Trade the News Market Internals update at 14:00ET

Dow -43 S&P -3.5 NASDAQ -5

***Economic Data***

– (BE) Belgium Sept Trade Balance: -€540.0M v -€1.8B prior
– (US) MBA Mortgage Applications w/e Nov 11th: -10.0% v +10.3% prior
– (RU) Russia Oct Industrial Production Y/Y: 3.6% v 3.5%e
– (US) Oct Consumer Price Index M/M: -0.1% v 0.0%e; CPI Ex Food & Energy M/M: 0.1% v 0.1%e; CPI NSA: 226.421 v 226.621e
– (US) Sept Net Long-term TIC Flows: $68.6B v $54.0Be; Total Net TIC Flows: $57.4B v $89.6B prior
– (US) Oct Industrial Production: 0.7% v 0.4%e; Capacity Utilization: 77.8% v 77.6%e
– (US) Nov NAHB Housing Market Index: 20 v 18e
– (US) DOE Weekly Energy Inventory: Crude: -1.06M v -1Me; Gasoline: +1.0M v -1Me; Distillate: -2.14M v -3Me; Utilization: 84.8% v 82.8%e

– The DJIA and S&P500 tested yesterday’s lows in the premarket this morning as traders worried about contagion issues in European debt markets. The yield on Italian 10-year debt pivoted around the key 7% level, although stress is being seen in 10-year Spanish debt as well as yields on the debt of so-called semi-core nations Belgium and Austria. In data, the US October CPI flattened even further than the October reading. Meanwhile the US October Industrial Production numbers were a bit better than expected, but still anemic. The front-month WTI crude contract continues to steadily advance and as of writing is poised to top $102. Note that one factor moving oil is news that Enbridge and Enterprise disclosed plans to reverse the flow of the SEAWAY pipeline to carry crude from (rather than to) Cushing, OK to the Gulf Coast, altering supply dynamics. The result of this announcement has been a sharp rise in WTI crude and a drop in Brent crude, as it unlocks some of the crude flooding the Midwest and allow WTI to more accurately reflect global prices.

– Retail names continue to report this week. Target’s Q3 bottom-line was much better than expected thanks to one time tax benefits, while its profit guidance for Q4 was just in line. On the conference call, executives warned that the consumer environment is poor and is likely to remain uneven. Shares of TGT are up 2%. Apparel name Abercrombie & Fitch widely missed profit expectations despite robust same-store sales in its Q3. Executives said that results were impacted by costing challenges combined with greater uncertainty in the macroeconomic environment. ANF is down 14%. PC giant Dell topped earnings expectations on revenue that fell a bit short, while its revenue expectations for FY12 were not great, thanks to the “uncertain macroeconomic environment.” Dell is down 2%. Shares of manufacturer Tyco are up 2% thanks to strong Q4 results.

– The FX price action was choppy during the New York session, although key levels are within the range established from the start of the Asian session. The earlier risk aversion on perhaps that ECB was asked to widen its acceptable range of collateral from an Italian bank was offset by comments from German Chancellor Merkel that German would give up some sovereignty in order to resolve the current debt crisis. However rumors circulated that Spain could experience a LCH margin hike. Portugal Finance Minister Gaspar stated that the recent EU/IMF/ECB Troika performance review went well and that all criteria for deficit and debt limits had been met. EUR/USD was around the 1.3500 in mid-morning trading.

***Looking Ahead***

– 11:00 (IT) Mario Monti to be sworn in as interim PM of Italy
– 11:00 (US) Fed to buy USD8.00-8.75B in Notes
– 12:00 (GE) German Fin Min Schaeuble
– 12:00 (PO) EU/IMF hold press conference on Portugal review
– 12:30 (IT) Italy lower house meets to set the date of Italy confidence vote for PM Monti
– 12:45 (US) Fed’s Rosengren speaks on Economy
– 13:00 (GR) Greece PM Papdemos to meet IIF Dalara
– 13:15 (US) World Bank President Zoellick
– 13:30 (GE) German Dep Fin Min Asmussen
– 16:30 (AU) RBA Gov Stevens

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