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Pros Say:  Bankruptcies Ahead...Buy Consumer Staples

Congressional wrangling over an auto-industry bailout continued to dominate expectations on Thursday, complicated by more downbeat data about initial claims for unemployment benefits. But some analysts interviewed by CNBC found diamonds among the lumps of coal.

Billions have been thrown at a problem that's only just begun to be solved

Michael Darda of MKM Partners said the massive efforts to stabilize the economy are showing only slight progress, leaving the credit markets still "in a state of near-paralysis." He predicted a "long, slow sloppy return to normalcy;" there is "no silver bullet" for solving the problem. Darda and Oaktree Asset Management's Robert Pavlik agreed that there will be an auto-industry bailout, because the alternative would almost certainly be a depression.

Libor shows signs of a thaw, under 2 percent for the first time in more than 4 years

For the first time since 2004, the LIBOR rate has slipped below 2 percent, and Cronus Futures Management's Kevin Ferry said that's significant because in the money markets -- as opposed to debt or equity -- "the gravitational pull of zero is beginning to work." He expects it to remain in zero territory longer than analysts had previously expected, but not long enough to cause serious problems in the long run.

Dire times, but keep your eye on consumer staples

Merrill Lynch chief North American economist David Rosenberg said the current situation is different from anything experienced since World War II, because it is a credit collapse, such as has only happened in this country in the 1930s and in Japan in the 1990s. Merrill's chief investment strategist, Richard Bernstein, said consumer staples are very attractive in the equity market as "the anti-commodity play," with profit margins expanding as commodity prices fall. (See their comments here)

More bankruptcies on the way, and more liquidations

Carlos Mendez of ICP Capital said more American companies are likely to go bankrupt, and bankruptcies are now more likely to lead to liquidations, because credit is unavailable even to good companies, much less to companies that are bankrupt and need the "exit financing" that has been common in bankruptcy situations.

Upbeat about health care in a down market

Fort Pitt Capital's Charlie Smith said he's looking for short-term rallies in commodities and gold, but they may not last unless there's some sign of strength in the economy. Brett D'arcy of CBIZ Financial Solutions said health care is a healthy sector, as stocks of big pharmaceutical companies with strong balance sheets are selling at bargain prices.

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