Trade the News Market Internals Update at 12:00ET

Dow +24 S&P +6 NASDAQ +34

***Economic Data***

– (BR) Brazil July Central Gov’t Budget (BRL): 11.2B v 10.5B prior
– (BR) Brazil Aug FGV Construction Costs M/M: 0.2% v 0.3%e
– (US) Q2 Preliminary GDP Q/Q Annualized: 1.0% v 1.1%e; Personal Consumption: 0.4% v 0.2%e
– (US) Q2 Preliminary GDP Price Index: 2.4% v 2.3%e; Core PCE Q/Q:2.2% v 2.1%e
– (BR) Brazil July Nominal Budget Balance (BRL): -5.0BB v -5.6B prior; Primary Budget Balance: 13.8B v 14.0Be; Net Debt to GDP ratio: 39.4% v 39.7%e
– (US) Aug Final University of Michigan Confidence: 55.7 v 55.8e
– (MX) Mexico Central Bank leaves the Overnight Rate unchanged at 4.50%; As expected

– Equity markets lost ground between the open of cash trading and the release of Fed Chairman Bernanke’s speech at the Jackson Hole conference. Investors and commentators did not have great expectations for major initiatives to be announced by Bernanke, although many had predicted that “operation twist” might be launched at Jackson Hole (shifting the average maturity held on the Fed balance sheet toward the long end of the curve). Indices dipped lower and then recovered some losses as traders digested the remarks; interestingly the Nasdaq popped right into positive territory. All in all, Bernanke only reiterated many points he has made already over recent weeks, noting again that the recovery slower than expected, emphasizing that Fed policy can’t do much more to help the recovery and calling on Congress to act swiftly to resolve the deficit issue. Q&A will arrive later this morning. The second revision of Q2 US GDP held no surprises; the headline figure was revised slightly lower, right in line with expectations. Yields backed up in UST markets post Bernanke, with the 10-year up about 6 basis points to 2.2%.

– In equity news, Tiffany & Co. blew out profit expectations yet again, widely beating expectations even as revenue was a bit soft. The firm also tweaked its FY11 outlook higher and said that Q3 sales are exceeding expectations. Shares of TIF are up nearly 6% in early trading. Recent tech IPO Pandora widely beat expectations in its first quarterly report as a public company, sending its shares up 7%.

– Risk aversion flows ahead of Fed Chief Bernanke speech in Jackson Hole aided both USD and JPY pairs as the New York session commenced. EUR/USD continued to find resistance on the way towards 1.45 area and only tested just above 1.4450 in today’s session. Right after Bernanke’s speech the Swiss Franc weakened notably against most major pairs, with little hard news to explain the move. Traders passed around rumors about possible moves by UBS to charge for deposits or potential SNB measures, although nothing has been confirmed as of yet. USD/CHF pushed out above 1.1560 for one-month highs.

***Looking Ahead***

– EU finance ministry officials were expected to discuss the collateral dispute between Finland and Greece
– 12:25 (EU) ECB’s Trichet speaking at Jackson Hole, WY
– 15:00 (AR) Argentina July Shop Center Sales Y/Y: No est v 19.9% prior
– 22:00 (CH) China July YTD Industrial Profits: No est v 28.7% prior
Weekend
– (SI) Singapore Presidential Election

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