Mid-day Update

S&P 500 1,148.18 -.08%
NASDAQ 2,028.72 -.53%

Leading Sectors
Computer Services +.57%
HMO's +.56%
Banks +.43%

Lagging Sectors
Homebuilders -1.18%
Iron/Steel -1.36%
Semis -1.93%

Other
Crude Oil 36.04 -1.69%
Natural Gas 5.43 -2.43%
Gold 391.60 -.56%
Base Metals 110.55 -3.32%
U.S. Dollar 89.43 +.58%
10-Yr. Long-Bond Yield 4.07% +.86%
VIX 14.93 +.47%
Put/Call .82 +17.14%
NYSE Arms 1.07 -21.32%

Market Movers
MAMA +37% on continued strength from 4Q report.
LGND +11.5% after significantly beating 4Q estimates and raising guidance.
COO +10.2% after beating 1Q estimates and raising guidance.
SEAC -19.9% after beating 4Q estimates and having lawsuit against CCUR thrown out.
BVF -9.3% after missing 4Q estimates and lowering guidance.
AZ -4.5% after 2Q beat estimates by cutting costs and raising prices, thus hurting sales.

Economic Data
ISM Non-Manufacturing came in at 60.8 in February vs. 63.5 forecast.

Recommendations
PAYX price target raised to $41 and rating raised to Outperform at SoundView. IGT rated new Buy at Bank of America, price target set at $50. BOFA also rated AGI Buy and set price target of $33. ESRX price target raised by CSFB to $86. Goldman Sachs recommends buying Yen against US dollar. GS says they would buy IBM, EMC and DELL on weakness related to STX report. GS says Tuesday's court decision reversing the FCC's UNE-P, handing a near-term victory to the RBOCs, is a non-event for communications equipment vendors and continues to favor JNPR, NT, SONS and CSCO. GS is expecting lumber prices to average 18% higher in 04 vs. 03 on continued strength in US housing market. Citi Smith Barney says XLNX experiencing packaging-related delivery constraints in March Q limiting upside, but making June Q better. Citi likes SAP and says its demand is improving with pipeline strong, win rates increasing and deal sizes stabilizing. TheSteet.com's Cramer says commodity rally may be in its very early stages still as demand will outstrip supply for years. Jason Goepfert of Sentimetrader.com says February market action bodes will for next few months, reported TheStreet.com

Mid-day News
U.S. stocks are falling mid-day as traders continue to speculate Friday's employment report will result in an immediate Fed rate hike. The US dollar and interest rates continued their recent rebound. Saudi Arabia will reduce the price of its shipments to the U.S. in April, compared with a benchmark grade, Reuters reported. Deutsche Telekom and France Telecom, Europe's two largest phone companies, had their credit raised by Moody's after they cut debt. Copper futures had their biggest decline in more than 4 years on concern that its price has risen so much that it will cut demand in the future. The ISM Non-Manufacturing Index declined to 60.8 in February from January's all-time high reading of 65.7. The employment component of the index fell slightly to 52.7 from January's 53.4, the highest reading since 1987. The Business Roundtable said that 33% of CEO's plan to increase hiring in the next 2 quarters, up from 25% last quarter. Railroads have hauled 5.5% more truck trailers and multi-use containers so far in 04 than 03, according to the Amer. Assoc. of Railroads. Arrow Electronics, the world's largest distributor of computer parts, is seeing a lot of demand from small and mid-sized businesses according to the CEO.

BOTTOM LINE: The U.S. equity markets seem to be overreacting to the rally in the U.S. dollar and interest rates. The dollar is up 5% after a decline of 30% from its all-time high. It is a positive that it is not falling at such a rapid rate. I do not believe, at this time, that we have begun a new bull market in the U.S. currency. Interest rates have barely moved up from their recent lows and yields are still down 11% since Sept. 03. Interest rates normally rise substantially before a series of Fed moves. That is not the case at this time. The Portfolio is down today as it took a hit on a recent buy of SEAC. I exited this position after it penetrated my stop-loss, notwithstanding my opinion that the fall is an overreaction to the court loss. I also trimmed some other longs, leaving the Portfolio with 50% net long market exposure. The market appears to be making a short-term bottom and I will look to increase exposure at the appropriate time.