Pre-market - 7:50 am

Futures down a bit this morning.

Today's economic calendar:
FOMC Meeting Begins
ICSC-Goldman Store Sales                        7:45 AM ET
Redbook                                                   8:55 AM ET
S&P Case-Shiller HPI                       9:00 AM ET
Consumer Confidence                             10:00 AM ET
State Street Investor Confidence Index     10:00 AM ET
4-Week Bill Auction                                11:30 AM ET
2-Yr Note Auction                                    1:00 PM ET

Today's earnings reports.
Before open:

ABC	AmerisourceBergen Corporation	Services	Drugs Wholesale
AME	Ametek Inc.	Industrial Goods	Industrial Electrical Equipment
AOS	AO Smith Corp.	Industrial Goods	Industrial Electrical Equipment
ASH	Ashland Inc.	Basic Materials	Chemicals - Major Diversified
BHI	Baker Hughes Incorporated	Basic Materials	Oil & Gas Equipment & Services
BTU	Peabody Energy Corp.	Basic Materials	Industrial Metals & Minerals
CBE	Cooper Industries plc	Conglomerates	Conglomerates
CRS	Carpenter Technology Corp.	Basic Materials	Steel & Iron
CVG	Convergys Corporation	Technology	Business Software & Services
DAL	Delta Air Lines Inc.	Services	Major Airlines
DCOM	Dime Community Bancshares Inc.	Financial	Savings & Loans
DD	EI DuPont de Nemours & Co.	Basic Materials	Chemicals - Major Diversified
EMC	EMC Corporation	Technology	Data Storage Devices
ENR	Energizer Holdings Inc.	Consumer Goods	Personal Products
FMER	FirstMerit Corporation	Financial	Regional - Midwest Banks
FPL	FPL Group Inc.	Utilities	Electric Utilities
GKSR	G&K Services Inc.	Services	Business Services
GLW	Corning Inc.	Technology	Communication Equipment
GSBC	Great Southern Bancorp Inc.	Financial	Regional - Southwest  Banks
GWW	W.W. Grainger, Inc.	Services	Industrial Equipment Wholesale
JEC	Jacobs Engineering Group Inc.	Services	Technical Services
JNJ	Johnson & Johnson	Healthcare	Drug Manufacturers - Major
KCI	Kinetic Concepts Inc.	Healthcare	Medical Appliances & Equipment
MHP	The McGraw-Hill Companies, Inc.	Services	Publishing - Books
MTG	MGIC Investment Corp.	Financial	Surety & Title Insurance
NUE	Nucor Corporation	Basic Materials	Steel & Iron
NVS	Novartis AG	Healthcare	Drug Manufacturers - Major
PEBO	Peoples Bancorp Inc.	Financial	Regional - Midwest Banks
RF	Regions Financial Corp.	Financial	Regional - Southeast Banks
RYN	Rayonier Inc.	Financial	REIT - Diversified
SBNY	Signature Bank	Financial	Regional - Northeast Banks
SHW	Sherwin-Williams Co.	Services	Specialty Retail, Other
SIFY	Sify Technologies Limited	Technology	Internet Service Providers
SYBT	SY Bancorp Inc.	Financial	Regional - Southeast Banks
TLAB	Tellabs Inc.	Technology	Communication Equipment
TRV	The Travelers Companies, Inc.	Financial	Property & Casualty Insurance
TUES	Tuesday Morning Corp.	Services	Discount, Variety Stores
VZ	Verizon Communications Inc.	Technology	Telecom Services - Domestic
WFT	Weatherford International Ltd.	Basic Materials	Oil & Gas Equipment & Services
WTNY	Whitney Holding Corp.	Financial	Regional - Southeast Banks
X	United States Steel Corp.	Industrial Goods	Metal Fabrication

After close:

