Trade the News Market Internals Update at 12:00ET

Dow -1 S&P +2.5 NASDAQ +14

***Economic Data***

– (US) MBA Mortgage Applications w/e Sept 9th: +6.3% v -4.9% prior
– (PD) Poland Aug M3 Money Supply M/M: 1.9% v 0.8%e
– (CA) Canada Q2 Capacity Utilization Rate: 78.4% v 78.0%e
– (US) Aug Producer Price Index M/M: 0.0% v 0.0%e; Ex Food & Energy M/M: 0.1% v 0.2%e
– (US) Aug Advance Retail Sales: 0.0% v 0.2%e; Retail Sales Less Autos: 0.1% v 0.2%e; Retail Sales Ex Auto & Gas: 0.1% v 0.2%e
– (US) July Business Inventories: 0.4% v 0.5%e
– (BR) Brazil Aug CAGED Formal Job Creation: K v 200.0Ke v 140.6K prior
– (US) Weekly DOE Energy Inventories: Crude: -6.7M v -3.5Me; Gasoline: +1.9M v -1Me; Distillate: +1.7M v +500Ke; Utilization: 87.0% v 85.7% w/w

– Markets remain focused on unfolding events in Europe this morning, where blow-by-blow headlines are making for very choppy trading on both sides of the Atlantic. Euro stocks headed higher following hints from EU Commissioner Barroso that Eurobonds might be permissible without a new treaty, then headed lower as Moodys cut Societe Generale and Credit Agricole and Fitch cut ratings on five Spanish regional governments. Then after the open of US trading, an Austrian parliamentary committee failed to approve a bill with the July 21st agreements to make needed changes to the EFSF, throwing a wrench in plans to get the measures passed as quickly as possible and sending stocks lower. Then China reaffirmed its intention to reinvest its FX reserves overseas and its willingness to buy the bonds of challenged sovereigns, and fresh reports suggested Greece would cut more public sector jobs to get its reform measures back on track, sending equities higher. In the US, the August retail sales data was flat, ending a streak of faint growth in the key indicator. Treasury prices are a little lower keeping the 10-year benchmark yield pinned near 2%.

– Firms continue to offer revised forecasts as the global economic picture clouds over. Following guidance cuts from leading semi names last week, Lattice Semiconductor revised its Q3 revenue outlook to flat to -4% from flat to +5% thanks to softening demand trends. LSCC actually spiked higher in early trading, before floating down to around +3%. Materials name Solutia cut its full-year view due to flagging demand truck and bus, solar and electronic end markets. SOA lost as much as 12% in early trading, before trading back up to -5% mid morning. Industrial gasses firm Pentair reaffirmed its outlook ahead of its investor day. On the positive side, firearms maker Smith & Wesson hiked its FY12 revenue outlook slightly thanks to booming business for guns. SWHC is up 4%. Two big names have launched sizable share buybacks: Dell authorized a $5B buyback (20% of market cap) and Staples launched a $1.5B share repurchase authorization (15% of market cap). Both DELL and SPLS are +2%. In deal news, ConAgra said it would withdraw its $5.2B bid for Ralcorp if the company doesn’t consider its bid by Monday evening. Yahoo’s board is meeting today with private equity investors that are reported to be considering major investments into the company. In a filing, holder Third Point (5.15% stake) stated that it intends to remove Chairman Bostock with the help of founder and former CEO Jerry Yang. In other deal news, Avis formally dropped plans to contest Hertz’s acquisition of Dollar Thrifty.

– The greenback was softer during the early New York session following the Aug retail sales data. The euro was helped by comforting statements by Treasury Sec Geithner on the European situation as he stated there was no chance European leaders would allow their financial institutions to suffer. EUR/USD tested near 1.3750 but a ratings downgrade of five Spanish regions provided stiff headwinds for any additional gains in the pair. ECB’s Noyer was back on the wires defending the French banks but did concede that the drop in bank shares reflected uncertainty over dividends and earnings. BRIC members continue to make potential efforts to invest in Europe ahead of their schedule Sept 24th meeting.

***Looking Ahead***

– 11:30 (BR)) Brazil July Economic Activity Index M/M: 0.5%e v -0.3% prior; Y/Y: 2.0%e v 2.9% prior
– 11:30 (BR) Brazil Central Bank Posts Currency Flows’ Data for Prev. Week
– 11:30 (US) World Bank President Zoellick speaks in Washington
– 12:00 (GR) German, French and Greek conference call
– 13:00 (GE) German Fin Min Schaeuble
– 13:00 (US) Treasury to sell $13B in 30-Year Bonds Reopening
– 15:00 (AR) Aug Consumer Price Index M/M: 0.8%e v 0.8% prior; Y/Y: 9.7%e v 9.7% prior
– 15:00 (AR) Aug Wholesale Price Index M/M: No est v 0.9% prior; Y/Y: No est v 12.5% prior
– 18:00 (DE) Denmark holds General Elections

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