Trade the News Market Internals update at 12:00ET

Dow +245 S&P +27 NASDAQ +51

***Economic Data***

– (SP) Spain Sept YTD Budget Balance: -€37.0B v -€30.9B prior
– (GE) Germany Oct CPI Baden Wuerttemberg M/M: 0.3% v 0.0% prior; Y/Y: 2.8% v 2.5% prior
– (GE) Germany Oct Preliminary Consumer Price Index M/M: 0.0% v 0.1%e; Y/Y: 2.5% v 2.6%
– (GE) Germany Oct Preliminary CPI EU Harmonized M/M: 0.0% v 0.0%e; Y/Y: 2.8% v 2.8%
– (BR) Brazil Sept Unemployment Rate: 6.0% v 5.8%e
– (BR) Brazil Sept Central Gov’t Budget (BRL): 5.4B v 2.7Be
– (US) Q3 Advanced GDP Q/Q Annualized: 2.5% v 2.5%e; Personal Consumption: 2.4% v 1.9%e
– (US) Q3 Advanced GDP Price Index: 2.5% v 2.4%e; Core PCE Q/Q: 2.1% v 2.2%e
– (US) Initial Jobless Claims: 402K v 401Ke; Continuing Claims: 3.645M v 3.70Me
– (MX) Mexico Aug Global Economic Indicator: 4.4 v 3.7%e
– (US) Sept Pending Home Sales M/M: -4.6% v +0.3%e; Y/Y: 7.9% v 11.8%e
– (US) Weekly EIA Natural Gas Inventories: +92 bcf v +80 bcf to +90 bcf expected range

– Equity indices have rallied hard worldwide since the announcement of Europe’s grand bargain to boost the EFSF and bolster Greece. Asian indices (with the exception of the Shanghai Composite) traded much higher, while European markets are on fire. In the US, all three leading indices are up more than 2% in the early going. The initial look at Q3 US GDP is helping sentiment as well this morning, with growth in the quarter coming in at nearly twice the rate seen in Q2, banishing for the moment fears of renewed recession. The very strong personal consumption figures also gave investors reason to be optimistic, with a growth rate triple that seen in Q2. Nevertheless, the weekly claims numbers remained stubbornly high this morning, with little sign of improvement. The risk-on atmosphere is sending gold a bit higher, with spot gold up incrementally from yesterday, at $1,727. Crude is still within the higher range seen over the last few sessions, trading above the $93 handle. Money is coming out of fixed income markets backing the US 10-year yield to 2.3% and the 30-year above 3.3%.

– Leading health insurance names have reported quarterly results that were widely boosted by lower utilization rates, thanks to the weak economy and high unemployment, aiding earnings. Aetna was way ahead of consensus earnings views in its Q3, although its initial FY12 forecast was a bit soft. Aflac only just met expectations, and interestingly did not mention its FY12 guidance discussed some months ago. However its higher dividend is boosting the stock. Cardinal Health also just met consensus estimates for its Q1 and reaffirmed its full-year forecast. CAH is falt on the day, AET is up more than 3% and AFL is soaring, gaining more than 10%.

– Visa’s profit and revenue growth rates slowed on a sequential basis in its Q4, even as process transactions grew 36% on a y/y basis. Visa met expectations and offered robust 2012 guidance; however investors sold the name on an up day and shares of Visa are struggling to stay out of the red. Note that competitor American Express gained 3% in the premarket on news that the Bank of China will begin issuing American Express credit cards. Consumer staples names Colgate and Procter & Gamble met expectations in quarterly reports, although guidance was lackluster. Colgate said FY11 margins would fall further than expected due to “significantly higher” costs, while Procter’s Q2 guidance was very soft. PG and CL are both up about 1%.

– Raytheon’s Q3 results missed expectations and executives said it would not offer FY12 guidance given continuing ‘super committee’ deliberations and the unknown impact on the US defense budget. Johnson Controls’ initial FY12 guidance calls for 20% profit growth, although that still puts them a bit behind expectations. The firm’s Q4 results met expectations. JCI rose 4% in the premarket, although some weak Q1 guidance has taken JCI back to unchanged in early trading.

– Iron ore miner Vale widely disappointed expectations, largely due to a big loss on FX. The company said that iron ore prices will remain high for a long time and the global market is still hot. In addition, it said it was seeing no signs of China or the US heading toward recession. Barrick Gold is up nearly 2.5% on solid quarterly results and firm FY11 gold production guidance. Dow Chemical reported excellent all-around growth in its Q3, although rising costs were a headwind for the firm. Fertilizer giant Potash lowered its FY11 potash shipment and potash margins guidance slightly, although it also reaffirmed its FY11 profit goals. Ag giant and fertilizer name Bunge had a huge bottom-line miss, thanks to trouble in its sugarcane business.

– The greenback is under broad pressure against its main trading- and commodity-related pairs as risk appetite takes off. USD/JPY hit fresh all-time lows after it dipped below 75.70. EUR/USD tested its former one-year up-trend line that was violated back in early September. The key resistance level now stands around the 1.4150/70 area. The 1.3970 is critical hourly support to maintain the recent upward momentum

***Looking Ahead***

– 11:00 (US) Oct Kansas City Fed Manufacturing Activity: v 8e
– 11:00 (US) Fed to purchase $2.25-2.75B in Notes/Bonds
– 12:45 (GE) German Chancellor Merkel
– 13:00 (GR) Greece PM to address nation
– 13:00 (US) Treasury to sell $29B in 7-Year Notes
– 14:30 (FR) France President Sarkozy
– 15:00 (AR) Argentina Sept Supermarket Sales Y/Y: No est v 18.5% prior

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