Mid-day Update

S&P 500 1,135.16 -.88%
NASDAQ 2,044.56 -1.01%

Leading Sectors
Fashion +1.65%
Computer Service -.11%
Papers -.24%

Lagging Sectors
I-Banks -2.10%
Utilities -2.22%
Iron/Steel -2.75%

Other
Crude Oil 37.37 -1.24%
Natural Gas 5.82 -3.23%
Gold 408.50 -2.95%
Base Metals 110.51 -.91%
U.S. Dollar 89.91 +1.07%
10-Yr. Long-Bond Yield 4.31% +1.88%
VIX 17.11 +11.98%
Put/Call .87 +16.0%
NYSE Arms .83 +2.47%

Market Movers
GSOF +37.42% on $380M acquisition by Pitney Bowes.
TSO +10.3% after significantly raising 1Q estimates.
LF +8.77% on Merrill upgrade to Buy.
NFI +17.5% on rebound from yesterday's fall after negative WSJ article.
PRX -9.66% after announcing $135M buyout of Kali Labs, lowering 1Q guidance.
Small/mid-cap security-related stocks down across the board on profit-taking after mania type runs.

Economic Data
Advance Retail Sales for March +1.8% vs. expectations of +.7%.
Retail Sales Less Autos for March +1.7% vs. expectations of .6%.
Business Inventories for February +.7% vs. expectations of +.5%.

Recommendations
DVN raised to Sector Outperform at CIBC. KWK lowered to Sector Underperform by CIBC. TDS cut to Sell at Legg Mason. CCI raised to Outperform at Thomas Weisel. LF raised to Buy at Merrill, target $28. EYET rated new Buy at Merrill, target $45. ABT rated new Underperform at CSFB. MDT, GDT and BSX rated new Outperform at CSFB. WMGI rated new Buy at Bank of America. ESV rated Strong Buy at Raymond James, target $37. GSF rated Strong Buy at RJ, target $35. MXO and STX rated Underperform at RJ. TheStreet.com has a positive column on CUNO, saying it could be a buyout target. Cramer, of TheStreet.com, is recommending the April 30 calls on INTC for aggressive traders. TSC also has a positive column on RCKY. Goldman Sachs reiterated Outperform on WMT, SPP, ROH, IGT, AGI and AYE. GS raised estimates on AMGN and BIIB, reiterating Outperform. Citi Smith Barney says to swap out of CPO and into BG. Citi reiterated 1H on CKFR, target $35. Citi rated PTV Buy, target $27. Citi rated SEE Buy, target $62. Citi says the pricing and lead-time environment in semis appears most positive for FCS, IRF, MXIM and LLTC.

Mid-day News
U.S. stocks are falling mid-day as the exceptionally strong retail sales reports resulted in rising interest rates, a rising U.S. dollar and falling commodity prices. Krispy Kreme(KKD) may open doughnut shops in Japan under a joint agreement with Global Dining, Dow Jones reported. Google's new free email service is facing scrutiny from a California state senator who wants to block it because the services' advertising violates privacy, Reuters reported. The median sale price of a home in Los Angeles County rose 29% in March to a record $375,000 as concern about rising rates spurred buying, the LA Times reported. A 37-year-old man in Washington state was arrested by federal agents and charged with possessing ricin, a deadly biological agent, the AP reported. Phelps Dodge and other companies that dig copper, silver and other metals are hiring workers and reopening mines as prices rise and demand for copper booms in China, the LA Times reported. Merrill Lynch said first-quarter profit rose 95% as revenue from bond trading and underwriting soared and an improving economy boosted fees from stock sales and mergers. Sales at U.S. retailers rose 1.8% in March, the biggest increase in a year, led by purchases of autos, furniture and building materials. Sales at building materials and garden supply stores rose 10.6%, the largest gain ever recorded. Economists at Morgan Stanley raised their estimate for 1Q GDP growth to 5.0%, Bloomberg reported. Pornographic "spam" must be labeled as such starting May 19, or senders will face fines, Bloomberg reported.

BOTTOM LINE: The Portfolio is down today as my falling shorts are not enough to offset 75% net long market exposure. The yield on the 10-yr T-note broke through the top of its intermediate-term downtrend line at 4.22%. The top of the long-term downtrend line is around 5.75%. I still expect the Fed to begin raising rates at the June 29-30 meeting, while the market is expecting the first increase at the September 21 meeting. I also still expect a 1Q GDP number north of 5%, while current market expectations are for 4.6% growth. Finally, I expect the market to remain relatively weak throughout the day. I will likely add exposure into this weakness as I expect a bounce tomorrow on the President's speech, combined with falling energy prices and great earnings reports.