Trade the News Market Internals Update at 12:00ET

Dow +70  S&P +10  NASDAQ +6

***Economic Data***

– (US) MBA Mortgage Applications w/e Aug 12th: 4.1% v 21.7% prior
– (SA) South Africa Jun Retail Sales M/M: 2.0% v 2.7%e; Y/Y: 2.2% v 2.1%e
– (PD) Poland July Employment M/M: 0.0% v 0.2%e; Y/Y: 3.3% v 3.5%e
– (PD) Poland July Avg Gross Wages M/M: 0.3% v 0.2%e; Y/Y: 5.2% v 5.0%e
– (CA) Canada Jun Int’l Securities Transactions: -C$3.5B v +C$10.0Be
– (US) July Producer Price Index M/M: 0.2% v 0.1%e; PPI Ex Food & Energy M/M: 0.4% v 0.2%e
– (RU) Russia July Unemployment Rate: 6.5% v 6.1%e
– (RU) Russia July Real Retail Sales Y/Y: 5.6% v 5.7%e
– (IS) Israel July Leading ‘S’ Indicator M/M: 0.2% v 0.2% prior
– (US) Weekly DOE Energy Inventories: Crude: +4.2M v -500Ke; Gasoline: -3.5M v -1Me; Distillate: +2.45M V +500Ke; Utilization: 89.1% V 87.6% w/w

– With Europe quiet for the moment and little significant US data on the docket, traders are focusing on positive earnings out of retailers as reasons to buy. The consensus seems to be that while recent consumer confidence surveys have been weak, results out of retailers tell a slightly more positive story. Note that the S&P500 is now about 10% above its lows from last week’s carnage. Fed dissident Plosser called the FOMC statements last week ‘inappropriate’ and ‘excessively negative,’ and remarked that the economic data does not necessarily indicate ‘dire predictions.’ Crude edged higher to around $89 in the front month contract before the big gains seen in this morning’s DoE inventory data. The contract traded lower post-inventory data. Treasury markets are little changed and yields remain depressed. The 10-year is still below 2.25% and despite hotter than expected PPI data 5-year TIPS breakeven spread is still well below 2%.

– Shares of Dell declined more than 7% in the premarket after the company cut its FY12 outlook once again. Dell warned that it continues to see uncertainty in IT spending, and said it would reorient its focus to the mid- to high-end of the market. Note that the PC firm did beat diminished earnings expectations in its Q2 results. DELL remains down 7% mid morning, while HPQ is down 2% in sympathy. Deere boosted its FY11 outlook for equipment and construction related sales, and also reported double digit y/y growth in key Q3 sales categories. Deere did warn that sales in South America would decline 5% in FY11, due to various adverse factors. Shares of DE fell into the red before the open, before recovering somewhat in early trading. CAT is solidly in the black. Target, BJ’s and Staples all firmly exceeded expectations in their Q2 reports, and Target and Staples both offered solid forward-looking guidance. SPLS rose more than 8% and TGT was up more than 4% in the premarket; SPLS dropped quickly to +2%, while TGT has sustained +4% in early trading. Shares of BJ’s are flat. Abercrombie and Fitch also comfortably beat expectations, although on the conference call executives warned that the company was concerned about a period of greater uncertainty in 2011 and into 2012, as more nervous consumers grappled with price increases. ANF fell 6% in the premarket, and is down 4% mid morning.

– The greenback was softer thanks to technical factors as US traders began to come into the market. EUR/USD tested above the 1.45 handle in an effort to test the alleged upper boundary of the option barrier currently in play. GBP/USD recovered from its session lows of 1.6350 to test above its former one-year trend line of 1.6540 as dealers reassessed the BoE minutes and focused on the statement that the MPC saw no need for any additional QE measures and reiterated its forecast for medium-term economic growth in the UK. Swiss Franc pairs showed little reaction after the Swiss government said it fully supported SNB measures to combat CHF currency strength. USD/CHF hovered around the mid-78 handle while EUR/CHF cross held below the 1.14 level. The crosses steadily weakened after the Swiss government said it might make additional comments in the session. USD/JPY remains quiet on a volatility basis but within striking distance of fresh all-time lows below 76.27.

***Looking Ahead***

– (SZ) Swiss Federal council conference
– 11:30 (BR) Brazil Central Bank posts currency flows’ data for week
– 11:30 (BR) Brazil Jun Economic Activity Index M/M: -0.1%e v 0.2% prior; Y/Y: 3.4%e v 4.3% prior
– 13:20 (US) Fed’s Fisher speaks at Event in Midland, Texas
– 19:50 (JP) Japan July Total Merchandise Trade Balance: ¥69.3Be v ¥70.7B prior; Adjusted Merchandise Trade Balance: -¥131.9Be v -¥191.2B prior

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