Trade the News Market Internals update at 14:00ET

Dow -54 S&P -1.5 NASDAQ +3.7

***Economic Data***

– (BR) Brazil July FGV Construction Costs M/M: 0.6% v 0.6%e
– (BR) Brazil July FGV Consumer Confidence: 124.4 v 118 prior
– (US) ICSC/GS weekly chain store sales w/e July 23rd: +0.3% w/w; +4.2% y/y
– (HU) Hungary Central Bank Interest leaves Base Rate unchanged at 6.00%; As expected
– (US) Redbook Retail Sales w/e July 23rd: +4.2% y/y; July MTD: -0.6% v Jun
– (MX) Mexico Jun Preliminary Trade Balance: $108M v $263Me
– (US) May S&P/CaseShiller 20 City M/M: -0.05% v 0.00%e; YoY: -4.51% v -4.50%e; Home Price Index: 139.87 v 139.80e
– (BR) Brazil Jun Current Account: -$3.3B v -$4.0Be; Foreign Direct Investment (FDI): $5.5B v $4.5Be
– (US) July Consumer Confidence: 59.5 v 56.0e
– (US) July Richmond Fed Manufacturing Index: -1 v +5e
– (US) Jun New Home Sales: 312K v 320Ke

– US equity markets opened flat on the day the morning after President Obama and House Speaker Boehner blamed each other for the failure come to any agreement in the debt ceiling negotiations. Despite a decline in some sectors, the Dow Jones Industrials and Transports in particular following several key earnings reports, overall markets continue to react to the situation with relative calm. US Treasury prices are higher and the dollar still well within recent ranges versus the euro. Spot gold has not risen appreciably today, sustaining the $1,610 level seen during recent sessions. In US data, July consumer confidence was stronger than expected, while June new home sales are more or less in line with the very low levels seen in recent months, prompting analysts to hope that sales have found a bottom.

– Initial June quarter results from big oil were seen this morning. BP’s profits were impacted by continuing costs from the Gulf of Mexico and lower income from refining operations. In addition, the firm’s overall production levels fell versus last year. Refiner Valero also felt the bite of high oil prices, with very soft profit levels in its Q2, even as revenue widely beat expectations. Valero said its costs were up nearly 50% y/y. On the other side of the coin, profits at driller Anadarko blew out on strong pricing. Note that Anadarko’s CEO said that the next six to nine months would be the most active period of exploration in the company’s history. APC is in the black, while VLO and ADRs of BP are down more than 2%.

– The shorts finally met their reward as Netflix fell sharply in post-market trading yesterday afternoon; the stock remains down 10% this morning. As is well known at this point, profits in the company’s Q2 were well below consensus, and guidance for Q3 was also very weak, thanks to lower net additions. Semi name Texas Instruments met expectations, although profit margins were down noticeably on a y/y basis. STMicro had a terrible Q2, and warned that things would not get better in Q3 as Japan and FX translation continues to hammer the firm’s profits. Broadcom is up 10% after topping profit expectations and offering constructive commentary on the conference call.

– Ford continues to outperform analysts’ expectations, although investors remain wary of the stock. Ford warned about softness in key European markets, although it’s production in Q3 will be up more than 90% as sales continue to recover. Engine maker Cummins crushed top- and bottom-line estimates and hiked its FY11 guidance on very strong sales worldwide. Shares of Ford are flat, while CMI is +5%. 3M was mostly in line with the Street and reaffirmed its outlook. AK Steel and US Steel both had weak Q2 profits and disappointing revenue levels, thanks to weak demand and higher costs. US Steel warned that things would not improve for the company in Q3. AKS and X are down 10% and 7%, respectively.

– The greenback continues to sink against major pairs as debt negotiations go nowhere. Overseas holders are ratcheting up diversification efforts as the impasse in Washington continues. Dealers are aware the one of the rating agencies may well cut the US sovereign AAA rating before the key August 2nd deadline. There was some chatter that some solo BoJ intervention could take place in order to curb yen appreciation, rather than a coordinated G7 approach as was seen back in March. The Swiss Franc remained just off all-time highs against the dollar, and 250 pips off its lows against the euro.

***Looking Ahead***

– 11:00 (US) Fed to purchase $2.75-3.50B in Notes/Bonds
– 11:30 (US) Treasury to sell 4-Week and sell $20B in 52-Week Bills
– 13:00 (US) Treasury to sell $35B in 2-Year Notes
– 14:00 (US) Fed’s Hoenig to Testify on Monetary Policy
– 16:30 (US) Weekly API Energy Inventories