Mid-day Update

S&P 500 1,103.63 -.37%
NASDAQ 1,844.36 -.95%

Leading Sectors
Airlines +1.62%
Utilities +.37%
Insurance +.13%

Lagging Sectors
Internet -1.40%
I-Banks -1.54%
Biotech -2.08%

Other
Crude Oil 41.90 -2.96%
Natural Gas 5.19 +.02%
Gold 409.50 +.99%
Base Metals 108.20 -.21%
U.S. Dollar 89.69 -.09%
10-Yr. T-note Yield 4.19% -.78%
VIX 15.33 +4.28%
Put/Call .87 +16.0%
NYSE Arms 1.78 +74.51%

Market Movers
ACDO -23.2% after missing 4Q estimates and lowering 05 guidance.
TSN -7.7% after lowering 4Q estimates.
URI -16.7% after saying it received a subpoena from the U.S. SEC for some of its accounting records.
SWIR -7.9% after GMP cut to Reduce, target $19.

Economic Data
Personal Income for July rose .1% versus expectations of a .5% increase and a .2% rise in June.
Personal Spending for July rose .8% versus estimates of a .7% increase and an upwardly revised .2% decline in June.
PCE Deflator(YoY) for July rose 2.4% versus estimates of a 2.4% increase and a 2.5% rise in June.
PCE Core(YoY) for July rose 1.5% versus estimates of a 1.5% increase and a 1.5% rise in June.

Recommendations
Goldman Sachs reiterated Outperform on COH, MSFT, INTC, WMT, FD, FS and IGT. Citi SmithBarney reiterated Buy on LLY, target $82. Citi reiterated Buy on INTC, target $30. Citi reiterated Buy on PRU, target $55. PFGC downgraded to Sell at Deutsche Bank, target $19.50. NXTL raised to Sector Outperform at CIBC.

Mid-day News
U.S. stocks are quietly lower mid-day on profit-taking and terrorism worries ahead of the Republican Convention. Google stock options started trading Friday and volume was higher than may expected, the Wall Street Journal reported. Production at Ford's Hapeville, Georgia, plant was stopped at least for today because of a parts shortage, the AP reported. Venezuela, the world's fifth-largest oil supplier, expects oil prices to stabilize at $30/bbl. in the near future, El Universal reported, citing the country's oil minister. Washington and 11 other U.S. states have adopted laws barring suits for obesity against restaurants and food companies, the New York Post reported. Most big cell-phone companies intend to compile publicly accessible listings of wireless phone numbers starting in October, the NY Times said. UBS AG wants to make an acquisition such as a trust bank to target wealthy customers in the U.S., the Wall Street Journal reported. The U.S. Patent and Trademark Office turned down Donald Trump's initial attempt to register the expression, "You're Fired," for games and toys, the NY Times said. Radical cleric al-Sadr called on his followers across Iraq to stop fighting U.S.-led coalition troops and Iraqi forces and lay down their arms, the AP reported. France said it will maintain its law banning religious garb in state schools, rejected a demand by the Iraqi kidnappers of two French reporters for its revocation, Bloomberg reported. Crude oil futures in New York fell for the sixth session in seven amid reports that exports from Iraq, the Middle East's fifth-largest oil producer, were unaffected after an explosion damaged a pipeline, Bloomberg reported.

BOTTOM LINE: The Portfolio is lower mid-day on weakness in my biotechnology and technology longs. I have not traded and the Portfolio is still 125% net long. The weakness today is a worse than I expected, however measures of investor anxiety are rising, which is a positive. Moreover, I continue to expect oil prices to head toward the mid-$30's/bbl. within the next couple of months. With energy prices and interest rates dropping, I expect U.S. stocks to rise into the close on short-covering.