Mid-day Report

S&P 500 1,099.46 +.28%
NASDAQ 1,915.62 -.55%

Leading Sectors
Energy +1.60%
Gaming +1.54%
Tobacco +1.41%

Lagging Sectors
Networking -2.12%
Disk Drives -3.18%
Iron/Steel -5.32%

Other
Crude Oil 41.33 +.61%
Natural Gas 6.42 -.93%
Gold 375.70 +.21%
Base Metals 102.06 +.47%
U.S. Dollar 91.68 -.29%
10-Yr. Long-Bond Yield 4.79% -1.23%
VIX 18.34 -2.92%
Put/Call .92 +1.28%
NYSE Arms 1.39 +40.40%

Market Movers
BEAS -20.3% after missing 1Q revenue estimates and multiple downgrades.
MERX -31.4% after cutting 4Q forecast substantially and downgrade to Underperform by RBC Capital.
JNPR -4.49% after rivals Hitachi, NEC and Furukawa said they will jointly develop next-generation Internet router equipment.
GCO +15.7% after significantly boosting 1Q forecast.
ISCA +7.45% after saying it will acquire Martinsville Speedway for $192M and sell North Carolina Speedway to Speedway Motorsports for $100.4M.
IMPC -34.16% on disappointing 2Q earnings and 04 licensing revenue.
Chinese commodity stocks down across the board on concerns over potential hard-landing in China economy.

Economic Data
Consumer Price Index for April +.2% versus +.3% estimate and +.5% in March.
CPI Ex Food & Energy for April +.3% versus +.2% estimate and +.4% in March.
Business Inventories for March +.7% versus +.5% estimate and +.8% in February.
Industrial Production for April +.8% versus +.5% estimate and -.1% in March.
Capacity Utilization for April 76.9% versus estimates of 76.7% and 76.5% in March.
Preliminary Univ. of Mich. Consumer Confidence for May 94.2 versus 96.0 estimate and 94.2 in April.

Recommendations
Goldman Sachs said to Buy YHOO after analyst meeting confirmed thesis, sees 25-30% upside. GS reiterated Buy on INTC, CSCO, CTSH, HD, CEN and CAH. GS reiterated Underperform on PBG, BMY, SAY and FHCC. Goldman also said after its Beijing Commodity conference that it sees no signs of a slowdown in demand. Credit tightening polices by Chinese government are benefiting ACH. Overall, Goldman said only an unexpected sharp fall in growth would derail cyclical upturn, favorite beneficiaries are AL, NEM, AA, N and PDG. Citi SmithBarney said to Buy BEAS on weakness. Citi upgraded AEE to Buy and rated WR new Buy. Citi reiterated Buy on GTK, target $65. Citi reiterated Buy on YHOO, target $33. Citi reiterated Buy on WMT, target $64. Citi reiterated Buy on TGT, target $50. NVTL rated Overweight at JP Morgan. WEN raised to Overweight at JP Morgan. POP, GLT, RKT, WMO and WY raised to Buy at Deutsche Bank. ITW raised to Overweight at Lehman, target $120. ESRX raised to Buy at Merrill, target $89.

Mid-day News
U.S. stocks are mixed mid-day as falling interest rates and a strong energy sector are offsetting weakness in technology and basic materials shares. The U.S. would leave Iraq if the country's new administration asked it to do so after the planned handover of power on June 30, Agence France-Presse reported. Nortel said it's the subject of a criminal probe by the U.S. Attorney's Office in Texas. Panera Bread and Papa John's are among U.S. food companies facing an erosion in profits because of a surge in the cost of milk and other dairy products, Bloomberg reported. Airlines are battling losses as jet-fuel supplies drop close to record lows in some regions and prices soar. The worst may be yet to come as refiners sacrifice jet-fuel output to make gasoline, Bloomberg reported. Revlon and Samsonite joined a growing list of companies canceling sales of high-yield, high-risk debt as interest rates rise, Bloomberg said. Consumer prices are now expected to rise 2.2% this year, well below the 3% average rise over the last 84 years, Bloomberg reported.

BOTTOM LINE: The Portfolio is down slightly today as a couple of my security and biotech longs are rising substantially, almost offsetting loses in my tech long positions. The market is rising from its morning lows as expected. I have not traded as of yet and the Portfolio is still 125% net long. I want to reiterate that inflation is not currently a problem and that, historically, moderate inflation is good for stock prices as companies regain pricing power, boost profits and hire more workers. As I predicted months ago, when U.S. job growth accelerated the negative bias of the mainstream press would lead them to focus on inflation instead of the end of the so-called "jobless recovery." This, combined with the 24-7 reporting on torture, is eroding consumer and investor confidence. However, market action today is a big psychological positive for the Bulls as Dell's earnings, rising oil prices, the CPI and Consumer Confidence report could not move stocks substantially lower. I still expect a follow-through rally on good volume sometime in the next few days to confirm Wednesday's strong afternoon advance.