Rate Cut Speculation

Good morning. Much like we saw late last week, speculation has intensified over worldwide rate cuts after Australia surprised the world by cutting its benchmark interest rate by 100 basis points. Meanwhile, many investors remain skeptical that additional rate cuts will have a positive impact and some think the Fed has already engineered a stealth rate cut. Also, at this point the Fed is currently focused on trying to ease strains in the commercial-paper market.

As for the latest from the credit markets themselves, they still look tighter than a tick this morning after Iceland took over its second largest bank and Bank of America preannounced third quarter earnings which fell well short of estimates, cut its dividend by 50%, and announced plans to sell $10 billion in common stock.

Premarket gainers: AMD, GFI, ROYL, BK, AIG, FNM, NCC, FFIV, SSRI, GOLD, VVUS, FCX, NSH, SIL, PWAV, PAL, GFI, WBK, HMY, FMD, SOV, & IBKR.

Premarket losers: RBS, FSLR, BCS, SAP, GHM, MT, BAC, TRW, AGIX, CSIQ, SPWRA, ENER, JASO, SOLF, APWR, IFN, AIB, FRED, PZE, GLBL, MT, VCLK, SI, & CRM.

Today we have a lot of Fedspeak to deal with. Minneapolis Fed President Stern will speak at 11:AM and Bernanke will speak about the economy at 1:15PM. In addition, European Central Bank President Trichet will give the keynote address at the World Policy Conference at 11:20AM. We also have the FOMC minutes at 2PM. After the Fed didn't cut rates this morning, premarket futures turned south and have been extremely volatile ahead of the open. At a minimum, we're likely to see a very choppy trading session as traders try to figure out whether this market can sustain even a modest oversold bounce.

After the close, Alcoa will kick off earnings season, with analysts increasingly nervous about the report. In addition, oil prices will be monitored carefully on word that OPEC is about to cut input.

All in all, a lot of noise out there and continued fear and despair. In spite of that, go make it a great day!