Trade the News Market Internals update at 12:00ET

Dow -78 S&P -11.7 NASDAQ -22

***Economic Data***

– (IN) India Q2 Current Account: -$14.1B v -$10.8Be
– (CL) Chile Aug Unemployment Rate: 7.4% v 7.6%e
– (PD) Poland Sept NBP Inflation Expectations: 3.8% v 4.2% prior
– (SA) South Africa Aug Budget Balance (ZAR): -5.4B v -5.2Be; Trade Balance: -3.7B v -1.7Be
– (US) Aug Personal Income: -0.1% v+ 0.1%e; Personal Spending: 0.2% v 0.2%e
– (US) Aug PCE Core M/M: 0.1% v 0.2%e; Y/Y: 1.6% v 1.7%e; PCE Deflator Y/Y: 2.9% v 2.9%e
– (CA) Canada July Gross Domestic Product M/M: 0.3% v 0.3%e; Y/Y: 2.3% v 2.3%e
– (BE) Belgium Q2 Final GDP Q/Q: 0.5% v 0.7% prelim; Y/Y: 2.3% v 2.5% prelim
– (BR) Brazil Aug Nominal Budget Balance (BRL): -17.1BB v -5.0B prior; Primary Budget Balance: 4.6B v 5.1Be; Net Debt to GDP Ratio: 39.2% v 39.2%e
– (US) Sept Chicago Purchasing Manager: 60.4 v 55.0e
– (US) Sept Final University of Michigan Confidence: v 57.8e
– (US) Sept NAPM-Milwaukee: 55.4 v 57.2e

– A worrisome US personal income report clouded over two mildly positive September economic data reports this morning. The Chicago PMI data was pretty solid, with a better-than-expected headline figure and the highest new orders subcomponent since April. The final reading of the U of Michigan Confidence reading was a bit higher than the preliminary number, indicating consumers may only be fearing stagnation rather than further declines in the economy. However the August Personal Income data showed that incomes fell for the first time in nearly two years as the job market was still weak, even as spending still made another incremental gain. Not even Fed governor Bullard’s comment that the Fed could decide to take additional easing measures if the economy weakens seems to be able to pull equity indices out of the dumps. In Europe, markets wilted in the face of uncertainty about the ability of Slovakia’s parliament to pass the EFSF revisions. Some key commodities are under pressure once again including copper and grain markets. Treasury markets some early bids evaporate but money is still finding its way to the relative safety of US and German government bonds. The US 30 has bounced 2 points pushing the yield back below 3%.

– Micron Technology saw a substantial loss in Q4 thanks to a collapse in gross margins from the steep decline in DRAM prices. Adding weight to the company’s shares, Micron warned that an unfavorable outcome to the Rambus antitrust case could have a material adverse impact on Q4 results. Manufacturer Ingersoll-Rand cut its Q3 and FY11 profit outlook due to weakness in its North American residential and commercial security markets. Lumber Liquidators trimmed its FY11 guidance after acquiring the assets of Sequoia Floorings. There were reports that the Japanese banking regulators were investigating Citigroup Japan due to insufficient disclosures on product sales, with charges expected as early as October. The sale of BP’s Argentina units to CNOOC is said to be on the verge of breaking down. BP began negotiations with CNOOC over the unit, valued at £6B, back in July.

– The euro maintained a defensive tone through the New York session and broke through the 1.3480 level where earlier sovereign bids were said to be lurking. Dealers again noted Fibonacci daily support in the pair at 1.3410 which corresponded to the 50% retracement of the 1.1875 June 2010 low to the 1.4939 May 2011 high in the pair. Dealers are eyeing the weekend release of the China PMI as a big factor. Another disappointing number is could accelerate risk aversion trading.

***Looking Ahead***

– (CO) Colombia Central Bank Interest Rate Decision: Expected to leave the Overnight Lending Rate unchanged at 4.50%
– (FR) French President Sarkozy meets Greece PM Papandreou
– 11:00 (US) Fed’s Bullard to Speak in San Diego
– 11:00 (EU) EU President Van Rompuy
– 12:00 (GE) German Chancellor Merkel speaks at Regional CDU Conference in Schleswig-Holstein
– 12:00 (CO) Colombia Aug Urban Unemployment Rate: 11.2%e v 11.3% prior
– 13:00 (EU) EU President Van Rompuy

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