Wednesday, September 29, 2004

Mid-day Uddate

S&P 500 1,110.61 +.05%
NASDAQ 1,889.26 +1.03%


Leading Sectors
Disk Drives +2.76%
Semis +2.29%
Airlines +2.07%

Lagging Sectors
Energy -1.48%
Broadcasting -1.72%
Oil Service -2.19%

Other
Crude Oil 48.60 -2.71%
Natural Gas 6.73 +7.70%
Gold 415.20 +.24%
Base Metals 117.28 +.88%
U.S. Dollar 88.19 +.10%
10-Yr. T-note Yield 4.09% +2.20%
VIX 13.33 -3.62%
Put/Call .73 -18.89%
NYSE Arms 1.05 +17.98%

Market Movers
ORBZ +30.8% after Cendant(CD) agreed to buy it for $1.25 billion.
GOOG +4.0% after Morgan Stanley rated it Overweight.
IACI +5.6% on ORBZ news.
JMDT +41.0% on strong IPO demand.
CAT +3.9% on continued optimism over earnings forecast.
PFCB +5.5% after meeting 3Q estimates.
SHFL +5.8% as Calyon Securities rated it Add.
INSP +5.1% as Raymond James rated it Strong Buy.
BLUD +7.8% after beating 1Q estimates and raising 05 forecast.
PCLN +9.6% on ORBZ news.
PDX -15.2% after lowering 3Q/4Q outlook.
CPC -12.7% after cutting 04 guidance and multiple downgrades.
TSCO -5.8% after lowering 3Q forecast.

Economic Data
Final 2Q GDP rose 3.3% versus estimates of 3.0% and a prior estimate of 2.8%.
Final 2Q Personal Consumption rose 1.6% versus estimates of 1.6% and a prior estimate of 1.6%.
Final 2Q Price Deflator rose 3.2% versus estimates of 3.2% and a prior estimate of 3.2%.

Recommendations
Goldman Sachs reiterated Outperform on MDT, AMT, SLR, BIIB, AMGN, GDT, MET, CCL, RCL, GCI, CAT, Goldman reiterated Underperform on FHCC and DJ. Citi SmithBarney rated DEX Sell, target $19. Citi said to Buy WMT on weakness, target $65. Citi reiterated Sell on CLX, target $47. Citi reiterated Buy on AMGN, target $90. Citi reiterated Buy on LOW, target $67. Citi reiterated Sell on GDT, target $54. JNY raised to Overweight at JP Morgan. SPH cut to Reduce at UBS, target $32. WPI rated Outperform at CSFB, target $37. IPXL rated Outperform at CSFB, target $22. MAR raised to Sector Outperform at CIBC. LQI raised to Sector Outperform at CIBC.

Mid-day News
U.S. stocks are rising mid-day as energy prices fall and a report showed economic growth exceeded expectations for the third-quarter. Sprint plans to provide Internet and telephone service to a chain of U.S. coffeehouses owned by the National Federation of Coffee Growers of Columbia, the NY Times reported. Burger King signed up a franchise partner to open its first restaurants in Brazil, Valor Economico reported. China will pursue reunification with Taiwan through peaceful means to keep the country whole, China Central TV said. Martha Stewart will serve her prison term for obstruction of justice at a facility in West Virginia, CNBC reported. Many Floridians are suffering depression and anxiety after living through four hurricanes in six weeks, the AP reported. Senator Brownback said lawmakers from the U.S. senate and House of Representatives agreed to raise the maximum fines for broadcasting indecency, the LA Times reported. A measure of the number of applications to buy a home or refinance existing mortgages rose last week to the highest level since early May, Bloomberg reported. ConocoPhillips will buy 7.6% of OAO Lukoil of Russia for $1.99 billion and said it may raise that stake further, Bloomberg reported. SpaceShipOne, financed by Microsoft co-founder Paul Allen and built by aviation pioneer Burt Rutan, rocketed high over the California desert early today in a quest to win a $10 million competition designed to accelerate space tourism, Bloomberg said. The IMF said world economic growth will be a very robust 4.3% in 2005 after reaching 5.0% this year, the strongest in almost 30 years, Bloomberg reported. Crude oil fell for the first session in 10 after the Energy Department reported an unexpected increase in U.S. stockpiles, easing concern about the production and shipping disruptions caused by Hurricane Ivan, Bloomberg reported. U.S. GDP growth rose 3.3%, more than previously forecast for the third-quarter, on stronger exports and inventory rebuilding, Bloomberg said.

BOTTOM LINE: The Portfolio is slightly higher mid-day on strength in my internet and homebuilding longs. I have not traded today and the Portfolio is still 100% net long. The tone of the market is pretty good on the unexpected build in oil inventories and better economic growth. Considering recent disruptions, the build bodes well for further declines in oil prices. Interest rates should continue heading modestly high through year-end on a reacceleration in U.S. economic growth. Shorting TLT is one way to play this. I expect stocks to continue moving modestly higher over the next couple of days on short-covering, end-of-the-quarter window dressing, better economic data, declining energy prices and the Presidential debate.

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