Mid-day Update

S&P 500 1,141.49 +1.56%
NASDAQ 2,033.59 +1.90%

Leading Sectors
Iron/Steel +4.32%
Internet +3.90%
Airlines +3.86%

Lagging Sectors
Nanotechnolgoy +.56%
Fashion -.03%
Disk Drives -.13%

Other
Crude Oil 36.90 +3.27%
Natural Gas 5.64 +.95%
Gold 393.80 +.61%
Base Metals 107.20 -1.03%
U.S. Dollar 91.07 -.05%
10-Yr. Long-Bond Yield 4.38% -.96%
VIX 14.12 -9.49%
Put/Call .64 -8.57%
NYSE Arms .69 +32.69%

Market Movers
KLAC -6.71% after beating 3Q estimates, but disappointing 4Q guidance and First Albany downgrade to neutral.
EBAY +7.13% after beating 1Q estimates and raising 2Q/04 guidance.
LSCP +23.7% after beating 1Q estimates substantially and raising 04 guidance significantly.
KVHI +19.8% after beating 1Q estimates and positive comments.
EYE +16.78% after beating 1Q estimates, lowering 2Q sales forecast and raising 04 guidance.
ESI +11.65% after beating 1Q estimates.
ROG +9.87% after beating 1Q estimates and raising 2Q guidance.
ASCL -19.31% after missing 1Q estimates substantially, lowering 2Q guidance and Needham downgrade to hold.
GTI -16.9% after missing 1Q estimates and lowering 2Q/04 guidance.
PLXS -12.6% on profit-taking after meeting 2Q estimates and raising 3Q guidance.
CCMP -10.4% after missing 2Q estimates and WR Hambrecht downgrade to Hold.
SSTI -6.97% on profit-taking after beating 1Q estimates and raising 2Q guidance.

Economic Data
Producer Price Index for March +.5% versus +.4% estimate and +.1% prior month.
PPI Ex Food & Energy for March +.2% versus +.1% estimate and +.1% prior month.
Initial Jobless Claims last week were 353K versus 340K estimate and 362K prior week.
Continuing Claims were 3019K versus 2988K estimate and 2967K prior week.

Recommendations
JP Morgan raised TK to Overweight. Deutsche Bank raised CB to Buy, target $82. Oppenheimer raised TRI to Buy, target $40. CIBC raised ADS to Sector Outperform, target $46. Legg Mason raised UOPX to Buy, target $108. Legg Mason raised KNGT to Buy, target $30. Lehman raised CTX to Overweight, target $64. Raymond James raised UPS to Outperform, target $80. Raymond James raised WEBX to Strong Buy, target $30. Goldman Sachs reiterated Underperform on FISV, CMI, RKY and F. GS upgraded GLK to Outperform. GS rated JNPR Outperform. GS reiterated Outperform on VOD, UPS, WEN, FDC, AIG, ADP, GDT, GLW, SBC, AIG, PHCC, CIT, BAX, CAH, IGT, TRI, FE, KLAC and KRB. Citi Smith Barney raised JNPR to 1S from 2S, target $32.50. Citi reiterated Buy on FFIV, target $45. Citi reiterated Buy on ATH, raised estimates and price target to $134. Citi believes NOC, LMT and LLL will beat estimates. Citi reiterated Buy on VIAB, target $54. Citi reiterated Buy on HOT, target $47. Citi reiterated Buy on RCL, target $50. Citi reiterated Buy on SBUX, raised earning and target to $46. Citi reiterated Buy on TEX after weak quarter. Citi reiterated Buy on CTX, target $88. TheStreet.com has a positive column on HDI.

Mid-day News
U.S. stocks are sharply higher mid-day on a slew of positive earnings reports, positive CEO comments and falling interest rates. The U.S. will be involved in the Middle East for many years, and needs to demonstrate its resolve or risk "losing face" in the region and elsewhere in the world, James Schlesinger wrote in the Wall Street Journal. Abbey Joseph Cohen, of Goldman Sachs, made bullish comments on the economy and U.S. stock market on CNBC. AIG, the world's largest insurance company, said first-quarter profit rose 36%, Bloomberg reported. UPS, the largest package-shipping company, said first-quarter profit rose 24%, Bloomberg said. American Express said first-quarter profit rose 15% as rising consumer confidence and tax cuts encouraged more spending on credit cards and travel, Bloomberg reported. Caterpillar, the world's largest maker of earthmoving equipment, said first–quarter profit rose more than 300% on strong sales. Jim Owens, CEO of Caterpillar, said "It appears the world economy will have one of the strongest, broadest recoveries in years." He also said, "We anticipate that keeping pace with volume growth will require additional hiring through the remainder of the year." As many as 3,000 people were killed or injured in North Korea today as two fuel-laden trains collided and exploded, Reuters reported.

BOTTOM LINE: The Portfolio is down slightly today as my shorts hurt performance early in the morning. I covered several of these positions as they hit stop losses. I also added a number of new long positions in a variety of sectors, thus bringing the Portfolio's market exposure to 100% net long. One of my new long positions is INTC. I put a stop-loss of $26.25 on this trade. I think the market is signaling the beginning of the next up-leg in the current bull-run. Psychology appears to have shifted from concentrating on the few negatives to focusing on the many positives. American net worth is at all-time highs, the U.S. and world economies are growing at the fastest pace since the early 80's, inflation and interest rates are relatively low, corporate profits are at all-time highs/executives are making very positive comments about the future, stock valuations are falling as earnings significantly exceed expectations, the job market is accelerating and there has not been any new significant terrorist attacks on U.S. soil. These huge positives are more than outweighing the tougher-than-expected road to democracy in Iraq and high energy prices. I continue to expect the major U.S. indices to experience another double-digit gain this year on top of last year's large increase.