Trade the News Market Internals Update at 12:00ET

Dow -50 S&P -7 NASDAQ -3

***Economic Data***

– (IR) Ireland July Trade Balance: €3.2B v €4.2B prior
– (CA) Canada Aug Consumer Price Index M/M: 0.3% v 0.1%e; Y/Y: 3.1% v 2.9%e; CPI Index: 120.3v 120.0 prior
– (CA) Canada Aug CPI Core M/M: 0.4% v 0.2%e; Y/Y: 1.9% v 1.6%e
– (US) MBA Mortgage Applications w/e Sept 16th: 0.6% v 4.9% prior
– (SA) South Africa July Retail Sales M/M: 1.3% v 0.3%e; Y/Y: 2.8% v 2.0%e
– (NO) Norway Central Bank (Norges) leaves the Deposit Rates unchanged at 2.25%, as expected
– (MX) Mexico July Retail Sales: 3.1% v 4.8% prior
– (US) Aug Existing Home Sales: 5.08M v 4.75Me
– (US) Weekly DOE Energy Inventories: Crude: -7.3M v -1Me; Gasoline: +3.3M v +1Me; Distillate: -875K v +1Me; Utilization: 88.3% v 83.9% w/w

– Yesterday’s late market US sell-off seemed to have moderated before the open this morning. The FOMC rate decision will arrive mid afternoon and investors are debating the chances that Helicopter Ben will greenlight Operation Twist. In Europe, equity markets are at their lows as traders worry about the banking system. Earlier this morning, Greece Finance Minister Venizelos warned that there is a danger that reform program might fail and Lloyd’s of London said it had decided to pull peripheral euro bank deposits. Note that the August existing home sales hit their highest rate since early 2009, however analysts agree that the slightly better numbers were driven by a sudden jump in foreclosure and resale activity. Treasury markets are trending higher as money comes out of stocks and the US 10-year yield has slipped back toward 1.9%.

– Following Patriot Coal’s move last week, two more major coal producers cut production guidance this morning. Alpha Natural Resources and Walter Energy reduced their forecasts based on lower-than-expected output from certain mines. Alpha warned that weaker volumes at its Emerald mine and certain legacy Massey mines would affect full-year shipments while Walter sees lower second-half sales due to difficult conditions at an Alabama mine and slow recovery from the record rainfall in British Colombia. In addition, Walter slashed its Q3 and Q4 earnings outlook. Both names were down by double-digit percentages before the open, and mid morning ANR is -6% and WLT is -9%. Both are major metallurgical coal producers, and steel companies are trading off on the news, with industry ETF SLX down nearly 2% mid morning.

– Enterprise data giant Oracle only just beat expectations in its Q1 report, and its firm Q2 forecast helped the name advance in post market trading. Analysts focused on the firms much improved profit margins plus relatively upbeat comments about the business going forward. Shares of ORCL are up nearly 7%. After taking considerable equity losses over recent months, shares of Adobe gained as much as 6% in the premarket following the firm’s in-line Q3 results and a relatively strong forecast for Q4. ADBE is up 3% mid morning. General Mills narrowly beat expectations and reiterated its FY12 outlook this morning. Positive comments on the outlook for 2012 are aiding the name and shares of GIS are up 4%. In other news, shares of Microsoft slid slightly after the firm hiked its quarterly dividend. Google Chairman Schmidt is facing a Senate anti-trust subcommittee later today, to answer accusations that the firm has a monopoly position in search. And after falling star Netflix renewed a key content deal with Discovery Communications, chatter about a big partnership with Microsoft made the rounds.

– Overall the greenback remained range bound ahead of the FOMC decision later today. Dealers suspect the dollar could weaken further if the Fed announces any new QE measures. EUR/USD recovered from session lows during the New York morning aided by speculation that the French government might take measures to restore confidence in its banking sector coupled with ECB widening the range of debt instruments accepted as collateral. Dealers did note that the ECB action on collateral actually lowered its quality control. The market still awaiting Greece to outline its austerity measures negotiated with the Troika in recent days. USD/CAD tested one-month highs at parity despite higher Canadian CPI data; dealers were saying that USD buy-stops are layered above the 1.0030-70 area.

***Looking Ahead***

– 11:30 (BR) Brazil Central Bank Posts Currency Flows’ Data for Prev. Week
– 12:00 (GE) German Chancellor Merkel, Archbishop Zollitsch brief on Papal Visit
– 14:15 (US) FOMC Interest Rate Decision: expected to leaves rates unchanged at 0.25% prior
– 22:30 (CH) China Sept HSBC Flash China Manufacturing PMI: No est v 49.9 prior

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