Pros Say: TALF Bailout to Spark Recovery

Monday: Warren Buffett told CNBC the U.S. economy has "fallen off a cliff." Prof. Nouriel Roubini, who predicted the current crisis, said the U.S. recession could last up to 36 months. But some M&A activity was seen: Dow Chemical and Rohm & Haas announced a deal; and Roche and Genentech are reportedly close to their own agreement. CNBC heard from experts who said steady growth companies are the way to invest now; and that the government's TALF (Term Asset-Backed Securities Loan Facility) rescue plan is going to create the first signs of recovery.

Stocks are Marking Time, but Getting Cheaper and Cheaper

The markets are marking time, getting lots of bad news but not being surprised by any of it, according to Michelle Girard of RBS Greenwich Capital. More clarity is necessary on solving the banking mess. The TALF program is likely to provide the first tangible sign of a comeback. David Spika of WHG Funds said a lot of the fear has now been priced in; recovery may not happen overnight, but stocks are definitely cheaper.

Fewer New Lows; Go with Growth

Art Cashin of UBS said fewer stocks are making new lows, which is encouraging. Wachovia's Brian Piskorowski said "It's time to be readjusting portfolios; growth stocks continue to outperform value stocks." You have to look at high quality, low debt-to-capital, "names that can afford to pay their own bills."

Signs of a Bottom — But Recovery Now Looks More Distant

Eugene Peroni of Advisors Asset Management said "fear and trepidation" are at historic levels, indicating to him that a bottom is being formed. He sees a bounce coming in financials, although they will not lead the recovery. The underlying market is doing much better than the indices would seem to show.

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Zephyr Management's Jim Awad said the consensus is that the economy is going to turn in the first half of 2010, not in the second half of 2009, as previously believed. The financial system still needs to be fixed before things can recover. Make your fortune in distressed assets, Awad says.

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