Trade The News Market Internals Update at 12:00ET

Dow -29 S&P -4.4 NASDAQ -19

***Economic Data***

– (CL) Chile Sept Economic Activity Y/Y: 4.6%e v 4.6% prior
– (CL) Chile Oct Trade Balance: $836.7M v $250.0Me v $324.0M prior
– (CL) Chile Oct Copper Exports: $3.5B v $3.4B prior
– (BR) Brazil Oct Vehicle Production:265.6K v 261.2K prior; Vehicle Sales: 280.6K v 311.7K prior; Vehicle Exports: 52.3 v 44.7K prior
– (PD) Poland Oct Total Official Reserves: $102.7B v $100.3B prior
– (HU) Hungary Oct YTD Budget Balance (HUF): -1.28T v -1.571T prior
– (EU) completed €9.5B in weekly settlements vs €4.0B prior in Gov’t bond purchase program (SMP); To drain €183.0B in next 7-day Term deposit tender vs. 175.3B prior
– (UK) BOE Asset Purchase Facility (APF) bought £1.7B in 2015-2020 Gilts in reverse auction; bid-to-cover: 2.73x

– Markets are on edge again this morning with the Italian government hanging in the balance and no new government formed as of yet in Greece. US equity indices spent the first hour of trade in the black but have headed lower this morning as European finance ministers gather for yet another meeting to discuss the crisis, this time of the Euro Group. News is percolating through the markets that sales of a 10-year tranche of EFSF bonds are not proceeding well at all, with the fund having trouble finding investors. Note that mid-morning, there were headlines suggesting that some ECB governing council members are said to be uncomfortable about continuing bond purchases, not interested in giving Berlusconi political support via bond purchases. In a sign of the fear, spot gold is hitting one-month highs around $1,784, while the VIX index of volatility is heading for 32. US Treasury prices are flat with the benchmark 10-year yield remaining just above 2%. Spreads in Europe are wider yet again led by Italy which saw its 10-year yield climb to 6.6%.

– With most of the major S&P500 earnings over and done with, earnings season is winding down. Retailers will report later this week and next week. This morning both Dish Network and Sysco offered quarterly results athat more or less met expectations. Dish’s net adds in its Q3 were more than three times the comparable y/y amount, accelerating fears about the impact of the weak economy on the firm’s business. DISH is is up 4% but off its best levels, while SYY is down 1%.

– There were several small acquisition announced before the open this morning. Force Protection said it would be acquired by General Dynamics for $5.52/share in a $360M deal, around a 31% premium to prior close. General Dynamics said the transaction would accretive to earnings in 2012. American Dental Partners said it would be acquired by JLL Partners for $19/shr, an 83% premium to the name’s prior close. The total deal value is $398M. Small telecom firm Tekelec said it would be acquired by a consortium led by Siris Capital Group, LLC and several other affiliates. The transaction is valued at approximately $780M.

– The risk aversion that took over earlier during the European session eased off a bit early in the New York session as rumors of Berlusconi’s imminent resignation circulated. Berlusconi faces a budget vote and a related confidence vote on Tuesday, his political support has been rapidly dwindling and uncertainty is adding to market pressure on Italy. Italian yields and related spreads were off their worst levels during the New York morning and EUR/USD was trying to regain all of its earlier losses and moved back above 1.38 area. There was renewed dealer chatter that the ECB was again buying peripheral debt in session for the second time in the day.

***Looking Ahead***

– 11:00 (US) Fed to purchase $2.25-2.75B in Notes/Bonds
– 11:30 (US) Treasury to sell $29B in 3-Month and $27B in 6-Month Bills
– 12:00 (EU) Euro Area Finance Ministers meet in Brussels
– 12:00 (US) US President Obama on tax credits
– 12:45 (SZ) SNB member Jordan speaks in Lucerne
– 12:45 (EU) outgoing ECB member Stark speaking in Lucerne
– 13:00 (EU) EU trade Commissioner De Gucht
– 14:00 (EU) EU’s Barroso speaks at EPP Conference on Euro
– 14:00 (US) Fed loan officers survey
– 15:00 (US) Sept Consumer Credit: +$5.0Be v -$9.5B prior
– 18:00 (SZ) SNB Gov Hildebrand with ECB member Weidmann in Berlin

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