In an ominous sign heading into earnings season, US indices fell sharply Thursday even though Alcoa and Pepsi posted stronger than expected earnings. This drop indicates that Wednesday’s pop was nothing more than a bear market bounce as the stock market correction deepens with the end of QE3 coming at the end of the month. It also indicates that US indices remain highly vulnerable and apparently priced for perfection. After all, if positive earnings aren’t enough to keep stocks climbing, what’s going to happen tomorrow when word of aftermarket profit warnings gets out? As it is, two of the worst performers on the day were Gap and AMD, dragged down by soft same store sales and surprise management changes. The unravelling situation in Europe didn’t help matters either. Germany continued its string of poor economic reports raising concerns Europe’s largest economy may be falling into recession and could drag the rest of the Eurozone down with it (or the Eurozone’s problems have finally caught up to Germany). Troubled Portuguese Banco Espirito Santo filed for bankruptcy, which didn’t help matters either. The overdue correction in USD helped AUD, NZD and JPY to rebound over the last 24 hours. Although they have given back some of the gains from their initial burst of enthusiasm, technically they appear to be turning a corner after weeks of selling off. Asia Pacific indices may start the day under pressure on a combination of a negative handoff from the US and the overnight news that meetings between the Hong Kong Government and protesters have been put off. Tomorrow there are a batch of middle tier from releases that traders may look at for signs of whether Germany’s troubles are contained or part of a wider problem (likely the latter). The main event of the day is Canada’s employment report with the street looking for a moderate rebound after a choppy summer. Like Australia, Canada has had issues with its job numbers this summer and has had to make revisions, so here traders will be looking for signs of whether the positive momentum in the US is finding its way north of the border as well. Also Friday, another big slate of central bank speakers could influence USD and forex trading. Corporate News Symantec to split its security and information management business into two separate companies. Juniper Networks profit warning! Cuts EPS guidance to $0.34 to $0.36 from $0.35 to $0.40 and below street $0.38. Blames lower demand in US Microchip reports revenue of $546M well short of guidance $560-$575M and street $566M Family Dollar $0.73 vs street $0.77 Economic News Significant announcements released overnight include: UK monetary policy decision no change to interest rate or QE as expected US jobless claims 287K vs street 295K US natural gas storage 105 BCF vs street 109 BCF Canada new house prices 0.3% vs street 0.1% Upcoming significant announcements include: 11:30 am AEDT Australia home loans street 0.2% 4:00 pm AEDT Japan consumer confidence street 41.8 11:00 pm AEDT India industrial production street 2.7% TBA China new loans street 745B 7:00 am BST Sweden unemployment rate street 4.3% 7:45 am BST France industrial production street (1.0%) 7:45 am BST France manufacturing prodn street (0.7%) 9:00 am BST Norway producer prices previous (3.3%) 9:00 am BST Norway consumer prices street 2.4% 9:00 am BST Italy industrial production previous (1.9%) 9:30 am BST UK trade balance street (£3.0B) 9:30 am BST UK construction output street 2.9% 10:00 am BST Greece industrial production street 2.7% 8:30 am EDT Canada employment change street 20K vs previous (11K) 8:30 am EDT Canada full-time jobs previous (2K) 8:30 am EDT Canada part-time jobs previous (9K) 8:30 am EDT Canada unemployment rate street 7.0% TBA weekend China trade balance street $41.0B FOMC members Plosser, George, Fisher and Lacker, ECB Constancio and Linde, and Norges Bank Governor Olsen all speaking in the US on Friday. Saturday, FOMC members Tarullo, Evans, Fischer and Williams speaking plus ECB President Draghi holds a press conference. Sunday, Riskbank Governor Ingves participates in a panel discussion.