Mid-day Update

S&P 500 1,143.05 +.34%
NASDAQ 2,017.74 +.61%

Leading Sectors
Networking +2.02%
Disk Drives +1.87%
I-Banks +1.44%

Lagging Sectors
Iron/Steel -.32%
Broadcasting -.42%
Homebuilders -.91%

Other
Crude Oil 35.60 +2.95%
Natural Gas 5.16 +1.63%
Gold 396.40 -2.08%
Base Metals 112.75 +1.25%
U.S. Dollar 87.21 +1.24%
10-Yr. Long-Bond Yield 4.00% -.38%
VIX 15.42 -3.02%
Put/Call .81 +6.58%
NYSE Arms .74 -48.25%

Market Movers
RMBS +6.8% on belief that its recent courtroom victory will survive appeal.
IM +13.3% after significantly beating 4Q estimates and raising 1Q forecasts.
ESRX +4.7% after beating 4Q estimates and strong 04 outlook.
ESI, CECO, APOL, COCO and STRA all down after federal agents served ESI with a search warrant at its corporate offices. The warrant is related to information and documents on retention rates, student placement, recruitment, attendance and admissions.
STZ -10.5% after saying a recent secondary will lower 05 earnings.
CMTL +11.7% after raising 2Q and full-year 04 estimates.
GLDB +14.1% on takeover by DLJ Merchant Banking, Cypress Group and other investors.
CURE -14.6% after disappointing 4Q, weak guidance and announcing their 11th acquisition in a few years.

Economic Data
Existing Home Sales were 6.04M for January vs. an estimate of 6.25M.

Recommendations
IM raised to "Buy" at First Albany. ESRX, AEOS raised to "Outperform" at Wachovia. EMC added to focus list at J.P. Morgan. XLNX raised to "Overweight" at Lehman. AMD raised to "Buy" at Oppenheimer. Goldman raising rating on HD to "Outperform." GS says to buy CSCO and NT at current levels. Also, GS says to buy YHOO at these prices. Goldman says DOX has emerged from telecom downturn in strongest competitive position in its history. GS also saying wireless infrastructure spending continues to pick-up steam and should remain a revenue driver for semi companies in 04. Finally, GS thinks semis remain in trading range through mid-04. TheStreet.com is positive on TK, TNP and SJH on high energy prices. Citi Smith Barney says conditions remain strong for Semi. Equipment companies. Citi also raising SBUX price target to $45 and reiterating "Buy" before February sales figures. Citi says to buy ACS on weakness. Merrill Lynch "Focus 1" stock is CIN.

Mid-day News
U.S. stocks are higher mid-day on strong reports from Ingram Micro and Tiffany & Co., as well as continued optimism on the prospects for the U.S. economy by Alan Greenspan. TXN is saying VOIP is being deployed by cable companies in much larger volumes than previously. Jim Cramer, of TheStreet.com, is saying recent talk by the mainstream press of a bubble cannot be backed up with facts. Cramer also saying Ingram Micro's report bodes very well for tech. Fidelity doesn't plan to offer hedge funds, as it could result in a conflict of interest with their mutual funds. Clear Channel plans to impose new standards to prevent its stations from airing indecent content. The U.S. dollar is gaining on talk of an interest rate cut by the European Central Bank and strong U.S. growth prospects. Greenspan said the U.S. economy has made the transition from a period of sub-par growth to one of more vigorous expansion. He also recommended spending cuts instead of tax increases to cut the deficit. Thousands of drugs will be required to have bar codes on their labels similar to those used in grocery stores, the FDA said. The SEC proposed a mandatory 2% redemption fee on short-term mutual fund trades. States that offer college scholarships can deny them to students majoring in theology without violating their constitutional rights, the U.S. Supreme Court ruled. Worldwide semi sales will rise 23% this year, outpacing their 03 gain of 14%, researcher Gartner said.

BOTTOM LINE: The Portfolio is having a good day today notwithstanding its relatively low market exposure of 25% net long, as the shorts are up less than the longs. Greenspan reiterated again that the economy was on pace to grow vigorously in 04. Employment has always been a lagging indicator, usually improving 6-9 months after vigorous GDP growth. U.S. GDP growth only started to accelerate substantially in the 3Q of 03 due to corporate scandals, Sept. 11th and the War with Iraq. Moreover, the U.S. overcapacity issue which was created by the excesses and corruption of the later part of the 90's, delayed vigorous economic growth and is now affecting job creation. Too many companies with bad business models and inexperienced management were created during the bubble to target inflated markets, thus creating artificially high employment. This overcapacity in the labor markets had to be worked off with time and increased demand. With GDP growth the best in 2 decades stimulating demand, the timing now seems right to expect better labor conditions in the very near future. I would like to see the market strengthen throughout the day before increasing the Portfolio's market exposure. I will look to add names in retail, oil service and tech if this occurs.