Morning News Tuesday July 31st 2007

General News:

–       Personal Consumption Expenditures (PCE) rose in line with expectations at 0.1% with core up 0.1% as well

–       Employment Cost Index (ECI) data shows government compensation up 1.1% and trending stronger than the private sector.  Wages and salaries are tame and show signs of mean reversion.  Financial activity was hard hit.

–       Headlines are saying that TXU buyers are considering a pull out and could pay $1 billion in break up fees.

–       In an SEC filing, PIMCO’s Bill Gross is said to have bought 100,000 shares of a corporate bond fund on July 25^th.

–       The Chinese government may increase its shareholding in GB Group after already purchasing 15.5 million shares between June 15^th and July 13^th.

–       International Council of Shopping Centers report that sales rose 1.1% week over week as a result of back to school sales, marking the strongest increase since February.

Asia/Europe:

Asia:

–       Japanese housing starts rose 6.0% when -3.5% was expected.

–       Japanese small business confidence was unchanged and construction orders rose 26.4%.

–       The Japanese jobless rate fell 0.1% to 3.7%.

–       India raised its bank reserve requirements by 50 basis points.  Lenders must put aside 7% of deposits as of August 4^th.

–       HK retail sales rose 14.3% in June.  10% was expected.

Europe:

–       German retail sales rose 0.7%, 1.2% was expected.

–       French consumer confidence fell.

–       German unemployment fell 45,000, more than expected.

–       Italy’s PPI rose 2.8% year over year, 3% was expected.

Corporate News:

–          Shares in GlaxoSmithKline PLC (GSK) rose and the drugmaker confirmed its 2007 earnings outlook after a U.S. Food and Drug Administration panel recommended that its diabetes drug Avandia remain on the market, but with stronger health warnings.

–          Cosan Ltd., a producer of sugar and ethanol, said it plans an initial public offering of 100 million shares, according to a filing with the Securities and Exchange Commission

–          Power provider Entergy Corp. (ETR) said its second-quarter profit slipped 5% and missed Wall Street expectations due to cooler weather and higher operational and maintenance costs.

–          American Electric Power (AEP) said its second-quarter profit rose slightly from a year ago, buoyed by price hikes, new contracts, more favorable weather and fewer unplanned outages.

–          Bemis Inc. (BMS), one of the country’s largest food packaging suppliers, said Tuesday its second-quarter profit rose a paltry 1.2% as sales volume declined because Americans seemed to be buying less pre-packaged meals due to rising grocery prices.