Wednesday Watch

Earnings of Note
Company/Estimate
VOXX/.09
STZ/.49
EMMS/.07
FRE/1.61
GIS/.72
MERX/-.02
MON/.85

Splits
None of note.

Economic Data
Chicago Purchasing Manager for June estimated at 65.0 versus 68.0 in May.
The Fed is expected to raise the Fed Funds Rate by 25 basis points.

Recommendations
Goldman Sachs reiterated Underperform on VTS and Outperform on MUR. Goldman sees another strong quarter for MOT and increased estimates.

Late-Night News
Asian indices are higher, led by exporters, after a better-than-expected consumer confidence report in the U.S. OPEC President Yusgiantoro said oil prices should continue to ease back to the organization's $22-$28 target band, the Financial Times said. Disney's ESPN is in talks with British Sky Broadcasting to start a 24-hour sports channel in the U.K., the London-based Times said. General Motors Vice Chairman Lutz said Western Europe may be discouraging investment in manufacturing through high labor and regulatory costs, the Financial Times said. Passive smoking may be more dangerous than previously thought, raising the risk of heart disease among non-smokers by as much as 60%, Bloomberg reported. The U.S. Department of Agriculture reported its second possible case of made cow disease in less than a week as part of a screening program that the government expanded following a confirmed case in December, Bloomberg reported.

Late-Night Trading
Asian Indices are +.25 to +1.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.13%.

BOTTOM LINE: I expect U.S. stocks to open higher in the morning, led by technology and cyclical shares. The Chicago Purchasing Manager report will probably meet or fall slightly below expectations. I also expect the Fed to raise rates by 25 basis points and to keep the word "measured" in their policy statement with respect to the pace of future rate hikes. The extent of tomorrow's rally will likely be determined by the bond market's reaction to the rate increase and Fed statements. An increase in volatility and volume should be expected. Since May 17, the S&P 500 is up 5.0% and the Morgan Stanley Technology Index is up 10.3%. I continue to expect the rally will accelerate by no later than next Tuesday. However, if this does not occur I will have to re-think the current environment and the extent to which "irrational pessimism" is dominating investor psychology, thus leading to a continuation of the P/E multiple contractions that began in March of 2002. The Portfolio is 150% net long heading into tomorrow.