Trade the News Market Internals update at 12:00ET

Dow -73 S&P -9.8 NASDAQ -31

***Economic Data***

– (CA) Canada July Net Change in Employment: 7.1K v 15.0Ke; Unemployment Rate: 7.2% v 7.4%e
– (BR) Brazil July IBGE Inflation IPCA M/M: 0.2% v 0.2%e; Y/Y: 6.9% v 6.9%e
– (PD) Poland Official Reserves: $106.7B v $109.1B prior
– (US) July Change in Nonfarm Payrolls: 117K v 85Ke; Change in Private Payrolls: 154K v 113Ke; Change in Manufacturing Payrolls: 24K v 10Ke
– (US) July Unemployment Rate: 9.1% v 9.2%e
– (US) July Avg Hourly Earning M/M: 0.4% v 0.2%e; Avg Weekly Hours: 34.3 v 34.3e
– (CA) Canada Jun Building Permits M/M:+2.1 % v -5.0%e
– (CL) Chile Jun Economic Activity Y/Y: 6.1% v 5.8%e
– (CA) Canada July Ivey Purchasing Managers Index: 45.4 v 62.0e; PMI Seasonally Adj: 46.8 v 61.0e

– The US July payrolls news initially helped put a floor under market losses worldwide this morning, however the jobs report is far from an unambiguous positive. The headline payrolls number could have been a lot worse, although the birth/death plug cut it down to +99K, just out of the triple-digit range. The +154K private payrolls number was respectable, and the June data was revised higher as well. However the overall unemployment rate is stuck above 9%, and all-in-all the report hardly suggests that the economic picture is improving. US futures ticked up after the data and equity markets opened in positive territory, and then plunged into the red on rumors of a possible S&P sovereign downgrade of the US AAA rating as soon as this weekend. Spot gold remains well off its highs from yesterday, around $1,660. Treasury prices are a bit lower but declines are very modest considering the recent surge in prices. The 10-year yield is still lower by more than 30 basis points on the week and the curve has held the recent flattening.

– Headline results out of AIG yesterday after the close looked strong, although the firm’s strong profits were based solely on the sale of a stake in AIA and tax benefits. Underlying results at AIG were weaker on a y/y basis, with operating earnings of $0.69, thanks to widespread investment losses and big hits from the catastrophes this spring.

– Procter & Gamble slightly exceeded expectations in its Q4, although it’s guidance for Q1 and its initial FY12 guidance was softer than expected. Executives warned that the firm’s guidance ranges are wider than usual due to both upside and downside risks, and like the other consumer staples names said that prices hikes would continue apace in the year. PG was up 2% at the open. Media name Viacom reported solid y/y profit and revenue growth. VIA gained 3% before the open. Travel agency Priceline.com beat profit targes in its Q2 and offered very strong Q3 guidance. PCLN surged to as much as +12% right after the open, before following markets lower. Brocade Communications is down 25% after slashing its Q3 guidance thanks to weakening performance at its storage business. LinkedIn beat expectations widely in its first post-IPO report, although a downgrade at Morgan Stanley helped knock down shares of the firm.

– Magna International missed earnings expectations due to commodity costs and some weaker sales in Europe. MGA is -18%. Engineering giant Fluor beat profit targets by a wide margin and significantly widened its backlog to an impress $40B. Fertilizer name CF Industries crushed earnings expectations thanks to the very favorable dynamics in the industry. Like the other major fertilizer names, CF said that strong demand and tight inventories are expected to support crop prices and continuing high levels of plantings in 2012, particularly for corn and soybeans. FLR and CF are still in the black. US solar leader First Solar disappointed investors with anemic growth and lower FY11 guidance. Executives blamed lower ASPs as uncertainty in European markets undermined sales. The bottom line at refiner Sunoco got hit by one-time charges, but ex-items the firm had solid profits and fantastic revenue growth.

– The US payroll data initially provided a sense of relief from the concerns that have enveloped markets over the last 24 hours. However, dealers are questioning whether +117K is really sufficient to derail global growth concerns. In addition, the S&P downgrade rumors have not helped sentiment. The greenback is broadly softer against the major pairs, hovering around 1.42 against the euro.

***Looking Ahead***
– 15:00 (US) Jun Consumer Credit: $5.0Be v $5.1B prior
– 20:00 (CO) Colombia July Consumer Price Index M/M: 0.2%e v 0.3% prior; Y/Y: 3.4%e v 3.2% prior

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