Recession Risk

Good morning. Premarket futures are lower this morning as the market tries to figure out how deep and long the recession will be.

To answer that question, investors are sorting thorugh a number of mixed earnings reports (see KO, CSX, ABT, INTC, JPM, WFC) and some relatively dismal economic data. For example, September retail sales came in well below expectations (-1.2% vs -0.7% consensus) and the Empire Manufacturing report dropped -24.6 vs -10.0 consensus. As for inflation, the Price Producer Index fell 0.4% while the core prices rose 0.4%.

Along with watching the credit markets and seeing signs of easing, several Fed officials are making headlines this morning that they recognize recession risk but no rate cut is needed. Meanwhile, Meredith Whitney was out with cautious comments on banks even in spite of the latest rescue efforts.

Premarket gainers: EPIC, KO, ALTR, TSL, DNA, TLB, EXC, WB, WFC, INTC, AAPL, AMSC, UAUA, APWR, DISH, WIT, PPC, TSL, DTG, ECLP, CSH, MYL, & LUFK.

Premarket losers: LLTC, EBAY, CHT, AAUK, ACGY, ING, RTP, BBL, EXM, KEY, SWN, C, DELL, JPM, ASML, DRYS, KWR, PCU, AIG, AIB, CIT, SI, MT, & GGP.

In addition to this morning's data, we have business inventories at 10:AM, the EIA petroleum status report at 10:35AM, and the Beige Book at 2PM. We also have more Fedspeak from Bernanke around noon.

Needless to say, the market needs to show some signs that Monday's rally was not a fluke and that, even in spite of recession worries, buyers remain and the bad news has already been priced in.

Have a wonderful Wednesday!