Mid-day Update

S&P 500 1,131.87 +.50%
NASDAQ 2,008.83 +.73%

Leading Sectors
Insurance +1.92%
Semis +1.38%
Broadcasting +1.25%

Lagging Sectors
Iron/Steel -.88%
Retail -.92%
Oil Service -1.59%

Other
Crude Oil 35.21 -1.57%
Natural Gas 5.92 -.30%
Gold 429.00 +.16%
Base Metals 115.07 +1.47%
U.S. Dollar 87.28 -.38%
10-Yr. Long-Bond Yield 3.87% +.94%
VIX 17.03 +1.73%
Put/Call .62 -51.94%
NYSE Arms .72 -41.94%

Market Movers
CADA +26.9% on positive comments about X-charge payment processing applications.
LSCP +22.2% after announcing higher reimbursement from the government for their prostate treatment.
PHTN +9.7% after multiple upgrades.
NDC -13.5% after saying it will delay 3Q results on accounting review.
MANU -16.9% after disappointing 4Q and lowering 1Q guidance, multiple downgrades.
SUPG -29.0% after disappointing Dacogen drug-study results.

Economic Data
Producer Price Index for February +.1% vs. expectations of a .3% rise.
PPI Ex Food & Energy for February +.1%, meeting expectations.
Initial Jobless Claims last week were 342K vs. expectations of 340K.
Continuing Claims were 3063K vs. expectations of 3008K.
Construction Spending for February was -.1% vs. expectations of unch.
ISM Manufacturing for March was 62.5 vs. expectations of 59.5.
ISM Prices Paid for March was 86.0 vs. 82.0 forecast.

Recommendations
UTSI raised to Buy at Deutsche Bank, target $33. WMAR rated Outperform at Thomas Weisel. IACI raised to Buy at Legg Mason, $41 target. DDS cut to sell at Merrill Lynch. Merrill Lynch downgraded many other retailers to Neutral on concern that rising rates will dampen consumer demand. Lehman raised AV price target to $18. LIZ and JNY cut to Underweight at Prudential. Goldman Sachs reiterated Outperform on ATYT, SVU, MRVL, DDR, GCI, WEN, VZ, SBC and BIIB. GS upgraded KRI to Outperform. GS reiterated Underperform on HUM. GS believes newspaper help-wanted ad revenues are poised for a significant rebound in 04-05. GS reiterated Attractive view on Oil Service sector. Goldman says cable companies will most directly and profoundly utilize VoIP, happening now and impact is broad. Favorite VoIP equipment vendors are NT, SONS, CSCO, AV and NT. GS reiterated Underperform on HRB and PNRA. Citi Smith Barney says March came in stronger-than-expected for datacom equipment, thinks 2Q will be exceptional. Citi's favorites are CSCO, FDRY, EXTR, FFIV and RDWR. Citi reiterated 1H on IGT. Citi thinks WFMI, OATS and COST benefited from California grocer strike. Citi reiterated 1H on BBY, target $64. TheStreet.com has positive article on YHOO.

Mid-day News
U.S. stocks are modestly higher mid-day on strength in insurance and technology shares. American International Group(AIG), Pfizer(PFE) and Verizon(VZ) will be added to the Dow Jones Industrial Average on April 8, taking the place of AT&T(T), Eastman Kokak(EK) and Intl. Paper(IP). JC Penney is close to completing the sale of its Eckerd drugstore chain to CVS Corp. and Jean Coutu Group, the Wall Street Journal reported. A training manual by the terrorist group al-Jama'ah al-Islamiyyah discovered in Indonesia outlines plans to take over the world, CNN reported. Silver rose above $8 an ounce in London, the highest in more than 16 years. The ISM manufacturing index rose more-than-expected last month as production increased and more factories added workers than at any time since the 80's. "The breadth of the expansion as well as its speed is breathtaking," said Stephen Stanley, chief economist at RBS Greenwich Capital. The first quarter ISM employment index average of 62.5 was the highest since 1983.

BOTTOM LINE: The Portfolio is having a very good day today as several longs are up significantly and my shorts are down. I have not traded as of yet, leaving market exposure at 75% net long. It is good to see tech outperforming again. The bond market has moved down in anticipation of a strong employment report, thus cushioning the downside on a blow-out number. The NASDAQ is hovering above the psychologically important 2000 level. I may leave market exposure at 75% if this level can hold into the close. The writing is on the wall. The employment situation is improving. Whether it is this month or sometime in the near future, a strong jobs report is inevitable. The bond market's reaction will determine a lot as to the strength of the equity market for 04. It will be interesting to see where the mainstream media turns their negative focus next. I expect it will be inflation.