Trade the News Market Internals Update at 12:00ET

Dow -95 S&P -14.6 NASDAQ -44

***Economic Data***

– (GE) Germany July CPI Baden Wuerttemberg M/M: 0.5 v 0.2% prior; Y/Y: 2.7 v 2.3% prior
– (GE) Germany July Preliminary Consumer Price Index M/M: 0.4% v 0.3%e; Y/Y: 2.4% v 2.3%
– (GE) Germany July Preliminary CPI EU Harmonized M/M: 0.5% v 0.3%e; Y/Y: 2.6% v 2.4%
– (US) MBA Mortgage Applications w/e July 22nd: -5.0% v +15.5% prior
– (US) Jun Durable Goods Orders: -2.1% v +0.3%; Durables Ex Transportation: 0.1% v 0.5%e
– (MX) Mexico May Global Economic Indicator: 4.6% v 4.1%e
– (BR) Brazil Jun Total Outstanding Loans (BRL): 1.834T v 1.804T prior; Private Banks Lending: 1.062T v 1.048T prior
– (US) Weekly DOE Energy Inventories: Crude: +2.3M v -1Me; Gasoline: +1.0M v +500Ke; Distillate: 3.4M v +1.5Me; Utilization: 88.3% v 86.1% prior

– Equity markets opened and moved lower in New York as investors aggressively removed risk from their portfolios as traders were eyeing another bout of widening European sovereign spreads and the climate in Washington remained toxic. By mid morning though, some eyebrows were raised when Republican leader Boehner refused to address the press following another closed door meeting and speculation began to swirl of possible movement towards a deal, but it was again quickly refuted by a subsequent report that no deal had been reached. Spot gold hit fresh all-time highs above $1,625 earlier in the session. Note that the June durable goods orders survey was much weaker than expected, as the fallout from the soft patch continues to show up in data. Analysts say the data merely lags what we have already seen, and one highlighted that non-defense capital goods, ex aircraft, have accelerated by double digits over the last three months. The US 10-year Treasury yield remains below 3% after Fitch commented that US Treasuries will are expected to remain the world benchmark security even following a major ratings agency downgrade.

– Amazon comfortably beat Q2 top- and bottom-line expectations and offered a relatively strong Q3 guidance. Note that the profit outperformance would have been more in line in the absence of the divestment of several investments in the quarter. Las Vegas Sands crushed profit targets on continued strong growth in the firm’s Asia business. Insurance firms have done very well in the June quarter. Both Aetna and Wellpoint beat profit target, Aetna by a wide margin. Aetna also raised its FY11 outlook and offered constructive commentary on the conference call.

– Boeing puzzled analysts with very strong profits in its Q2 thanks to higher margins, contained costs and only moderate revenue growth. Boeing reaffirmed that first deliveries of 787 Dreamliner would begin in the third quarter but trimmed its expected number of deliveries. Defense industry names Northrop and General Dynamics both exceeded Q2 consensus profit estimates on lower-than-expected revenues. In addition Northrop raised its earnings outlook even while slightly trimming its sales forecast for FY11. Dow Chemical crushed revenue targets, sending shares of DOW up 2.5% immediately after the open, although shares dropped into the red in the early going, especially after the CEO warned that inflation in China may pose a headwind for the world economy. Corning met expectations, but warned that the global glass market would be weaker than expected in FY11.

– As with other big oil names, high crude prices in the second quarter helped ConocoPhilips beat expectations. Recall that earlier this month, the company said it would split off its refining business as a stand-alone publicly traded company, although investors have not responded very positively to the proposal. Integrated oil name Hess missed top- and bottom-line expectations thanks to much higher production expenses and lower production levels stemming from multiple shut-ins. The company cut its full-year production outlook on the shut ins, noting that they were only temporary setbacks. COP is flat and heading lower, while HES is down 4%.

– Continuing contagion jitters in Europe and constructive comments from the ratings agencies on US sovereign ratings actually helped the greenback strengthen versus the euro into the US session this morning. Note however that both the CHF and JPY continue to strengthen versus USD as the debt stalemate kept chipping away at market confidence. EUR/USD hitting session, hurt by somewhat of a dovish tome from ECB’s member Provoploulous who commented that euro zone inflation might fall below 2% later this year. In other currency news, the Brazilian Real was weaker by three big figures after the Brazilian gov’t announced it most recent measure to curb speculation in the Real currency. Brazil Fin Min Mantega commented that the government would impose a 1% IOF tax on net long term exposure in FX derivatives.

***Looking Ahead***

– 12:00 (FR) France Jun Total Jobseekers: No est v 2.687M prior
– 13:00 (US) Treasury to sell $35B in 5-Year Notes
– 14:00 (US) Fed Releases Beige Book Economic Survey
– 15:00 (AR) Argentina Jun Shop Center Sales Y/Y: No est v 10.3% prior
– 17:00 (NZ) Reserve Bank of New Zealand (RBNZ) Interest Rate Decision: Expected to maintain the official cash rate steady at 2.50%

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