Trade the News Market Internals Update at 12:00ET

Dow -128 S&P -12.6 NASDAQ -33.6

***Economic Data***

– (BR) Brazil Aug FGV Consumer Confidence: 118.7 v 124.4 prior
– (TU) Turkey Aug Industrial Confidence: 109.8 v 114.1 prior; Capacity Utilization: 76.1% v 74.7%e
– (BR) Brazil July Unemployment Rate: 6.0% v 6.2%e
– (US) Initial Jobless Claims: 417K v 405Ke; Continuing Claims: 3.641M v 3.70Me
– (MX) Mexico Q2 GDP (current $) Y/Y: 8.9% v 7.7%e
– (MX) Mexico July Unemployment Rate: 5.6% v 6.0%e
– (MX) Mexico Q2 Current Account: -$ v -$305Me
– (US) Weekly EIA Natural Gas Inventories: +73 bcf v +70 bcf to +75 bcf expected range

– European and US equity indices turned sour right as New York markets opened for cash trading this morning. A flurry of rumors regarding Germany led markets lower, including very vague chatter that ratings agencies would potentially downgrade Germany’s ratings soon and other rumors about a new short selling ban. All three major agencies came out and reaffirmed Germany’s AAA sovereign ratings, helping staunch the bleeding. In the premarket Warren Buffett’s big move into Bank of America aided sentiment, along with weekly continuing claims that hit their lowest level since September of 2008. Gold continues to unwind, with spot gold nearly touching $1,700 earlier this morning. An MF Global analyst commented earlier that the “fever has broken” on gold, stating that in the short run he saw signs that there was a bubble even though the long-term trend appears intact. As stocks moved lower money found its way to government bond markets. The 10-year is up more than half a point pushing the yield back below 2.25%.

– Bank of America secured a big vote of confidence this morning, securing a $5B investment from Buffett’s Berkshire Hathaway very similar to Buffett’s investment in Goldman Sachs during the financial crisis. BoA will sell Berkshire 50K shares of preferred stock with a 6% annual dividend, and BoA is authorized to buy back the investment at any time by paying a 5% premium. Berkshire also gets 10-year warrants to buy 700M BoA common shares at an exercise price of just over $7.14/shr. Shares of BAC were up 25% on the news just after the open of trade, however the stock is up less than 15% in mid morning trade. Other major bank stocks are up less than 5%, giving up the strong gains seen right after the announcement.

– In the other major story of the morning, markets continue to react to news that Steve Jobs has resigned as CEO of Apple, naming Tim Cook as the new CEO. Jobs will stay on as chairman of the board, and there have been reports that he plans to remain engaged in product development and strategy as long as he is able. Note that there was no mention of his health in the statement from the company. Apple’s stock dropped as much as 7% in post-market trading, although AAPL is only down 1.5% in early trading this morning. Overnight analyst after analyst reiterated standing buy ratings and price targets for the stock. There were also reports that Jobs’ condition is said to be weak, leaving him housebound in recent weeks. Note that shares of Disney are also down 1.5% this morning.

– FX markets continue to be locked within recent ranges. CHF softened in early New York trading as dealers ponder when the SNB might announce additional measures to curb the franc. Risk appetite got a boost from the Berkshire Hathaway’s investment in BoA, although the move had limited impact on the greenback and markets continue to focus on Friday’s comments from Bernanke. EUR/USD continued to encounter some good selling pressures above the 1.4470 area

***Looking Ahead***

– European Securities and Markets Authority (ESMA) to issue statement regarding the short sale restrictions after European market close
– (BR) Brazil July Central Gov’t Budget (BRL): No est v 10.5B prior
– 11:00 (US ) Fed to purchase $.25-0.50B in TIPS
– 12:00 (FR) France July Net Change Jobseekers: no est v 33.6K prior; Total Jobseekers: No est v 2.72M prior
– 13:00 (US) Treasury to sell $29B in 7-Year Notes

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