Some interesting fronts in the market today. First off, you have the market fully discounting a 75bp interest rate cut by the fed next week. It is now clear that investors just expect the fed to do whatever they please in order to alleviate losses. But most people are now losing confidence in the fed. Take a look at TIPS, or inflation-protected securities. People are so concerned about inflation that people are still buying these even though they now have a negative yield. Yes, negative.
These problems are going to take a while to sort out. All the while, there are companies that are performing very nicely. McDonald's (MCD) reported a rise in same store sales this morning. I'm a believer that large caps will out perform this year, especially companies without significant exposure to the credit markets.
At the same time, there are some great values in financial stocks. Morgan Stanley (MS) is trading below 40. Bank of America (BAC) at 36.50, and American Express (AXP) at 41.00.
I think there is some potential for stocks to move higher this week. There is little economic data being released, and there is anticipation on the fed for next week.