Trade the News Market Internals Update at 12:00ET

***Economic Data***

– (SP) Spain Aug YTD Budget Balance: No est v €-22.75B prior
– (BR) Brazil Sept FGV Consumer Confidence: 114.7 v 118.7 prior
– (BR) Brazil Sept FGV Construction Costs M/M: 0.1% v 0.1%e
– (US) ICSC/GS weekly chain store sales w/e Sep 24th: -0.2% w/w; +2.7% y/y
– (US) Redbook Retail Sales w/e Sep 24th: +4.4% y/y; Sep MTD: -0.1% v Aug
– (US) July S&P/CaseShiller 20 City M/M: 0.05% v 0.10%e ; Y/Y: -4.11% v -4.40%e; Home Price Index: 142.77 v 141.3 prior
– (US) Sept Consumer Confidence: 45.4 v 46.0e
– (US) Sept Richmond Fed Manufacturing Index: -6 v -11e

– Over on the Continent, the DAX and CAC are up 4.5% a piece, while leading US equity indices are up 2% in mid morning trading. The gains follow news yesterday afternoon from CNBC’s Liesman, who reported that euro zone officials were working on a “detailed proposal” for leveraging the EFSF. No headlines have decisively refuted his report, although European officials seem to be doing their best to qualify whatever is actually going on. In any case, the Greek parliament looks set to approve the new round of austerity measures, securing the next tranche of aid and keeping the country from defaulting, for now. Note that Chancellor Merkel was said to have informed party members that a Greek default cannot be ruled out even though she is not in favor of insolvency for Greece. US banks are leading the charge this morning, with shares of Morgan Stanley up a whopping 6%, even as Basel regulators meet to likely approve a new 1.0-2.5% surcharge for systemically important institutions. Money is coming out of bond markets for second straight session sending the US 10-year yield back up towards 2%.

– Walgreens had a very good Q4 to round up the year, narrowly beating estimates on very strong y/y profit growth and solid comps. On the subject of the dispute with Express Scripts management had no new developments to share, expect to reiterate that terms offered by Express Scripts are still unacceptable. Shares of WAG are down 3.5%. Two more names have slashed guidance due to the worsening economic outlook. Autoparts manufacturer Accuride Corp gutted its FY11 outlook, while tech hardware maker IDTI trimmed its Q2 revenue forecast following numerous competitors.

– In FX trading, extensive rebalancing by money managers before quarter-end was helping the equity markets and weighing upon the greenback. In Europe, the mixed official signals on the EFSF continued as German Finance Minister Schaeuble warned that increasing the size of the EFSF would mean some AAA-rated nations would be downgraded. The European Investment Bank (EIB) said it had yet to be approached to offer plans for the EFSF. Nonetheless EUR/USD managed to take out stops above the 1.36 level.

***Looking Ahead***

– 11:00 (US) Fed to purchase $0.25-0.75B in TIPS
– 11:30 (US) Treasury to sell 4-Week Bills
– 12:00 (GR) Greece Parliament to vote on property tax bill
– 12:30 (US) Fed’s Lockhart (non-voter) speaks on economy in Jacksonville, Florida
– 13:00 (US) Treasury to sell 2-Year Notes
– 13:20 (US) Fed Fisher (voter)
– 14:00 (GE) German Chancellor Merkel and Greece PM Papandreou meet for talks in Berlin
– 15:00 (BR) Brazil Aug Total Outstanding Loans (BRL): No est v 1.854T prior; Private Banks Lending: No est v $1.072T prior; Outstanding Loans M/M: No est v 1.1% prior
– 16:25 (CA) Bank of Canada’s Macklem speaks
-16:30 (US) Weekly API Energy Inventories