Trade the News Market Internals Update at 12:00ET

DJIA +14 S&P500 -1.3 NASDAQ -3

***Economic Data***

– (SA) South Africa Sept Budget Balance (ZAR): -17.0BB v -5.4B prior
– (CL) Chile Sept Industrial Production Y/Y: 5.2% v 3.5%e; Industrial Sales Y/Y: 1.1% v 0.8%e
– (CL) Chile Sept Unemployment Rate: 7.4% v 7.3%e
– (CL) Chile Sept Total Copper Production: 436.7K v 427.4K tons prior
– (CL) Chile Sept Retail Sales Y/Y: 9.6% v 8.5%e
– (US) Sept Personal Income: 0.1% v 0.3%e; Personal Spending: 0.6% v 0.6%e
– (US) Sept PCE Core M/M:0.0 % v 0.1%e; Y/Y: 1.6% v 1.7%e; PCE Deflator Y/Y: 2.9% v 3.0%e
– (US) Q3 Employment Cost Index: 0.3% v 0.6%e
– (BE) Belgium Q3 Preliminary GDP Q/Q: 0.0% v 0.4% prior; Y/Y: 1.8% v 2.2% prior
– (EU) ECB completed €4.0B in settlements in its Gov’t Bond buying program vs. €4.5B prior; To drain €173.5B in next Term Deposit Tender
– (US) Oct Final University of Michigan Confidence: 60.9 v 58.0e

– US indices are struggling to get out of negative territory this morning after the collapse of the market rally during the European session. The terrible showing in the Italian debt auction plus the German Constitutional Court ruling that limits the Bundestag’s freedom of action on EFSF approvals sent European indices reeling just before US traders returned to their desks. The September Personal Income/Spending report indicated some troubling trends, as nearly flat income growth saw consumers sustain mild spending growth at the expense of savings. Many question how durable any recovery could be in the absence of income growth. In regards to the euro zone deal, Fitch said the debt haircut plan would amount to a Greek default if it was carried out, contradicting the opinion of the International Swaps and Derivatives Association (ISDA).

– There were some strong results out of the tech and consumer tech sector. AMD’s profits outperformed despite continuing manufacturing delays from the Japan situation earlier this year, prompting a few analyst upgrades. AMD is up more than 12%. Netflix competitor Coinstar, which operates the popular Redbox service, crushed earnings expectations and hiked its FY11 guidance. The firm also raised its DVD rental prices for the first time in eight years, due to higher operating expenses. CSTR is in the red. Electronic Arts surprised investors with a healthy profit, versus expectations for a small loss. ERTS is down 9%. And Hewlett-Packard officially dropped plans to sell of its PC business last night, following a fresh review by incoming CEO Meg Whitman. HPQ is down 4%.

– Metlife modestly exceeded expectations in its Q3 report, thanks in part to double-digit growth in international premiums and a big gain in investment income. On the conference call, Metlife’s CFO confirmed that it would drop bank holding company status by mid 2012 with the divestment of its bank unit. Health insurance name Cigna missed bottom-line expectations slightly, but also significantly hiked its guidance for FY11 membership growth. MET is up 4% while CI is down 1%.

– Pharma names Merck and Biogen Idec both comfortably beat consensus estimates on the top and bottom lines. Singulair, Merck’s top drug, saw sales rise 10 percent to $1.34 billion. Its US patent expires next year. Biogen said it hopes to file for approval of its BG-12 MS drug in the first half of FY12. MRK is up 1%, off its best levels. BIIB is near its highs, up 2%.

– Auto-related manufacturing names Goodyear and American Axle both topped markets’ expectations, the former by a very wide margin thanks to one-time items. However, Goodyear warned that tire sales volumes in North America declined 8% y/y. Axle was optimistic about strong growth in its backlog. GT is up 6% and AXL is flat, after being down almost 5% earlier. Whirlpool’s results were disappointing and the firm announced that it would cut 10% of its workforce and undertake major restructuring efforts. Whirlpool said it saw weakening demand from emerging markets and “recessionary” demand levels in developed markets. Autoparts name Lear missed high expectations despite double-digit revenue growth in its major segments. LEA is down 5%, while WHR is down more than 10%.

– The price action continues to be muted this morning despite the renewed concerns over peripheral bond yields. EUR/USD drifted lower to test 1.4135 after to stay below its former one-year uptrend line that was violated back in early Sept. The euro needs a clear break and a weekly close above the 1.4230 area in order to maintain its recent upward momentum. The Italian 10-year bond-yield retested the 6% level ahead of the European close despite renewed chatter of ECB buying peripheral debt.

***Looking Ahead***

– (CO) Colombia Central Bank Interest rate Decision: Expected to leave the Overnight Lending Rate unchanged at 4.50%
– (MX) Mexico Sept YTD Budget Balance (MXN): No est v -172.5B prior
– 11:00 (US) Fed to buy $8.00-9.00B in Notes

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