Trade the News Market Internals Update at 12:00ET

Dow +95 S&P +11 NASDAQ +21

Economic Data***

– (TU) Turkey Central Bank Interest leaves the Benchmark Repo Rate unchanged at 5.75%; as expected
– (US) ICSC/GS weekly chain store sales w/e Sep 17th: -1.2% w/w; % y/y
– (HU) Hungary Central Bank leaves the Base Rate unchanged at 6.00%, as expected
– (BR) Brazil Sept IBGE CPI M/M: 0.5% v 0.5%e
– (PD) Poland Aug Core Inflation M/M: 0.2% v 0.1%e; Y/Y: 2.7% v 2.4%e
– (CA) Canada Aug Leading Indicators M/M: 0.0% v 0.2%e
– (CA) Canada July Wholesale Sales M/M: 0.8% v 0.8%e
– (US) Aug Housing Starts: 571K v 590Ke; Building Permits: 620K v 590Ke
– (US) Redbook Retail Sales w/e Sep 17th: +4.1% y/y; Sep MTD: 0.0% v Aug
– (BE) Belgium Sept Consumer Confidence: -9 v -9 prior
– (EU) ECB drained €152.5B vs. €152.5B Targeted in 7-Day Term Deposits

– US equity indices overcame early softness to trade higher this morning as investors positioned themselves ahead of the opening of the two-day FOMC meeting. Jitters about Greece continue as there has been no resolution of the tranche payment issue and another conference call between Troika and Greek officials is scheduled. Note that Fitch was out with a report on the European crisis this morning, and among other things it asserted that concerns over the risk of a break-up of the euro zone are greatly exaggerated. The IMF issued its World Economic Outlook (WEO) this morning, confirming the preliminary worldwide reductions in 2011 and 2012 GDP forecasts seen at the end of August. The IMF warned that Europe and the US could slip back into recession in 2012 unless they deal with problems that could infect the rest of the world. S&P’s Italy ratings cut is also on traders’ minds this morning, although in the WEO the IMF said that Italy’s fiscal deficit compares relatively favorably to other advanced economies. On the home front, August housing starts fell more than expected and more than at any time since April, dropping 5% from July levels. However August building permits picked up somewhat over July levels. Gold ticked up after the US open, recouping much of the losses seen yesterday morning. Spot gold gained nearly $30/oz and crept back above the $1,800 level. Bond markets in the US and Germany are little changed despite a much anticipated Italian sovereign downgrade at S&P. The Italian 10-year yield has backed up 9 basis points to 5.65%.

– AutoZone’s Q4 results beat expectations on higher domestic same-store sales and plenty of new store openings. ConAgra missed earnings estimates thanks to higher costs and said that earnings next quarter would also disappoint. However, the firm reiterates that strong earnings growth would be seen in the second half of FY12. On the subject of the firm’s failed bid for Ralcorp, executives highlighted their commitment to growth via acquisitions and said they had a number of acquisition initiatives in the pipeline. Carnival PLC beat top- and bottom-line expectations in its Q3, although its profit guidance for Q4 was somewhat weak. The firm also trimmed its FY11 outlook. Investment banking name Jefferies crushed revenue targets in its Q3 and earnings were robust. However, the firm warned that its core revenues and earnings have been directly impacted by the extremely difficult and volatile operating environment, particularly in August. Xilinx became the latest semi name to trim its outlook for the current quarter, cutting its sales outlook to -7% to -10% on a sequential basis, from -3% to +1% q/q prior.

– FX markets were rocky in the New York session as numerous events and rumors circulated and the Swiss Franc returned to center stage. Renewed chatter made the rounds that the SNB might raise the EUR/CHF floor from 1.20 to 1.25. Earlier in the session, the Swiss Govt reiterated that the franc remained overvalued and repeated that it would support SNB measures, helping to ignite the rumors. EUR/CHF moved from 1.2060 to test above 1.22 before retreating. Swiss officials would not comment on the market rumors and said they would not make any official statements. Note that JPY has piggy-backed on the soft CHF tone as Japan continued to wrestle with its strong currency. EUR/USD drifted off its New York morning highs after the European Systemic Risk Board (ESRB) was said to have issued its first-ever warning in a report released several weeks ago. EUR/USD fell below its Asian opening levels of 1.3670. The IMF formally released its revised growth projections which slashed the 2012 GDP outlook to 4.0% from 4.5% June view.

***Looking Ahead***

– 11:30 (CA) Bank of Canada Gov. Carney speaks in Saint John, New Brunswick
– 11:30 (US) Treasury to sell 4-Week Bills
– 11:30 (US) Treasury to sell $25B in 52-Week Bills
– 13:00 (GR) Second day of schedule Greek-Troika conference call
– 13:00 (GE) German Chancellor Merkel and Roettgen Take Part in Panel on sustainable economic growth
– 16:30 (US) Weekly API Energy Inventories

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