Mid-day Update

S&P 500 1,124.07 +.33%
NASDAQ 1,906.53 +.53%

Leading Sectors
Fashion +1.31%
Disk Drives +1.23%
Iron/Steel +1.15%

Lagging Sectors
HMOs -.38%
Tobacco -.39%
Oil Service -.39%

Other
Crude Oil 43.05 -1.15%
Natural Gas 4.68 -2.99%
Gold 406.40 -.10%
Base Metals 110.01 +1.13%
U.S. Dollar 88.89 -.29%
10-Yr. T-note Yield 4.09% -1.67%
VIX 14.38 -1.78%
Put/Call .65 -30.85%
NYSE Arms 1.15 -38.50%

Market Movers
RIMM +5.5% after announcing a new keyboard technology for cell-phones.
XMSR +5.3% after announcing XM Radio Online, a premium Internet music service.
NTMD +11.0% after saying data from a clinical trial of its treatment for heart failure in African Americans will be presented at the AHA meeting in November.
SWFT -10.7% after lowering 3Q estimates substantially.
NARA -7.8% after Keefe, Bruyette downgrade to Underperform.
MNT -7.0% after SunTrust Robinson downgrade to Neutral.

Economic Data
Consumer Price Index for August rose .1% versus estimates of a .1% gain and a .1% decline in July.
CPI Ex Food & Energy for August rose .1% versus estimates of a .2% increase and a .1% gain in July.
Initial Jobless Claims were 333K last week versus estimates of 340K and 317K the prior week.
Continuing Claims were 2882K versus estimates of 2880K and 2885K prior.

Recommendations
Goldman Sachs reiterated Outperform on AFL, BIIB, DHR, MERQ and GE. Goldman reiterated Underperform on AMCC and INFA. UBS rated TS Buy, target $50. Citi SmithBarney rated FRO Sell, target $28. Citi rated OSG Sell, target $45. Merrill Lynch rated NVT Buy, target $42. ITW raised to Overweight at Prudential, target $105. NAV cut to Underweight at Prudential, target $38. ASO cut to Sell at Deutsche Bank, target $22.

Mid-day News
U.S. stocks are modestly higher mid-day on a better-than-expected consumer inflation report and the passing of Hurricane Ivan. Iraqi Prime Minister Allawi will speak to a joint session of Congress and address the UN General Assembly during his visit to the U.S. next week, the Washington Post reported. Viacom and Blackstone Group could bid for Lions Gate Entertainment since Sony agreed to buy MGM, the New York Daily News reported. The Mondavi family may try to buy the Robert Mondavi Winery and other luxury-wine producing assets from Robert Mondavi, the NY Times said. CanWest Global Communications, Canada's largest media company, is shopping for cable operations in the U.S., the Globe and Mail reported. Coca-Cola's credit rating may finally be reduced after it lowered its forecast for second-half earnings, Bloomberg reported. U.S. consumer prices barely rose in August, restrained by cheaper automobiles and apparel, Bloomberg reported. Money manager Michael Price is betting on retailers such as Dillard's because of their real estate assets, Bloomberg said. International investors purchased a net $64 billion of U.S. Treasuries, stocks, corporate bonds and other securities in July, Bloomberg reported. Office Depot, which said Tuesday its third-quarter and year earnings would miss analysts estimates, will buy back as much as $500 million of its shares, Bloomberg reported. Charles Schwab and other U.S. retail brokerages will have a "delayed recovery" in profitability as long as market volatility remains near fifty-year lows, according to Sanford C. Bernstein analysts, Bloomberg reported. The Federal Reserve Bank of Philadelphia's index of regional manufacturing fell to 13.4 this month, below expectations, from 28.5 in August, Bloomberg said. Delta Air's corporate credit rating was lowered two levels by S&P after the airline offered to exchange debt to cut costs and avoid a bankruptcy filing, Bloomberg reported. Hurricane Ivan will cost insurers less than first estimated after the third storm to hit southern U.S. states in six weeks skirted New Orleans, Bloomberg said.

BOTTOM LINE: The Portfolio is slightly higher mid-day as my rising software and Chinese ADR longs are more than offsetting my losses in consumer-oriented shorts. I took profits in one of my technology longs and added HNP long. I am using a stop-loss of $31.25 on this position. The tone of the market is pretty good today, however measures of investor anxiety are falling again. The extent of the decline in the Philly Fed is a bit worrisome, but I continue to expect an acceleration in economic growth during the fourth quarter. Interest rates are falling substantially today as another report shows that inflation is not the significant problem the bears and media made it out to be. As well, commodity prices are dropping again which is also a positive. I expect U.S. stocks to remain mixed into the close as worries over economic growth offset declining energy prices and interest rates.