Mid-day Update

S&P 500 1,118.32 -.01%
NASDAQ 1,880.47 +.59%

Leading Sectors
Software +2.72%
Semis +2.57%
Disk Drives +2.20%

Lagging Sectors
Homebuilders -.84%
Commodity -1.15%
Iron/Steel -1.31%

Other
Crude Oil 44.12 -1.08%
Natural Gas 4.64 -.39%
Gold 403.40 +.75%
Base Metals n/a
U.S. Dollar 88.28 -.62%
10-Yr. T-note Yield 4.17% -.69%
VIX 14.12 +.79%
Put/Call .78 -11.36%
NYSE Arms .93 -1.06%

Market Movers
PSFT +10.2% after saying Oracle won permission from a U.S. judge to proceed with its $7.7 billion hostile bid for it.
AA -7.9% after lowering 3Q estimates and Morgan Stanley downgrade to Equal-weight.
NTSL +21.6% after Cisco said it will buy the company for $128 million.
VLTR +18.4% after Goldman Sachs rated the company Outperform.
TTWO +5.0% after beating 3Q sales estimate and missing 3Q earnings estimate.
JOSB +6.6% after beating 2Q estimates.
CMO -10.6% after saying higher borrowing costs were dampening profits.

Economic Data
Producer Price Index for August fell .1% versus estimates of a .2% rise and a .1% increase in July.
PPI Ex Food & Energy for August declined .1% versus estimates of a .1% increase and a .1% rise in July.
Trade Balance for July fell to -$50.1B versus estimates of -$51.5B and -$55.0B in June.

Recommendations
Goldman Sachs reiterated Outperform on AA, VLTR and SUN. Goldman reiterated Underperform on NSM, S, MET, KSS, VC and ASH. Citi SmithBarney reiterated Buy on TXU, target $53. Citi reiterated Buy on CCE, target $25. Citi rated NUE Sell, target $74. Citi rated X Sell, target $34. Citi reiterated Buy on CWST, target $16.50. Citi reiterated Sell on COP, target $65. CCE cut to Reduce at UBS, target $36. VC cut to Underperform at CSFB. Merrill upgraded NUE to Buy, target $114. CPWM rated Sector Outperform at CIBC, target $42. KO raised to Buy at Legg Mason, target $52. GDW raised to Overweight at Morgan Stanley. PMI cut to Underweight at Morgan Stanley. APPB raised to Overweight at JP Morgan. AKS raised to Overweight at JP Morgan. MRVL rated Overweight at JP Morgan. IDIX rated Outperform at Bear Stearns.

Mid-day News
U.S. stocks are mixed mid-day as technology shares are rising and commodity-realted stocks are falling after a better-than-expected inflation report. Sharp, a Japanese electronics maker, will support its newest Aquos brand liquid-crystal-display flat-screen tv with a $60 million global ad campaign, the Wall Street Journal said. OAO Yukos Oil's largest oil pumping unit may lose all its field development licenses, Interfax reported. Four U.S. airports will begin testing a system that scans boarding passes to detect any residue that might indicate a passenger has recently handled explosive materials, the Washington Post reported. Vice-President Cheney said indicators measuring unemployment and other statistics miss 400,000 people who make money selling items on EBay, the AP reported. Michael Eisner will step down as CEO of Disney in 2006, Bloomberg reported. Texas Instruments CEO Templeton said he is optimistic about demand for the semiconductors that his company supplies for half the world's mobile phones, Bloomberg said. U.S. public-health advisers may recommend all Americans receive flu inoculations each year, expanding the potential market for vaccine makers Chiron and Sanofi-Aventis by almost two-thirds, Bloomberg reported. Hurricane Ivan, with winds of 145 mph, forced evacuations in Jamaica as it moved on a track toward Cuba and Florida, where residents braced for the third powerful storm to hit the state in a month, Bloomberg reported. U.S. Treasury notes are heading for their biggest weekly gain in five after prices paid to producers unexpectedly declined last month, the first measure of inflation for August, Bloomberg said.

BOTTOM LINE: The Portfolio is higher mid-day on strength in my software and semi-equipment longs. I have not traded today and the Portfolio is still 125% net long. It is another positive day for the Bulls as the market consolidates recent gains and most stocks are higher, notwithstanding terrorism fears and hurricane concerns. The fact that energy prices are falling in the face of likely disruptions in the Gulf and ongoing problems in Russia is a positive. The strength in the tech sector is also a positive for the overall market as it was the main weak link. A successful Oracle/PeopleSoft merger will likely lead to more consolidation in the sector. This is badly needed due to the lingering affects of overcapacity generated during the bubble. Too many crippled tech companies are still competing for the same dollars, thus hurting the stronger players. As well, the ECRI Weekly Leading Index turned up today and appears to have broken its recent downtrend, which bodes well for future economic growth. Finally, another government report showing that inflation is not a significant threat is resulting in another fall in long-term interest rates. On the negative side, measures of investor anxiety continue to fall. I expect U.S. stocks to rise modestly into the close on falling oil, declining interest rates, optimism over future economic growth, strength in the technology sector and short-covering.