Trade the News Market Internals Update at 12:00ET

Dow -200 S&P -24 NASDAQ -52

***Economic Data***

– (BR) Brazil Sept Industrial Production M/M: -2.0% v -1.2%e; Y/Y: -1.6% v -1.0%e
– (PE) Peru Oct Consumer Price Index M/M: 0.3% v 0.2%e v 0.3% prior; Y/Y: 4.2% v 4.0%e; Wholesale Prices M/M: 0.2 v 0.7% prior
– (US) ICSC/GS weekly chain store sales w/e Oct 29th: +0.7% w/w; +3.0% y/y
– (BR) Brazil Oct PMI Manufacturing: 46.5 v 45.5 prior
– (CZ) Czech Oct Budget Balance (CZK): -91.5B v -105.1B prior
– (US) Redbook Retail Sales w/e Oct 29th: +4.7% y/y; Oct MTD: -0.6% v Sept
– (BR) Brazil Oct Trade Balance: $2.4B v $1.0Be
– (SI) Singapore Oct Purchasing Managers Index: 49.5 v 48.3e; Electronics Sector Index: v 47.0e
– (US) Sept Construction Spending M/M: 0.2% v 0.3%e
– (US) Oct ISM Manufacturing: 50.8 v 52.0e; Prices Paid: 41.0 v 55.0e

– The Greek confidence vote/referendum situation decimated European equity indices this morning, although they are well off their prior lows as they head towards the closing bell. In the US, futures fell sharply, with the DJIA and S&P500 opening up approx -2.5% each. However US indices have regained some losses in the first hour and a half of trading. At this point the Greek government is looking very shaky, with multiple defections from the ruling party and many more voices within the party calling for PM Papandreou to resign. European officials plan to meet at Cannes ahead of the G20 meeting to discuss the Greece situation, although the details of what is happening in Athens remain highly fluid. In the US, the ISM Manufacturing report indicated that manufacturing growth ground to a halt in October, while the prices paid index dropped well into contraction territory, to its lowest level since April 2009. New orders were stronger than in recent months. Bond markets on both sides of the Atlantic have been whipsawed violently by safe haven flows. The US benchmark yield dipped below 2% while the Bund approached 1.75% before rebounding. European sovereign spreads are hitting new life time highs across the continent. The Italian 10-year yield has topped 6.3% for the first time while the spread between French and German 10-year paper has surpassed 120 basis points. Commodity markets have been weighed upon by a firmer Greenback. Dec crude briefly dipped below $90.

– Shares of insurance giant Allstate gave up gains from the post market this morning, dropping nearly 3% in the first half hour of trade despite having reported quarterly results that crushed all expectations. Note that shares of Allstate competitor Metlife fell as much as 7% in the premarket, while shares of Citigroup and Morgan Stanley fell nearly 10%, reacting to the European situation. CME was more or less in line with analysts’ estimates. On the conference call, executives were reluctant to discuss the MF Global situation, and only really stated that MF Global was not in compliance with customer segregation requirements, triggering an investigation. CME is down 5%.

– Shares of Pfizer and Watson Pharma opened in the red but quickly rose into positive territory. Both names topped estimates and increased FY11 guidance.

– Prepaid wireless names Leap and MetroPCS had poor earnings results, although both noted that the third quarter is typically their worst quarter. Note that PCS’s net adds were down sharply on a y/y basis; alternatively Leap had a big fall in churn and a nice uptick in ARPU. PCS is down 7%, while LEAP is up around 15%.

– Emerson Electric met expectations in its Q4 report and hiked its quarterly dividend. The firm’s FY12 outlook was very strong. Heavy truck manufacturer Oshkosh was firmly ahead of consensus expectations, although like many other defense-oriented names, it lowered its FY12 defense segment guidance due to uncertainties involved in government spending levels.

– In the energy patch, refiners Valero and Marathon both delivered greater than 70% y/y profit growth in the quarter thanks to low crude prices and excellent refining margins, easily beating out the Street’s expectations. Valero did warn that its refining margins have declined in Q4, although from very high levels. Both names fell as much as 5% in the early going, although both are nearly back to unchanged. Shares of drilling services name Baker Hughes are down 10% after the firm missed profit expectations.

– The risk aversion sentiment drove FX trading. In a week that was supposed to be focused on the FOMC and ECB policy meetings, the US employment report and the G20 conference, global markets have been pitched a number of curveballs at this point. First there was the BOJ intervention, then the MF Global bankruptcy and now a fresh Greek crisis. The latter had put global markets into a risk-off mode and sent the euro tumbling towards the lower end of the 1.36 handle. Greek PM Papandreou called for emergency Cabinet meeting ahead of the European equity close today in a move to control the revolt within his ruling party. USD/JPY pair continued to hold above the 78 handle without any BOJ currency intervention and shrugging of the recent wave of risk aversion.

***Looking Ahead***

– (RU) Russia Oct Reserve Fund: No est v $25.9B prior; Wellbeing Fund: No est v $88.7B prior
– 11:00 (GR) Greece emergency Cabinet meeting on possible early elections and referendum proposal
– 11:00 (MX) Mexico Central Bank Economists Survey
– 11:00 (MX) Mexico Sept Remittances: $1.9Be v $2.1B prior
– 11:30 (UK) DMO to announce size for 0.625% Index-Linked 2040 Gilt auction

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