ALTR	Altera Corp.	Technology	Semiconductor - Specialized
BBOX	Black Box Corp.	Technology	Networking & Communication Devices
BKI	Buckeye Technologies Inc.	Consumer Goods	Paper & Paper Products
BXP	Boston Properties Inc.	Financial	REIT - Office
CASB	Cascade Financial Corp.	Financial	Regional - Pacific Banks
CLMS	Calamos Asset Management Inc.	Financial	Asset Management
CNI	Canadian National Railway Company	Services	Railroads
CNS	Cohen & Steers Inc.	Financial	Asset Management
CSGS	CSG Systems International Inc.	Technology	Business Software & Services
DV	DeVry, Inc.	Services	Education & Training Services
ELY	Callaway Golf Co.	Consumer Goods	Sporting Goods
FFBC	First Financial Bancorp.	Financial	Regional - Midwest Banks
FFIC	Flushing Financial Corp.	Financial	Savings & Loans
FPFC	First Place Financial Corp.	Financial	Regional - Midwest Banks
GILD	Gilead Sciences Inc.	Healthcare	Biotechnology
HPOL	Harris Interactive Inc.	Technology	Internet Software & Services
HTCH	Hutchinson Technology Inc.	Technology	Data Storage Devices
HTLD	Heartland Express, Inc.	Services	Trucking
IDTI	Integrated Device Technology, Inc.	Technology	Semiconductor - Broad Line
INFN	Infinera Corp.	Technology	Communication Equipment
ITI	Iteris, Inc.	Technology	Processing Systems & Products
KEYN	Keynote Systems Inc.	Technology	Internet Software & Services
KTCC	Key Tronic Corp.	Technology	Computer Peripherals
LFL	LAN Airlines S.A.	Services	Regional Airlines
MCK	McKesson Corporation	Services	Drugs Wholesale
MOLX	Molex Inc.	Technology	Diversified Electronics
MRCY	Mercury Computer Systems, Inc.	Technology	Computer Peripherals
MRTN	Marten Transport Ltd.	Services	Trucking
MTH	Meritage Homes Corporation	Industrial Goods	Residential Construction
NAL	New Alliance Bancshares Inc.	Financial	Regional - Northeast Banks
NATI	National Instruments Corporation	Technology	Technical & System Software
NWK	Network Equipment Technologies Inc.	Technology	Networking & Communication Devices
PLCM	Polycom, Inc.	Technology	Processing Systems & Products
PLT	Plantronics, Inc.	Technology	Processing Systems & Products
PMTC	Parametric Technology Corporation	Technology	Technical & System Software
PTV	Pactiv Corp.	Consumer Goods	Packaging & Containers
QLGC	QLogic Corp.	Technology	Semiconductor - Integrated Circuits
RFMD	RF Micro Devices Inc.	Technology	Semiconductor - Integrated Circuits
RKT	Rock-Tenn Co.	Consumer Goods	Paper & Paper Products
ROCM	Rochester Medical Corp.	Healthcare	Medical Instruments & Supplies
SANM	Sanmina-SCI Corp.	Technology	Printed Circuit Boards
SMCI	Super Micro Computer, Inc.	Technology	Networking & Communication Devices
STLD	Steel Dynamics Inc.	Basic Materials	Steel & Iron
STM	STMicroelectronics NV	Technology	Semiconductor - Broad Line
SXL	Sunoco Logistics Partners LP	Basic Materials	Oil & Gas Pipelines
SYK	Stryker Corp.	Healthcare	Medical Instruments & Supplies
TPX	Tempur Pedic International Inc.	Consumer Goods	Home Furnishings & Fixtures
TRMK	Trustmark Corporation	Financial	Regional - Southeast Banks
TWPG	Thomas Weisel Partners Group, Inc.	Financial	Investment Brokerage - National
WASH	Washington Trust Bancorp Inc.	Financial	Regional - Northeast Banks
WMS	WMS Industries Inc.	Services	Resorts & Casinos
WSBC	WesBanco Inc.	Financial	Regional - Mid-Atlantic Banks
YHOO	Yahoo! Inc.	Technology	Internet Information Providers

Upgrades:

