Trade the News Market Internals Update at 12:00ET

DJIA +25 S&P500 flat Nasdaq -19

***Economic Data***

– (CA) Canada Sept Net Change in Employment: +60.9K v +15Ke; Unemployment Rate: 7.1% v 7.3%
– (CL) Chile Sept CPI M/M: 0.5% v 0.5%e; Y/Y: 3.3% v 3.3%e; CPI Ex Perishables & Fuel M/M: 0.3% v 0.5%e
– (CL) Chile Sept Trade Balance: $324.0M v $640.0Me; Copper Exports: $3.3B v $3.6B prior
– (BR) Brazil Sept IBGE Inflation IPCA M/M: 0.5% v 0.5%e; Y/Y: 7.3% v 7.3%e
– (PD) Poland Sept Total Official Reserves€100.3B v €107.0B prior
– (RU) Russia Q3 Consumer Confidence: -7 v -9 prior
– (US) Sept Change in Nonfarm Payrolls: +103K v +55Ke; Change in Private Payrolls: 137K v 90Ke; Change in Manufacturing Payrolls: -13K v 0Ke (flat)
– (US) Sept Unemployment Rate: 9.1% v 9.1%e
– (US) Sept Avg Hourly Earning M/M: 0.2% v 0.2%e; Avg Weekly Hours: 34.3 v 34.2e
– (MX) Mexico Sept Consumer Prices M/M: 0.3% v 0.3%e; Y/Y: 3.1% v 3.2%e; CPI Core M/M: 0.3% v 0.3%e
– (US) Aug Wholesale Inventories: 0.4 v 0.6%e
– (HU) Hungary Sept YTD Budget Balance (HUF): -1.6B v -1.5B prior

– This morning’s Sept non-farm payrolls data offered the markets cold comfort as employment gains in the month beat expectations but were still way below the levels needed to bolster the economic recovery. PIMCO’s Bill Gross responded to the data by reiterating his common refrain that the US needs 200K jobs a month for a sustainable recovery and added that monetary policy was close to being exhausted. Meanwhile the unemployment rate has not budged, although many saw the revision of the flat August headline non-farm figure to +57K as a heartening sign. In Europe, it looks as if politicians are embracing some form of Plan B for dealing with the debt crisis, with measures being prepared to bolster bank capital levels ahead of a potential Greece insolvency. There were rumors overnight that France and Germany were not in agreement over how specifically to handle bank recapitalization, although they were strenuously denied by sources inside of the French Finance Ministry. By mid morning the non-farm payrolls optimism had worn off and both the Nasdaq and S&P500 were back in negative territory.

– Alcoa officially kicks off the September quarter earnings season on Tuesday, and investors continue to position themselves ahead of what many are expecting to be a choppy, uneven round of quarterly reports. Last night Samsung Electronics offered a preliminary look at its Q3 results, indicating that profits will exceed expectations thanks to strong smartphone sales. Note that with DRAM prices down approx 50% in Q3, analysts believe Samsung was the only profitable DRAM maker in the quarter. Genetic analysis tools firm Illumina offered very weak guidance for Q3, warning that uncertainty on research funding in the US and Europe has become a real impediment to the industry. Competitor Bruker BioScience offered its own commentary, saying that its revenue would beat consensus expectations. Shares of ILMN were down more than 30% in early trading, while shares of competitors BRKR and LIFE were both down 5%. Shares of Sprint were up as much as 7% earlier this morning as management outlined plans for a stronger 4G network and big sales goals for the iPhone 4S. Shares of network partner Clearwire have tanked 15% on news that Sprint would be building out its own network infrastructure.

– Shares of the leading US banks are under pressure this morning from events in Europe, details about the Volker Rule and a barrage of analyst skepticism. Barclays warned that Bank of America expect Q3 earnings to offer less clarity on the company’s mortgage related issues than it originally expected. At Citi, they see trading weakness and lower investment banking fees. More negative rumors about Goldman Sachs laying off employees made the rounds. A late Sept version of the Volcker Rule was leaked last night, prompting talk that the leak could result in a faster implementation. Leaked details seemed to indicate the rule would require very detailed policing of individual traders at banks.

– Risk appetite found some footing following the September payrolls report, weakening the greenback. EUR/USD tested above the 1.35 handle as commodity-related pairs strengthened. The dollar was off its worst levels by mid morning. The Canadian Dollar also saw a firm tome following Canada’s better employment data and USD/CAD tested 1.0330 and then probed another big figure lower after the US jobs report. CHF saw its best levels erode on renewed chatter that the SNB might raise the floor on the EUR/CHF cross as soon as this weekend. EUR/CHF was making another attempt to probe above the 1.24 level.

***Looking Ahead***

– 15:00 (US) Aug Consumer Credit: $8.0Be v $12.0B prior
– 22:30 (CH) Sept China HSBC Services PMI: no est v 50.6 prior

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