Stocks are flat to slightly up as concerns about the fallout from subprime loans overshadow today's corporate deals. Two market pros told CNBC's "Power Lunch" that investors need to be on their guard in light of recent volatility.
"We have the polarized forces; you have deals on the one hand, which are positive, and subprime on the negative, much like this whole year with the tug of war between the optimists and pessimists," said Jeff Knight, CIO of global asset allocation at Putnam Investments.
Knight noted that Putnam will be watching the situation in the troubled subprime lending industry very carefully. "So far it's a cash flow situation with borrowers unable to pay back loans. What's going to be important is how it plays out for the balance sheets," he said.
Bill Rhodes, chief investment strategist at Rhodes Analytics, said he is keeping an eye on what investors are predicting for the Federal Reserve.