Trade the News Market Internals Update at 12:00ET

Dow -132 S&P -13.5 NASDAQ -27

***Economic Data***

– (BR) Brazil Central Bank Weekly Economists Survey: 2011 GDP growth at 3.42% v 3.50% prior
– (CA) Canada Aug Int’l Securities Transactions: C$7.9B v C$10.0Be
– (US) Oct Empire Manufacturing: -8.5 v -4.0e
– (US) Sept Industrial Production: 0.2% v 0.2%e; Capacity Utilization: 77.4% v 77.5%e
– (CA) Canada Q3 Business Outlook Future Sales: 6 v 20 prior; BoC Senior Loan Officer Survey: -26.9 v -49.6 prior

– European shares were making big gains again overnight before German officials stepped in and threw cold water on hopes that the upcoming European summit could offer a final solution for the euro zone debt crisis. Euro indices traded straight down from 05:00ET onward, taking US futures lower with them. The poor showing in the headline October Empire Manufacturing data only added weight. The S&P500 is headed straight toward the key 1200 level. Note that the new orders and employment sub-indices of the Oct Empire survey were both pretty positive. Corporate earnings out this morning have not been exceptional, and the robust deal flow has not managed to help sentiment this morning either. Front-month crude peaked above $88 overnight, and then traded lower. Bonds are rallying again on safe haven flows pushing the US 10-year yield below 2.2%.

– Citigroup’s earnings were only slightly higher than expected, after subtracting a $0.39 gain from the bank’s debt value adjustment. Top-line revenue was in line, although the investment banking business saw revenue decline 12% y/y, hurt by declining underwriting and merger advisory fees. Wells Fargo’s Q3 results were right in line with the consensus view, while net interest margin dropped by a notable amount. Credit metrics at both banks continue to look better and better, including considerably lower charge-offs and provisions. Shares of WFC are down 6%, while Citi is still in positive territory. In other earnings, oil services leader Halliburton just met expectations on solid y/y profit and revenue growth. On the conference call, Halliburton’s CEO said that he expects cost inflation to continue in North America and does not expect any significant improvement in pricing this year. Shares of HAL are down 7%, while the broader OIH is down 3%. Toy maker Hasbro narrowly missed top- and bottom-line estimates, and disclosed a much lower operating margin in the quarter. Broker Charles Schwab’s earnings were weighed down by the poor market in Q3, although they were still up 80% on a y/y basis.

– It’s been a big deal morning for the energy sector. Kinder Morgan reached a $21B agreement to buy El Paso Corp, tying up the two largest natural gas pipeline operators in North America. Kinder said it would buy El Paso for a total of of $26.87/shr in cash, warrants and debt, for a 37% premium to Friday’s close. Note that the deal would end El Paso’s plan, announced in May, to split into two publicly traded companies, which would have separated its exploration and production business from its pipeline operations. Kinder Morgan said it plans to sell El Paso’s exploration and production assets. Energy Transfer Partners has agreed to sell its propane operations to AmeriGas Partners in for $2.9B.
Shale driller Brigham Exploration is being taken out by Statoil for $36.50/shr, for a total deal worth $4.4B. In separate energy news, Anadarko Petroleum agreed to pay BP $4.0B in a settlement agreement stemming from Deepwater Horizon claims.

***Looking Ahead***

– 11:30 (PE) Peru Sept Unemployment: 7.0% prior
– 22:00 (CH) China Q3 Real GDP Q/Q 2.2% prior; Y/Y 9.5% prior; GDP YTD Y/Y: 9.6% prior
– 22:00 (CH) China Sept Industrial Production Y/Y: 13.3%e v 13.5% prior; Industrial Production YTD Y/Y: 14.1%e v 14.2% prior
– 22:00 (CH) China Sept Retail Sales Y/Y: 17.1%e v 17.0% prior; Retail Sales YTD Y/Y: 16.9%e v 16.9% prior

This information was brought to you courtesy of TradetheNews.com, for your free trial Click Here