Trade the News Market Internals Update at 12:00ET

Dow +71 S&P +6 NASDAQ +1

***Economic Data***

– (SA) South Africa Central Bank (SARB) leaves interest rates unchanged at 5.50%, as expected
– (UK) Bank of England (BOE) maintained both Interest Rates and Asset Purchase Target left unchanged at 0.50% and £275B respectively
– (CA) Canada Sept Int’l Merchandise Trade: +C$1.25B v -C$560Me
– (US) Oct Import Price Index M/M: -0.6% v 0.0%e; Y/Y: 11.0% v 11.8%e
– (US) Sept Trade Balance: -$43.1B v -$46.0Be (narrowest since Dec 2010)
– (US) Initial Jobless Claims: 390K v 400Ke; Continuing Claims: 3.615M v 3.68Me
– (MX) Mexico Aug Gross Fixed Investment: 10.6% v 9.7%e
– (US) Weekly EIA Natural Gas Inventory: + bcf v +30 bcf to +35 bcf expected range

– European markets opened in the red overnight and then climbed right into positive territory after Italy’s relatively successful bond auction and the nomination of Former ECB Vice Chairman Papademos as the prime minister of Greece’s interim government. However US equities have given up some gains in the first hour of trading as investors wilt in the face of continued turmoil in Europe. The Italian 10-year rate may be holding below the 7% level after testing an EMU high of 7.48% on Thursday, however the French 10-year yield and spread against the German Bund remained elevated as rumors make the rounds of an imminent French downgrade. Independent ratings analyst Sean Egan (of Egan Jones) commented that France’s sovereign rating is “probably headed south”; recall that Moody’s is currently accessing France’s stable sovereign outlook. Spot gold has come well off of its recent levels, taking another step down in the first hour of trading and is currently around $1,745. Front-month crude remains elevated, trading above $96. Treasury prices are modestly pushing the US 10-year yield back above 2%.

– In earnings, Cisco once again modestly exceeded expectations on modest profit growth. CEO Chambers said the firm has completed most of its restructuring and remains focused on margins. However he also warned that Europe would remain challenging even as Americas’ growth picks up. Shares of CSCO are up 7%. Media giant Viacom was in line with forecasts and cranked up its share buyback program to a whopping $10B, approx 35% of its market cap. Shares of Viacom gained 4% in the premarket before trading back to unchanged. Green Mountain Coffee missed revenue targets in its Q4. Revenue missed due to a number of factors including changes in wholesale order patterns. GMCR is at its lows, down 37%, and heading lower. Kohl’s was right in line and offered solid guidance. Merck hiked its dividend and said its FY12 revenue would be more or less flat on a y/y basis.

– The euro was off its New York session highs after the positive glow from Italian and Greek political developments wore off. EUR/USD had tested above 1.36 earlier on reports that Italy would speed up passage of its 2012 budget bill, aided further by continuing chatter of an emergency ECB meeting. Greece seemed to have finally selected former ECB member Papdemos as its interim PM. Note taht Bundesbank VP Dombret commented that there was no emergency ECB meeting yesterday nor was one scheduled for today.

***Looking Ahead***

– 11:00 (US) Fed member Liang speaks on Financial Stability in Chicago
– 11:00 (US) Fed to purchase $1.50-2.00B in Notes/Bonds
– 11:00 (UK) BOE confirms details of week’s Asset Purchase operations
– 11:45 (US) Fed Chairman Bernanke speaks to Soldiers in El Paso, Texas
– 13:00 (EU) Outgoing ECB member Stark speaks at Event in Berlin
– 13:00 (EU) ECB member Praet speaks in Chicago
– 13:30 (GE) German Chancellor Merkel
– 13:00 (US) Treasury to sell $16.0B in 30-Year Bonds
– 14:00 (US) Oct Monthly Budget Statement: -$105.0Be v -$140.4B prior

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