Mid-day Update

S&P 500 1,063.56 +.03%
NASDAQ 1,755.73 +.18%

Leading Sectors
Energy +1.21%
Computer Boxmakers +1.18%
Commodity +.87%

Lagging Sectors
Biotech -.83%
Semis -.96%
Fashion -1.19%

Other
Crude Oil 46.0 +1.10%
Natural Gas 5.47 +.61%
Gold 401.30 +1.21%
Base Metals 111.07 +1.23%
U.S. Dollar 87.93 -.86%
10-Yr. T-note Yield 4.20% -1.54%
VIX 18.38 -3.51%
Put/Call 1.28 +23.08%
NYSE Arms 1.52 -45.32%

Market Movers
DELL +4.8% after meeting 2Q estimates, maintaining 3Q forecast and multiple upgrades.
DNA -5.3% after saying its Avastin colon-cancer drug may increase risk of heart attacks and strokes.
CNO -8.7% after announcing the departure of CEO William Shea.
SINA -9.5% after MDB Capital cut to Neutral and competitor SOHU trading halt.
ADI -4.8% after missing 3Q estimates and lowering 4Q outlook.
SCSC +9.9% after beating 4Q estimates and giving strong 1Q outlook.
RRGB +9.4% after beating 2Q estimates, raising 3Q/04 outlook and multiple upgrades.
DIGE +9.8% after yesterday's sharp decline on disappointing 4Q earnings.
KSS +4.5% after meeting 2Q estimates and maintaining guidance.
SCSS -10.3% after downgrade to Underweight at BB&T capital over concerns that mold forms in the company's mattresses.

Economic Data
Producer Price Index for July rose .1% versus estimates of a .3% increase and a .3% decline in June.
PPI Ex Food & Energy for July rose .1% versus estimates of a .1% rise and a .2% increase in June.
Trade Balance for June came in at -$55.8B versus estimates of -$47.0B and -$46.9B in May.
Preliminary Univ. of Mich. Consumer Confidence for August was 94.0 versus estimates of 97.2 and 96.7 in July.

Recommendations
CSCO raised to Overweight at Morgan Stanley. LXK raised to Overweight at Morgan Stanley. ROH raised to Overweight at JP Morgan. NILE raised to Outperform at JP Morgan. QLTY cut to Underweight at JP Morgan. BEAS raised to Buy at Merrill, target $8. Goldman Sachs reiterated Outperform on DELL and DNA. Citi SmithBarney reiterated Buy on MDT, target $61. Citi reiterated Buy on DELL, target $39. Citi reiterated Buy on SNMX, target $12. Citi reiterated Sell on WTW, target $31. Citi reiterated Buy on FD, target $58. Citi reiterated Buy on URBN, target $35. Citi reiterated Buy on BRCD, target $6.30. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on BEAS, target $11.50. Citi reiterated Buy on TGT, target $50.

Mid-day News
U.S. stocks are mixed mid-day as positive news from Dell is being offset by rising energy prices. Hudson's Bay Co., Canada's biggest department-store chain, is in talks to sell all or part of its operations to U.S. retailer Target, the Globe and Mail reported. Aetna is using medical experts for advice on subscribers' conditions as part of its plan to cut costs and improve finances, the Wall Street Journal reported. General Electric's NBC said it signed a three-year contract with DreamWorks Television to get an ownership interest in and the first right to air its shows, the LA Times reported. McKesson Corp. and Cardinal Health are interested in buying PSS World Medical, Business Week reported. U.S. producer prices rose less than forecast last month, restrained by cheaper cars and the biggest drop in the cost of food in more than two years, Bloomberg reported. Google said regulators may force it to buy back shares sold in its IPO because an interview in Playboy magazine may have violated U.S. securities law, Bloomberg said. U.S. consumer confidence fell for the first time in three months in August, restrained by news of higher oil prices and slower job creation, Bloomberg reported. More than half of Americans surveyed said they approve of the job President Bush is doing, up from a low of 46% in May, according to a new Gallup Poll. Crude oil futures rose to a record $49.99 a barrel in New York on speculation a recall vote in Venezuela will disrupt shipments from the fourth-largest supplier to the U.S., Bloomberg reported. As well, hurricane Charley and Tropical Storm Bonnie caused companies to cut daily crude-oil production in the Gulf of Mexico by 18% and natural-gas output by 7.4%, Bloomberg reported. Hurricane Charley headed for Florida's west coast today, forcing the state to call for the evacuation of almost 2 million people, Bloomberg said.

BOTTOM LINE: The Portfolio is slightly higher today on strength in my homebuilding and internet longs and weakness in my Chinese ADR shorts. I have not traded and the Portfolio is still 25% net long. The market is being restrained today by worries over terrorism at the Olympics, potential disruptions to oil shipments in Venezuela and the disruption to oil production in the Gulf from Hurricane Charley. Inflation readings continue to decelerate and interest rates continue to fall, yet the mainstream press barely reports these positive developments and chooses to focus the overwhelming majority of their reports on high oil prices. Oil comprises less than 5% of inflation. I am not trying to minimize its importance. I just don't believe that one commodity that is trading 41% below its inflation-adjusted highs of almost 25 years ago deserves to receive this much attention. Moreover, consumers are now spending less than 2% of their discretionary income on gas versus 6% during the late 70's. Relatively few companies, outside of the airline industry, are being hurt significantly by high oil prices at this point. The deceleration in retail sales is more a function of less tax-cut stimulus, bad weather, less home re-financings and the huge spike in home sales during the first quarter rather than high gas prices. Again, I am not trying to say that high energy prices aren't worthy of reporting or they are not a negative, just that they don't deserve the amount of attention they are getting at this point.