Trade the News Market Internals Update at 12:00ET

Dow +155 S&P +10 NASDAQ -3

***Economic Data***

– (BR) Brazil Aug Central Govt Budget (BRL): no est v 11.2B prior
– (BR) Brazil Sept FGV Inflation IGP-M M/M: 0.7% v 0.6%e; Y/Y: 7.6% v 7.5%e
– (IR) Ireland Sept Consumer Confidence: 53.3 v 55.8 prior
– (CL) Chile Aug Industrial Production Y/Y: 1.7% v 0.0%e; Industrial Sales Y/Y: 2.9% v 2.1%e
– (CL) Chile Aug Total Copper Production: 427.4K v 373.5K tons prior
– (CL) Chile Aug Retail Sales Y/Y: 9.1% v 10.5%e
– (PD) Poland Q2 Current Account: -€3.4B v -€2.6Be
– (US) Q2 Final GDP Q/Q Annualized: 1.3% v 1.2%e; Personal Consumption: 0.7% v 0.4%e
– (US) Q2 Final GDP Price Index: 2.5% v 2.4%e; Core PCE Q/Q: 2.3% v 2.2%e
– (US) Initial Jobless Claims: 391K v 420Ke; Continuing Claims: 3.73M v 3.73Me
– (CA) Canada Aug Industrial Product Price M/M: +0.5% v -0.5%e; Raw Materials Price Index M/M: -3.2% v 2.5%e
– (US) Aug Pending Home Sales M/M: -1.2% v -2.0%e; Y/Y: 13.1% v 6.3%e
– (US) Weekly EI Natural Gas Inventories: +111 BCF v +100 BCF to +105 BCF expected

– The slightly-better-than-expected final Q2 GDP reading and the decline in weekly jobless claims goosed markets higher on both sides of the Atlantic this morning, adding further shine following Germany’s passage of the EFSF. The second reading of Q3 GDP was +1.0%, making the final revision a non-trivial increase, while the initial claims number hit its lowest level in five months. Note that Fed Chairman Bernanke’s comment that the Fed would respond with more measures if inflation expectations fall too low also had an impact this morning. However the feel-good gains from this morning have given way to some selling led by what are now declines in the NASDAQ. Note that metals and energy were not big participants, and spot gold barely budged off the $1,615 level where it closed yesterday afternoon. Copper remains not far from recent one-year lows. Crude futures are mostly unchanged as well. Fed Governor Plosser repeated his dissident views this morning. He insisted that the Fed would likely need to raise rates before 2013 and downplayed worries about inflation, warning that TIPS have been distorted by flight-to-quality buying. The US 10-year yield remains near 2%.

– In equity news, AMD gave investors a dim preliminary look at its Q3 results. The company warned that its revenue growth would be considerably less than expected, with gross margins also lower. The company said the weak outlook was primarily due to issues related to new technology rollouts in 32nm manufacturing. Multiple analysts cut ratings on the name overnight, however one or two also called the move a big buying opportunity. AMD remains down nearly 11% in early trading. Mosaic reported results that were right in line with recent guidance. The firm was very bullish on fertilizer markets worldwide and dismissed concerns that economic weakness would diminish agricultural commodity demand. Nevertheless, shares of Mosaic have sank all morning, with MOS down 5%. Heavy automobile parts maker Titan boosted its FY11 outlook, saying that it is also looking forward optimistically to FY12. TWI is up more than 10%, but are around +5% mid morning.

– EUR/USD slid off its best levels following the German parliamentary passage of the EFSF expansion. Dealers noted that the price action was driven by classic “buy the rumor, sell the fact” thinking. Chancellor Merkel did manage to garner a majority vote without the need of any minority support as only 13 members of the coalition government defected, well within the 19 member cushion. USD/JPY was inching higher toward the 77 handle but remained contained within recent ranges. Repatriation flows from the end of the Japanese fiscal-half year should continue to be a factor in the cross.

***Looking Ahead***

– 11:00 (US) Sept Kansas City Fed Manufacturing. Activity: No est v -2.0% prior
– 13:00 (PD) European Financial and Government Conference
– 13:00 (SA) South Africa Fin Min Gordhan speaks
– 13:00 (US) Fed’s Lockhart speaks in Atlanta
– 13:00 US) Treasury to sell$29B in 7-Year Notes
– 14:50 (US) Fed Rosengren
– 19:00 (SP) Deadline for Spanish Lenders to complete recapitalization

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