How is the current bond market meltdown affecting equities to this point?

Well, our economy has always been a credit driven one. Each individual, small business, or large corporation depends on some form of borrowing to sustain and grown their respective balance sheets. When credit markets tighten, as demonstrated by the ramping money market rates and the 3-month LIBOR overnight, it becomes extremely difficult to borrow -- period. Financial institutions, individuals, and corporations begin hoarding cash and bunker down into a capital preservation mode. Without access to credit, these entities will suffer and can fail -- and fail fast.

The market?s main focus is on the Treasury?s proposal to buy near $700 billion illiquid assets from financial institutions. Congress? ability to pass this quickly should help to bolster the perception that our financial system can be stabilized.

Would you cite this as the beginning of the end of the crisis?

Even after a form of this proposal gets passed, the US economy still has to contend with pieces other than the magnitude of the current financial crisis: extremely weak consumer, an ailing industrial sector, volatile crude oil prices and slowing global growth. So we will be nowhere near "out of the woods" after the bailout package becomes finalized, but it would be a crucial step to rebuilding a broken system.

What do you see as crucial to any approved program?

An important anchor to having the economy avoid a long recession is to quickly rectify the credit markets to ensure that borrowing between banks, corporations, and individuals can resume in a more normal fashion. The flow of credit must be unfrozen.

Which stock recommendations would you make for us today, based on your current outlook?

Well, in this more defensive climate, the kinds of stocks that do well do one of two things: they increase their dividend yields or they buy back stock. This demonstrates to investors that the company is confident in its outlook and on its balance sheet.

McDonald?s (MCD) is a good example of a company that does this. The company recently increased its dividend 33%, and the Street took notice. As a result, on a day like today (Friday) when the markets are down a percentage point or so, MCD is up 50 cents per share (in morning trading).

As far as share buybacks, Nike (NKE) earlier this week announced it will be buying back $5 billion in stock, and this follows an ongoing buyback of $3 billion. Two days after this latest buyback announcement, the company blew out earnings by 10 cents per share and went on to close up 8-9%. The stock is up $1 so far today.

What?s more, even in this weak environment the company is performing well. World-wide futures orders are up 10%.

Chris Williams is the Director of Trading for Zacks Investment Management.