Mid-day Update

S&P 500 1,125.53 +.30%
NASDAQ 1,913.02 +.26%

Leading Sectors
Homebuilders +2.91%
Energy +2.0%
I-Banks +1.79%

Lagging Sectors
Tobacco -.28%
Iron/Steel -.47%
Foods -.93%

Other
Crude Oil 47.03 +1.47%
Natural Gas 5.43 +3.45%
Gold 411.00 +.98%
Base Metals 113.70 +2.39%
U.S. Dollar 88.39 -.67%
10-Yr. T-note Yield 4.07% +.33%
VIX 13.88 -3.81%
Put/Call .71 -22.83%
NYSE Arms .83 -20.95%

Market Movers
RHAT -14.0% after missing 2Q revenue estimates and lowering guidance.
PLMO -14.0% after substantially beating 1Q estimates, but giving conservative guidance on conference call.
TASR +4.0% after saying it received an order for 360 Taser X26 weapons from the U.S. Army National Guard.
TRMM +31.2% after saying it bought eFunds ATM portfolio for $150 million and Friedman, Billings rated it Outperform. EFD +14.8%.
RRGB +10.6% after boosting 3Q forecast substantially.
FDS +6.9% after beating 4Q estimates and raising 1Q outlook.
GLDB -11.1% after saying Silver Acquisition said it my cut its agreed purchase price significantly because of a reduction in GLDB's financial condition.
X -3.8% after Prudential downgrade to Neutral.

Economic Data
Housing Starts for August were 2000K versus estimates of 1930K and 1988K in July.
Building Permits for August were 1952K versus estimates of 1985K and 2066K in July.

Recommendations
Goldman Sachs reiterated Outperform on CVD, HOT and NKE. Goldman upgraded STR to Outperform. Citi SmithBarney reiterated Buy on TYC, ITT and MMM. Citi upgraded GRP to Buy, target $25. Citi upgraded BJS to Buy, target $62. Citi reiterated Buy on DOW, target $46. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on STZ, target $47. Citi reiterated Buy on VRTS, target $24. Citi reiterated Buy on KBH, target $111.00. HLT raised to Buy at Bank of America, target $23. HMT and HOT raised to Buy at Bank of America.

Mid-day News
U.S. equities are modestly higher mid-day on strength in homebuilding and investment-banking stocks. A U.S. panel might recommend this week that U.S. states expand their routine genetic screening of newborns to 30 diseases that are deemed treatable if detected early, the Wall Street Journal reported. Crude oil is rising to a one-month high of $47.18/bbl. on concern Russian exports will be disrupted after utilities cut some power supplies to OAO Yukos Oil, the country's top producer, Bloomberg reported. The Univ. of Michigan's business school is the preferred graduate business school in the U.S. among job recruiters, the Wall Street Journal reported. Senator John McCain is expected to propose a bill calling for broadcasters to only air digital television signals by 2009, Reuters reported. A new military headquarters in Washington will prepare for potential terrorist attacks in the U.S. capital and coordinate efforts of the area's military resources, the Washington Post said. P&G's application to sell a testosterone-laden skin patch, designed to boost the sex drives of women whose ovaries have been removed, was granted a priority review by the U.S. FDA, Bloomberg reported. Goldman Sachs said third-quarter profit rose 30%, buoyed by revenue from investment banking and debt trading, Bloomberg said. U.S. housing starts unexpectedly rose for a second month in August as mortgage rates near record lows attracted buyers, Bloomberg reported. American International Group said the SEC may sue the company's financial products division for violating U.S. securities laws, Bloomberg reported. Northrop Grumman won a $400 million award from the U.S. National Aeronautics and Space Administration to help design a nuclear-powered spacecraft to explore Jupiter's moons, Bloomberg said.

BOTTOM LINE: The Portfolio is unchanged mid-day as my security and software longs are rising and my steel and telecom longs are falling. I have not traded today and the Portfolio is still 75% net long. The tone of the market is pretty good today. Homebuilders are significantly outperforming. As well, i-banking stocks are under accumulation, which is positive for the broad market. However, measures of investor complacency and commodities prices are rising again. I expect the Fed to raise the Fed Funds' rate by 25 basis points this afternoon and say that diminishing inflation concerns will allow them to continue to raise rates at a measured pace. U.S. stocks should trade modestly higher into the afternoon on short-covering.