SOLF	Solarfun Power Holdings Co. Ltd.	Technology	Semiconductor - Specialized
NVDA	NVIDIA Corporation	Technology	Semiconductor - Specialized
DFS	Discover Financial Services	Financial	Credit Services
ANF	Abercrombie & Fitch Co.	Services	Apparel Stores
CAL	Continental Airlines, Inc.	Services	Major Airlines
IM	Ingram Micro Inc.	Services	Computers Wholesale
SSI	Stage Stores Inc.	Services	Apparel Stores
UDR	UDR, Inc.	Financial	REIT - Residential
HME	Home Properties Inc.	Financial	REIT - Residential
BKCC	BlackRock Kelso Capital Corporation	Financial	Credit Services
OSG	Overseas Shipholding Group Inc.	Services	Shipping
DSPG	DSP Group Inc.	Technology	Communication Equipment
NAT	Nordic American Tanker Shipping Ltd.	Services	Shipping
ORLY	O'Reilly Automotive Inc.	Services	Auto Parts Stores
EGLE	Eagle Bulk Shipping, Inc.	Services	Shipping
DRYS	DryShips, Inc.	Services	Shipping
RRI	RRI Energy, Inc.	Utilities	Electric Utilities
GD	General Dynamics Corp.	Industrial Goods	Aerospace/Defense Products & Services
SOA	Solutia Inc.	Basic Materials	Specialty Chemicals
GIII	G-III Apparel Group, Ltd.	Consumer Goods	Textile - Apparel Clothing
ICE	IntercontinentalExchange, Inc.	Financial	Diversified Investments
ROSE	Rosetta Resources, Inc.	Basic Materials	Independent Oil & Gas
QSII	Quality Systems Inc.	Technology	Healthcare Information Services
SLB	Schlumberger Limited	Basic Materials	Oil & Gas Equipment & Services
TRI	Thomson Reuters Corporation	Services	Business Services
STI	SunTrust Banks, Inc.	Financial	Money Center Banks
ACXM	Acxiom Corporation	Technology	Information Technology Services
TIF	Tiffany & Co.	Services	Jewelry Stores

Downgrades:

WBD	Wimm-Bill-Dann Foods OJSC	Consumer Goods	Dairy Products
WCRX	Warner Chilcott plc	Healthcare	Drug Manufacturers - Other
STP	Suntech Power Holdings Co. Ltd.	Technology	Diversified Electronics
STJ	St. Jude Medical Inc.	Healthcare	Medical Appliances & Equipment
SLB	Schlumberger Limited	Basic Materials	Oil & Gas Equipment & Services
GPC	Genuine Parts Company	Services	Auto Parts Wholesale
PARD	Poniard Pharmaceuticals, Inc.	Healthcare	Biotechnology
STI	SunTrust Banks, Inc.	Financial	Money Center Banks
TSS	Total System Services, Inc.	Services	Business Services
GNK	Genco Shipping & Trading Ltd.	Services	Shipping
CVBF	CVB Financial Corp.	Financial	Regional - Pacific Banks
PRSP	Prosperity Bancshares Inc.	Financial	Regional - Southwest  Banks
RF	Regions Financial Corp.	Financial	Regional - Southeast Banks

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More on the AIG, Goldman,Fed,Geithner dealings - from Zero Hedge

Even more on the AIGgate - from Zero Hedge - added 3:30
Neil Barofski testimony document - Testimony.pdf - added 3:30
Now we have more - add Blackrock - from Zero Hedge - added 6:40

And even more - What Does Senator Bunning Know, And, More Relevantly, What Does The Just Disclosed Fed Whistleblower Know? - from Zero Hedge - added 10:40 pm

CNBC video of Bunning's comments:




Darrell Issa's Special Report On AIG Could Be The End Of Geithner - Zero Hedge - added 10:41

