Trade the News Market Internals update at 12:00ET

Dow -101 S&P -14 NASDAQ -23

***Economic Data***

– (US) ICSC/GS weekly chain store sales w/e July 30th: -0.3% w/w; +4.0% y/y
– (BR) Brazil Jun Industrial Production M/M: -1.6% v -0.4%e; Y/Y: 0.9% v 2.5%e
– (US) Jun Personal Income: 0.1% v 0.2%e; Personal Spending: -0.2% v +0.1%e
– (US) Jun PCE Core M/M: 0.1% v 0.2%e; Y/Y: 1.3% v 1.4%e; PCE Deflator Y/Y: 2.6% v 2.6%e
– (US) Redbook Retail Sales w/e July 30th: +4.5% y/y; July MTD: -0.5% v Jun
– (SI) Singapore July Purchasing Managers Index: 49.3 v 50.0e; Electronics Sector Index: 49.5 v 50.5e

– The final US debt ceiling deal has passed the House of Representative and proceeds to the Senate later today, putting an end to the current round of US debt fears. However analysts and commentators broadly agree that damage has already been done to the US economy by the crisis. S&P500 futures gave up ground from passage through the open of trade, and all three leading US equity indices are in the red this morning. The June PCI data was not positive, with the headline showing practically no growth and the personal spending component contracted for the first time in nearly two years. The data only makes investors wonder about the prospects for Friday’s July payrolls report. In Europe, contagion fears about Italy and Spain were driving funds into safe havens. There were rumors circulating that Italian officials would be meeting with the Bank of Italy to discuss volatility in debt financing markets and Italian banks swooned into their close of trade. Spot gold is only slightly off another record high of $1,639. The US 10-year is up another half point depressing its yield below 2.7%, while the 2-10 year spread continues to compress below 235 basis points.

– Marathon Oil missed the Street’s Q2 profit expectations, on weaker than expected y/y profit growth. The firm’s production in the quarter came in below its own forecasts, due to downtime at various facilities. Marathon recently spun off its refining operations as a free-standing corporation. The new Marathon Petroleum had very strong earnings and revenue figures for its Q2. MRO is down 2% and MPC is down 3.5%. Industrial powerhouse Emerson met expectations in its Q3 and reaffirmed its FY11 guidance, although it warned revenue for the year could be at the low end of its prior range. Foster Wheeler topped profit and revenue expectations in its Q2 and sustained its EBITDA guidance for the year, but also warned that its Q3 would be weaker on a sequential basis.

– Among consumer-facing names, MetroPCS is getting slammed after missing profit expectations in its Q2 and also recording a big y/y decline in net subscriber additions. On the conference call executives warned that the firm’s churn levels may continue to increase into Q3, as normal seasonality will be accentuated. PCS is down 30%, dragging LEAP down 15% on the news. Molson Coors also missed profit targets as worldwide beer volumes fell somewhat over 2010 levels in the firm’s second quarter. Molson also launched a big $1.2B stock buyback, helping to limit downside this morning. TAP is down 1%. Luxury name Coach beat expectations, however investors were nervous about the firm’s lower profit margins, sending shares of COH down 5%.

– Dealers used the weaker US data as an excuse to reverse dollar gains against the euro. The US consumer income and spending data continued to show that economic fundamentals remained weak. The lack of jobs combined with wage gains that have failed to keep pace with inflation raise the risk of further cuts in consumer spending. EUR/USD recovered from session lows of 1.4150 to test above 1.4240. Far East banks continued their appetite for gold with recent reports that both Bank of Korea and Thailand were buyers of the precious metals

***Looking Ahead***

– 11:30 (US) Treasury to sell 4-Week Bills
– 12:00 (US) US Senate planned vote on the debt ceiling planned
– 16:30 (US) API Weekly Energy Inventories
– 17:00 (US) July Total Vehicle Sales: 11.80Me v 11.41M prior; Domestic Vehicle Sales: 9.20Me v 8.95M prior
– 21:00 (CH) China July Non-manufacturing: No est v 57.0 prior
– 22:30 (CH) China July HSBC Services PMI: No est v 54.1 prior

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