•    Today's European economic reports were bullish for bunds and bearish for the euro. The August European executive and consumer sentiment index, published by the European Commmission, fell by -0.7 to 88.8 from 89.5 in July, which was weaker than market expectations for a -0.2 point drop to 89.3. The August Euro-Zone inflation rate fell to +3.8% from +4.0% in July, versus expectations for an unchanged rate of +4.0%, which should ease ECB concerns about the inflation outlook and reduce the chances for another rate hike.

•    Personal income/consumption and PCE deflator – Today’s July personal income report is expected to fall –0.2% following June’s report of +0.1%. July personal spending is expected to show a mild increase of +0.2%, fading after June’s strong report of +0.6%. Meanwhile, the July PCE deflator on a year-on-year basis is expected to climb to +4.5% y/y from +4.1% y/y in June. The July core PCE deflator, which is the Fed’s preferred inflation measure, is expected to rise +0.3% m/m, matching June’s report of +0.3%. On a year-on-year basis, the July core PCE deflator is expected to tick higher to +2.4% y/y from +2.3% y/y in June. The expected increase to +2.4% would match the current 2-year high of +2.4% posted in late-2006 and early-2007, and leave the indicator only 0.1 point below the 13-year high of +2.5% posted in August and September 2008. The Fed remains vigilant about the recent rise in core inflation, although concerns have eased a bit recently with the sharp declin e in oil and commodity prices.

•    Chicago purchasing managers index - Today’s Aug Chicago purchasing managers index is expected to fall –0.8 points to 50.0, reversing part of July’s increase of +1.2 to 50.8. The Chicago purchasing managers index in July rose above the boom-bust level of 50 after having been below the 50 mark in the 5 months from February through June. The improvement in the purchasing managers index was tied in part to the federal stimulus program and continued strong export demand. However, the question is the extent to which optimism in the US manufacturing sector may start to fade given the declining impact of the stimulus program and slower economic growth overseas. This coming Tuesday’s national Aug ISM manufacturing index is expected to be unchanged at 50.0 after falling –0.2 points to 50.0 in July.

•    US consumer confidence – Today’s final-Aug US consumer confidence index from the University of Michigan is expected to show a small increase of +0.3 to 62.0, improving on the +0.5 point increase to 61.7 seen in the early-August report. In July, the US consumer confidence index rebounded higher by +4.8 points from the 28-year low of 56.4 posted in June. US consumer confidence over the summer rebounded mildly from the recent lows due to the federal stimulus program and mildly lower gasoline prices. However, US consumer confidence is still in very poor shape due to the weak economy and labor market, continued high gasoline prices, the banking crisis, and falling home prices

•    September S&Ps this morning are trading -3.40 points on the negative Dell news and on weaker European confidence. The US stock market yesterday opened higher and rallied throughout the day (Dow +1.85%, S&P 500 +1.487%, Nasdaq Composite +1.22%).

•    Bullish factors for stock prices yesterday included (1) the larger-than-expected upward revision to Q2 GDP, (2) the -$2.56 a barrel sell-off in crude oil prices on news the US government would release oil from the Strategic Petroleum Reserve if needed due to Hurricane Gustav, (3) the 23% surge in Fannie Mae and 11% gain in Freddie Mac after Fannie Mae's CEO replaced three top deputies in an effort to restore investor confidence, and (4) the 7.4% rally in Lehman Brothers after a report that the fourth biggest US securities firm will eliminate as many as 1,000 jobs in what would be the firm's fourth round of job cuts this year.

    •    Bearish factors for stock prices yesterday included (1) the larger-than-expected jump in weekly continuing unemployment claims to a 4-3/4 year high, (2) the 1.3% drop in Coca-Cola after the world's largest sodamaker was cut to "neutral" from "outperform" at Credit Suisse who said Pepsico is a better investment because they are further along with their restructuring, and (3) the 7.9% drop in Williams-Sonoma after the biggest US gourmet-cookware chain said Q2 profit fell 29% and it said full-year profit and sales will decline more than it expected.

•    Dell (DELL) fell nearly 10% in after-hours trading yesterday as the world's second-largest personal-computer maker said Q2 net income fell 17% to 31 cents a share, well below analysts estimates of 36 cents a share. In addition, Dell said that sales growth is weakening in Europe and Asia as "continued conservatism" among US customers is spreading to Europe and some countries in Asia. The Dell news pushed HP down -0.6% this morning in European trading and Intel down 1%.

•    Marvell Technology Group (MRVL) is down 3% in European trading this morning after the chip-maker for iPhones and Blackberries reported Q2 earning of 15 cents and missed the consensus by 30%. In addition, Marvell issued quarterly sales guidance of $860-880 million, which was below the analyst consensus of $889 million