Bernanke article in the WSJ - 9:10AM

The Fed’s Exit Strategy - WSJ By BEN BERNANKE The depth and breadth of the global recession has required a highly accommodative monetary policy. Since the onset of the financial crisis nearly two years ago, the Federal Reserve has reduced the interest-rate target for overnight lending between banks (the federal-funds rate) nearly to zero. We have also greatly expanded the size of the Fed’s balance sheet through purchases of longer-term securities and through targeted lending programs aimed at restarting the flow of credit. These actions have softened the economic impact of the financial crisis. They have also improved the functioning of key credit markets, including the markets for interbank lending, commercial paper, consumer and small-business credit, and residential mortgages. My colleagues and I believe that accommodative policies will likely be warranted for an extended period. At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road. The Federal Open Market Committee, which is responsible for setting U.S. monetary policy, has devoted considerable time to issues relating to an exit strategy. We are confident we have the necessary tools to withdraw policy accommodation, when that becomes appropriate, in a smooth and timely manner. View Full Image Chad Crowe The exit strategy is closely tied to the management of the Federal Reserve balance sheet. When the Fed makes loans or acquires securities, the funds enter the banking system and ultimately appear in the reserve accounts held at the Fed by banks and other depository institutions. These reserve balances now total about $800 billion, much more than normal. And given the current economic conditions, banks have generally held their reserves as balances at the Fed. But as the economy recovers, banks should find more opportunities to lend out their reserves. That would produce faster growth in broad money (for example, M1 or M2) and easier credit conditions, which could ultimately result in inflationary pressures—unless we adopt countervailing policy measures. When the time comes to tighten monetary policy, we must either eliminate these large reserve balances or, if they remain, neutralize any potential undesired effects on the economy. To some extent, reserves held by banks at the Fed will contract automatically, as improving financial conditions lead to reduced use of our short-term lending facilities, and ultimately to their wind down. Indeed, short-term credit extended by the Fed to financial institutions and other market participants has already fallen to less than $600 billion as of mid-July from about $1.5 trillion at the end of 2008. In addition, reserves could be reduced by about $100 billion to $200 billion each year over the next few years as securities held by the Fed mature or are prepaid. However, reserves likely would remain quite high for several years unless additional policies are undertaken. Even if our balance sheet stays large for a while, we have two broad means of tightening monetary policy at the appropriate time: paying interest on reserve balances and taking various actions that reduce the stock of reserves. We could use either of these approaches alone; however, to ensure effectiveness, we likely would use both in combination. Congress granted us authority last fall to pay interest on balances held by banks at the Fed. Currently, we pay banks an interest rate of 0.25%. When the time comes to tighten policy, we can raise the rate paid on reserve balances as we increase our target for the federal funds rate. Banks generally will not lend funds in the money market at an interest rate lower than the rate they can earn risk-free at the Federal Reserve. Moreover, they should compete to borrow any funds that are offered in private markets at rates below the interest rate on reserve balances because, by so doing, they can earn a spread without risk. Thus the interest rate that the Fed pays should tend to put a floor under short-term market rates, including our policy target, the federal-funds rate. Raising the rate paid on reserve balances also discourages excessive growth in money or credit, because banks will not want to lend out their reserves at rates below what they can earn at the Fed. Considerable international experience suggests that paying interest on reserves effectively manages short-term market rates. For example, the European Central Bank allows banks to place excess reserves in an interest-paying deposit facility. Even as that central bank’s liquidity-operations substantially increased its balance sheet, the overnight interbank rate remained at or above its deposit rate. In addition, the Bank of Japan and the Bank of Canada have also used their ability to pay interest on reserves to maintain a floor under short-term market rates. Despite this logic and experience, the federal-funds rate has dipped somewhat below the rate paid by the Fed, especially in October and November 2008, when the Fed first began to pay interest on reserves. This pattern partly reflected temporary factors, such as banks’ inexperience with the new system. However, this pattern appears also to have resulted from the fact that some large lenders in the federal-funds market, notably government-sponsored enterprises such as Fannie Mae and Freddie Mac, are ineligible to receive interest on balances held at the Fed, and thus they have an incentive to lend in that market at rates below what the Fed pays banks. Under more normal financial conditions, the willingness of banks to engage in the simple arbitrage noted above will tend to limit the gap between the federal-funds rate and the rate the Fed pays on reserves. If that gap persists, the problem can be addressed by supplementing payment of interest on reserves with steps to reduce reserves and drain excess liquidity from markets—the second means of tightening monetary policy. Here are four options for doing this. First, the Federal Reserve could drain bank reserves and reduce the excess liquidity at other institutions by arranging large-scale reverse repurchase agreements with financial market participants, including banks, government-sponsored enterprises and other institutions. Reverse repurchase agreements involve the sale by the Fed of securities from its portfolio with an agreement to buy the securities back at a slightly higher price at a later date. Second, the Treasury could sell bills and deposit the proceeds with the Federal Reserve. When purchasers pay for the securities, the Treasury’s account at the Federal Reserve rises and reserve balances decline. The Treasury has been conducting such operations since last fall under its Supplementary Financing Program. Although the Treasury’s operations are helpful, to protect the independence of monetary policy, we must take care to ensure that we can achieve our policy objectives without reliance on the Treasury. Third, using the authority Congress gave us to pay interest on banks’ balances at the Fed, we can offer term deposits to banks—analogous to the certificates of deposit that banks offer their customers. Bank funds held in term deposits at the Fed would not be available for the federal funds market. Fourth, if necessary, the Fed could reduce reserves by selling a portion of its holdings of long-term securities into the open market. Each of these policies would help to raise short-term interest rates and limit the growth of broad measures of money and credit, thereby tightening monetary policy. Overall, the Federal Reserve has many effective tools to tighten monetary policy when the economic outlook requires us to do so. As my colleagues and I have stated, however, economic conditions are not likely to warrant tighter monetary policy for an extended period. We will calibrate the timing and pace of any future tightening, together with the mix of tools to best foster our dual objectives of maximum employment and price stability. —Mr. Bernanke is chairman of the Federal Reserve.