Trade the News Market Internals Update at 12:00ET

Dow -105 S&P -13 NASDAQ -9

***Economic Data***

– (IR) Ireland CPI MoM: 0.3% v 0.2% prior, YoY: 2.6% v 2.2% prior
– (IC) Iceland Sept Unemployment Rate: 6.6% v 6.7% prior
– (PD) Poland Sept CPI M/M: 0.1% v 0.4%e; Y/Y: 3.9% v 4.1%e
– (PD) Poland Current Account: -€1.73B v -€1.4Be; Trade Balance: -€750M v -€1.0Be
– (CA) Canada Aug Int’l Merchandise Trade: -C$620M v -C$1.0Be
– (US) Aug Trade Balance: -$45.6B v -$46.0Be
– (US) Initial Jobless Claims: 404K v 405e; Continuing Claims: 3.67M v 3.7Me
– (US) EIA Natural Gas Inventories: +112 BCF v +100 to +105 BCF expected

– US equity trading is being driven by events on this side of the pond again for the first time in several session, as JPMorgan’s troubling earnings report helps drag down the DJIA and S&P500. In the background, traders are worried that trade data published by China and the US is more evidence of a global economic slowdown. China’s overall Sept trade balance report hit a four-month low, including a seven-month low in overall exports. The August US Trade balance report showed the US trade deficit declined in August, versus expectations in a slight increase. In Europe, Slovakia’s parliament approved the EFSF measure in a second vote and leaders continued talks in Paris about increasing the size of haircuts on private Greek debt holdings. After sustaining some overnight strength, the euro has weakened as negotiators continue to hash out the fine details of how to proceed with the Greek bailout and the EFSF. EUR/USD continued to test above the 1.3800 level overnight, before dropping back toward 1.3700 in the US session. Treasury prices have found a bid putting yesterdays buyers of 10-year paper in the money: the 10-year yield is down 76 basis points to 2.13%.

– Earnings from JP Morgan are under close scrutiny this morning. The firm’s headline earnings came in at $1.02, beating estimates, although the bank admitted itself that this figure was sweetened by a $1.9B debt valuation adjustment. Ex this gain, JP Morgan’s earnings dropped around 25% on a y/y basis. Revenue at JPMorgan’s investment banking unit was down substantially on a y/y basis, raising eyebrows. On the conference call, executives said Q4 performance at the investment banking arm would be similar to Q3 results. The bank’s private equity unit also racked up a big $500M loss. Shares of JPM are down 5% this morning, driving hefty losses among the other big banks. The XLF is down 3%. Note that House Democrats have requested a DoJ anti-trust investigation into the banking industry for potential collusion on debit fees.

– Other significant earnings out this morning were relatively strong. Supermarket giant Safeway topped expectations and reaffirmed its FY11 guidance. After rising over 6.5% earlier in the session, shares of SWY are around +3.5% mid morning, while competitors KR and WMT. Winnebago crushed expectations, although profits fell a bit on a y/y basis. Shares of WGO had spiked as much as 12% in the premarket, although most of those gains are already in the rearview mirror, with WGO up a little more than 3.5% in mid-morning trading. Semi name Fairchild is up 5% despite largely in-line results, after confirming that cost controls were right on track to help the firm deal with the tech slowdown. Industrial supplies distributor Fastenal only just met expectations and shares of FAST are down 4%. Three notable names offered bullish preliminary guidance for upcoming quarterly results. Troubled homebuilder Beazer Homes said its Q4 orders were up 33% on a y/y basis and closings were up 23% y/y, promising a strong closeout to the year. BZH is up 9%. Network operator Clearwire said its revenue would beat expectations in its Q3, sending shares of CLWR up more than 16%. Mead Johnson said both top- and bottom-line results would be above par and also raised its FY11 guidance incrementally. MJN is up 2%.

***Looking Ahead***

– 11:30 (BR) Brazil Central Bank Posts Currency Flows’ Data for Prev. Week
– 17:00 (CL) Chile Central Bank Interest Rate Decision: Expected to leave the Nominal Overnight Rate Target unchanged at 5.25%
– 17:00 (CO) Colombia Aug Trade Balance: No est v $545.7M prior
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