Updated to correct and clarify forward P/E ratio for P&G

NEW YORK ( TheStreet) -- When a plan won't come together, apparently an outline will have to do.

Europe didn't really do much on Wednesday but Wall Street decided it was enough. For now. The prospect of China getting involved surely didn't hurt, and the rally was rather subdued with only moderate volume behind it. More polite applause than ringing endorsement.

The latest from The Wall Street Journal is that the talks are bogging down over how much Greece's debt should ultimately be forgiven. Sounds familiar. It's a live by the headline, die by the headline market these days, and the bet now seems to be that the next headline from Europe is going to be a good one. Europe's leaders are eventually going to have to agree on the down-and-dirty details of a plan, but Wednesday's summit seems to have been accomplishment enough to buy them some more time. The story remains the same though: Stay tuned.

Meanwhile, even as U.S. stocks have been surging for most of October, it turns out mutual funds investing in domestic equities continued to see heavy outflows.

According to data released Wednesday by the Investment Company Institute, long-term mutual funds saw overall inflows of $3.93 billion for the week ended Oct. 19 but that was entirely due to surging interest in bonds, which saw inflows of $5.65 billion. Domestic equity funds were hit with outflows of $3.47 billion, while hybrid funds, investing in both stocks and bonds, took in $1.57 billion. Funds investing in international equities added a paltry $177 million.

Over the past five weeks, equity funds have now seen total outflows of $24.05 billion, overwhelmingly from domestic funds, according to the ICI, which collects data on 95% of industry assets and adjusts it to reach its total estimates. Stocks may have stormed back this month but some folks are definitely seizing the opportunity to take some money off the table.

Thursday's economic data features weekly initial and continuing jobless claims and third-quarter gross domestic product at 8:30 a.m. ET, and pending home sales for August at 10 a.m.

The consensus has initial claims for the week ended Oct. 22 at 402,000, according to Briefing.com, whose estimate is at 400,000. Continuing claims are seen at 3.7 million for the week ended Oct. 15. GDP is estimated at 2.5% growth, a performance that will pretty darn good after second-quarter GDP came in at 1.3%. Research firm Macroeconomic Advisors is a bit higher, at 2.6%, after tweaking its view one-tenth of a percentage point lower following the durable goods orders data earlier Wednesday.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, is looking for a GDP rise of 3% for the third quarter, and he's hoping to see more of the same in the fourth quarter.

"Whatever the third quarter number turns out to be -- and remember the scope for future revisions is huge -- it is already history, and what really counts is the outlook for the fourth quarter and beyond," he writes. "What little data we have for October is mixed -- a big rebound in the Philly Fed, grim consumer confidence numbers but strong chain store sales -- but we are sticking for now to our working assumption that growth will be about 3%, Europe permitting."

Thursday is also a monster day for earnings with the most prominent quarterly reports due from two Dow components -- Exxon Mobil ( XOM) and Procter & Gamble ( PG) -- as well as heavyweights like Colgate-Palmolive ( CL) and Altria ( MO).

Consumer goods giant P&G gets the deep-dive treatment here. The stock is basically flat for 2011, and up around 2.6% for the past year. The average estimate of analysts polled by Thomson Reuters is for a profit of $1.03 a share in the company's fiscal first quarter ended Sept. 30 on revenue of $21.53 billion.

The company, whose brands include Tide detergent and Bounty paper towels, is typically right around the consensus, usually within 2 or 3 cents. With a forward price-to-earnings ratio (based on an estimate for a profit of $4.20 a share for the company's fiscal year ending in June 2012) of 15.5X and an annual dividend yield of 3.2%, the stock is more expensive than the S&P 500 with a P/E ratio of 12.2X but does have a better yield than the index at 2.2%.

The sell side is bullish on the stock at its current levels in the mid-60s with 18 of the 24 analysts covering the shares at either strong buy (9) or buy (9), and the median 12-month price target sitting at $70.50. BMO Capital Markets lifted its rating on P&G to outperform (the equivalent of strong buy) on Oct. 17 on its view that the company's fundamentals are solid and that management is working to improve total shareholder return.

The firm, which also boosted its price target on the stock to $75 from $71, said an expected restructuring in December will likely address a lingering problem at the company.

"We've long believed that PG's biggest obstacle is a legacy of bureaucracy where an 'unproductive middle' not engaged in manufacturing, R&D and advertising accounts for layers of complexity and cost," BMO said in its note to clients. "While PG's sales/employee of $640,000 ranks among the best, its overhead/employee of $113,620 is an estimated 45% higher than its closest peers. We think the December restructuring announcement will suggest that PG is intent on reducing overhead costs, the savings of which could further accelerate EPS growth."

Staff reductions, most likely through retirement programs, could come in both North America and Western Europe, says the firm, which believes the resulting savings could flow to the bottom line very quickly.

"As an example, we calculated that if PG reduced its employee base by 4,000 at a cost of $1.5 billion, the ongoing savings would be close to $1 billion," said BMO. "Given how quickly retirement programs have an impact on the P&L, we think a program of this nature has the potential to add incremental EPS of $0.25. While some of the savings might be reinvested, it's easy to see how EPS growth could head into the low teens, none of which is built into our estimates."

The rest of the notables on a lengthy a.m. roster include 1-800 Flowers.com ( FLWS), Aetna ( AET), Airgas ( ARG), AstraZeneca ( AZN), Avon Products ( AVP), Ball Corp. ( BLL), BankUnited ( BKU), Barrick Gold ( ABX), Bristol-Myers Squibb ( BMY), Brunswick Corp. ( BWS), Build-A-Bear Workshop ( BBW), Cardinal Health ( CAH), Celgene ( CELG), Citrix Systems, Corn Products International ( CPO), Deluxe Corp. ( DLX), Dow Chemical ( DOW), Federal-Mogul ( FMO), Goodrich Corp. ( GR), Hershey ( HSY), International Paper ( IP), Johnson Controls ( JCI), Keefe Bruyette & Woods ( KBW), L-3 Communications ( LLL), Lazard ( LAZ), Legg Mason ( LM), Lincoln Electric ( LECO), Monster Worldwide ( MWW), Moody's ( MCO), Occidental Petroleum ( OXY), OfficeMax ( OMX), Old Dominion Freight Line ( ODFL), Overstock.com ( OSTK), PF Chang's China Bistro ( PFCB), Potash ( POT), Pulte Homes ( PHM), Raytheon ( RTN), Revlon ( REV), Royal Caribbean Cruises, Royal Dutch Shell ( RDS.A), Six Flags ( SIX), Starwood Hotels & Resorts ( HOT), Time Warner Cable ( TWC), UAL Corp. ( UAL), Valley National Bancorp ( VLY), Waste Management ( WM), and Zimmer Holdings ( ZMH).

After the bell, the market gets numbers from Advanced Micro Devices ( AMD), Applied Micro Circuits ( AMCC), Baidu.com ( BIDU), Callaway Golf ( ELY), Coinstar ( CSTR), Crocs ( CROX), Deckers Outdoor ( DECK), Digital River ( DRIV), Eastman Chemical ( EMN), Expedia ( EXPE), Gilead Sciences ( GILD), KLA-Tencor ( KLAC), Las Vegas Sands ( LVS), Metlife ( MET), Motorola Mobility Holdings ( MMI), Oclaro ( OCLR), PMC-Sierra ( PMCS), Sonus Networks ( SONS), and VeriSign ( VRSN).

-- Written by Michael Baron in New York.

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