexico and Europe, Layfield arrived in the WWE in the mid-1990's. A former WWE champion, JBL was a featured wrester at WrestleMania 21 and can also be seen on Friday Night SmackDown! on UPN. Outside of the ring, JBL is a self-taught investor who was recruited to write a personal finance book, Have More Money Now, which was released in the summer of 2003. He has appeared on finance shows on CNN and Fox News Network. He is co-chairman of the Smackdown Your Vote! Campaign and he has joined both the USO and Armed Forces Entertainment (AFE) for tours through Iraq, Afghanistan and other Middle East countries. He regularly visits the Walter Reed Army Medical Center and the Bethesda naval hospital to meet with wounded troops.