The old school conventional wisdom is that consumer non-durable stocks, in industries such as soda, razor blades, tobacco, are a good place to be when the economy tips into recession. The past couple of weeks has seen heavy selling in names such as Pepsi, and Merck. McDonald's had a tough day after earnings. Today Pepsi Bottling PBG got hit. While this has been going on, banks and airlines have continued their large bounces off their lows.
The overall market has rallied into the Fed meeting. The funny thing is that with Bernanke, it seems like the weaker the stock market is, the greater the chance of surprise rate cuts. If the rally continues strong tomorrow, it increases the chance that the Fed will think they have done enough and only cut 1/4 point, or do nothing. Traders playing the Fed Fund futures are currently favoring a half point cut.
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