Tuesday Watch

Earnings of Note
Company/Estimate
CC/-.07
FDS/.43
LEH/1.91
LEN/1.16
ORCL/.18
PIR/.13

Splits
None of note.

Economic Data
Consumer Price Index for May estimated +.5% versus +.2% in April.
CPI Ex Food & Energy for May estimated +.2% versus +.3% in April.
Business Inventories for April estimated +.4% versus +.7% in March.
Empire Manufacturing for June estimated at 30.50 versus 30.21 in May.
Preliminary Univ. of Mich. Consumer Confidence for June estimated at 90.8 versus 90.2 in May.
NAHB Housing Market Index for June estimated at 68 versus 69 in May.

Recommendations
Goldman Sachs reiterated Outperform on MSFT, ADP, CEN and PAYX.

Late-Night News
Asian indices are quietly mixed ahead of a number of important U.S. economic reports. Steel price rises in the last two years may soon come to an end, the Financial Times said, citing an interview with Arcelor SA CEO Guy Dolle. Saddam Hussein and other detained leaders of his ousted regime will be handed to Iraqi authorities by the U.S. in the next two weeks, the BBC said. China plans to tighten controls on new shopping malls as part of the effort to cool investment and growth in rapidly expanding industries, the Financial Times reported. Manpower's recently released employment survey shows a "much improved" jobs market for the upcoming quarter, the Financial Times said. A letter purportedly written by Abu Musab al-Zarqawi, a terrorist linked to al-Qaeda, says his struggle in Iraq is getting harder because the U.S.-led coalition is tightening its grip, the AP said. A medical journal group that includes the New England Journal of Medicine may require drugmakers to reveal all product trials in order for a drug to be considered for publication, the NY Times said. AT&T will stop offering local service in some states as a court ruling that denies it discounted access to local networks becomes effective, the Wall Street Journal reported. Afghanistan has registered more than 3.5 million voters to take part in the presidential and general elections planned for September, the UN said. Lucent said demand for its products is on the rise in Asia after a three-year slump, Bloomberg reported. Japanese troops will join a UN multinational force planned for Iraq, Bloomberg said.

Late-Night Trading
Asian Indices -.50% to +.75% on average.
S&P 500 indicated -.20%.
NASDAQ 100 indicated -.14%.

BOTTOM LINE: I expect U.S. stocks to open weaker in the morning as higher-than-expected consumer confidence and inflation readings send interest rates higher. However, falling energy prices and relatively high Put/Call and ARMS readings from today should help to cushion any fall. A significantly higher-than-expected CPI reading could result in an inter-meeting rate hike within the next few days. I continue to expect a 50 basis point increase in the Fed Funds Rate by June 30th. I will likely cover a few shorts into any extreme weakness in the morning. The Portfolio is 25% net short heading into tomorrow.