Thursday Watch

Late-Night News
Asian indices are mostly higher on strength in commodity-related stocks in the region. Taiwan President Chen Shui-bian invited China's top cross-strait negotiator to visit Taiwan to reopen political talks, the state-run China Daily reported. Citigroup's Citibank, Bank of America and other financial institutions are streamlining the application process to open accounts online, the Wall Street Journal reported. Time Warner and Comcast plan to merge Time Warner's cable unit into Adelphia Communications if their joint bid for the company's cable-television assets succeeds, the Wall Street Journal reported. Blockbuster today raised its offer to buy competitor Hollywood Entertainment to $14.50 a share, or about $883 million, topping a bid from Movie Gallery, Bloomberg reported. President Bush, pressing Congress to solve the coming Social Security crisis, offered some details of his plan to create private accounts and said he's open to "any good idea" for shoring up the system, Bloomberg reported. China won't be swayed into changing its currency policy by proposed US legislation that would impose tariffs on the nation's exports unless the yuan is allowed to appreciate, a Chinese government economist said.

Late Recommendations
Goldman Sachs: Reiterated Outperform on DVN, CBG and MUR. Reiterated Underperform on EQR and UNM.

Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated -.12%.
NASDAQ 100 indicated -.16%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
CNBC Guest Schedule

Earnings of Note
Company/Estimate
APCC/.25
ASKJ/.32
AVID/.62
BMC/.21
CDN/.25
CERN/.54
CMCSA/.11
G/.42
IP/.43
MEDI/.17
PEP/.58
RTN/.46
SNDA/.28
FON/.32
HOT/.45

Splits
FLIR 2-for-1

Economic Data
-Preliminary 4Q Non-farm Productivity is estimated to rise 1.5% versus a 1.8% gain in 3Q.
-Preliminary 4Q Unit Labor Costs are estimated to rise 2.0% versus a 1.8% increase in 3Q.
-Initial Jobless Claims for last week are estimated to rise to 330K versus 325K the prior week.
-Continuing Claims are estimated to fall to 2765K versus 280K prior.
-Factory Orders for December are estimated to rise .6% versus a 1.2% gain in November.
-ISM Non-Manufacturing for January is estimated to fall to 61.5 versus 63.9 in December.

BOTTOM LINE: I expect US equities to open modestly lower in the morning on weakness in technology and retail stocks. However, shares may move modestly higher later in the day on more optimism over US reforms, low long-term interest rates, short-covering and bargain hunting. The Portfolio is 75% net long heading into tomorrow.

Wednesday Close

Indices
S&P 500 1,193.19 +.32%
Dow 10,596.79 +.43%
NASDAQ 2,075.06 +.31%
Russell 2000 631.98 +.61%
DJ Wilshire 5000 11,752.25 +.37%
S&P Barra Growth 574.08 +.45%
S&P Barra Value 614.77 +.19%
Morgan Stanley Consumer 588.31 +.51%
Morgan Stanley Cyclical 764.28 +.52%
Morgan Stanley Technology 474.17 -.23%
Transports 3,604.17 -.04%
Utilities 347.87 +.72%
Put/Call .73 -18.89%
NYSE Arms .85 -11.46%
Volatility(VIX) 11.66 -3.08%
ISE Sentiment 122.10 -32.60%
US Dollar 83.54 +.11%
CRB 282.96 -.33%

Futures Spot Prices
Crude Oil 46.69 unch.
Unleaded Gasoline 129.10 -.19%
Natural Gas 6.42 +.77%
Heating Oil 129.95 +.19%
Gold 423.60 +.14%
Base Metals 120.92 -.49%
Copper 139.40 +.04%
10-year US Treasury Yield 4.14% +.05%

Leading Sectors
Airlines +1.86%
Iron/Steel +1.85%
Oil Service +1.83%

Lagging Sectors
I-Banks -.68%
Computer Hardware -.76%
HMOs -1.02%

After-hours Movers
AMZN -14.64% after beating 4Q revenue estimates, missing 4Q earnings estimates and raising 1Q/05 revenue guidance.
CNET -11.35% after missing 4Q estimates, lowering 1Q estimates and widening 05 guidance.
GETI +16.42% after saying it plans to pay $320 million to shareholders in the form of a special dividend.
MNT +6.87% after beating 3Q estimates and raising 05 outlook.
DIGE -17.66% after missing 2Q estimates, widening 3Q outlook and lowering 05 guidance.
TSRA -10.28% after meeting 4Q estimates and lowering 05 guidance.
SBUX -5.02% after saying same-store-sales rose 7% during January.
OSTK -4.47% on AMZN report.
STLD -4.86% after missing 4Q estimates.
MERQ +3.96% after beating 4Q estimates, raising 1Q guidance and boosting 05 outlook.

Detailed Market Summary
Market Wrap CNBC Video(bottom right)
Futures Recap
NASDAQ 100 After-hours Indicator
Real-time/After-hours Stock Quote

Afternoon Recommendations
-Goldman Sachs: Reiterated Outperform on NSM, MERQ and ALL. Reiterated Underperform on BA. Upgraded MCHP to Outperform. Downgraded MCRL to Underperform.

After-hours News
US stocks finished modestly higher today on good earnings reports, lower energy prices and Fed comments that met expectations. After the close, Walt Disney plans to build a new computer animation unit to develop sequels to films it made during its partnership with Pixar, including Toy Story, Bloomberg reported. Lenovo Group CEO Yuanqing said the company’s plan to buy International Business Machines’ personal computer unit wouldn’t post a security threat to the US, the Financial Times reported. The Irish Republican Army says it is withdrawing from the decommissioning of weapons process established under the terms of the Northern Ireland Good Friday peace agreement, Bloomberg said. Iran say the European Union has not delivers promised “incentives” in return for its pledge to suspend its uranium enrichment activities, the Financial Times said. PIMCO is “bearish” on corporate bonds, said Paul McCulley, a managing director at the firm. Martha Stewart will star in a new version of Donald Trump’s “The Apprentice,” after she completes her jail sentence for obstructing justice, Bloomberg said. China would have to ease controls on its currency within six months or face a 27.5% tariff on exports to the US under legislation to be introduced in the Senate tomorrow, Bloomberg reported. A Missouri jury ordered Brown & Williamson Tobacco to pay $20 million in punitive damages to the husband of a woman who died of heart disease after decades of smoking Kool cigarettes, Bloomberg said. US Senators McCain and Feingold won over Senator Lott, who is joining them in a proposal to restrict donations to political groups like MoveOn.org and Swift Boat Veterans for Truth, Bloomberg reported. Federal Reserve policy makers raised the benchmark US interest rate a quarter-point to 2.5% and restated a plan to make future increases at a “measured” pace to keep inflation in check, Bloomberg said.

BOTTOM LINE: The Portfolio finished higher today on gains in my telecom, internet and steel longs. I exited a few technology longs in the afternoon as they hit stop-losses, thus leaving the Portfolio 75% net long. The tone of the market improved modestly into the close as the advance decline line finished at its daily highs and volume increased. Small-caps outperformed and measures of investor anxiety mostly fell. I expect US stocks to trade mixed-to-higher through week’s end on more optimism, good earnings/economic reports and lower energy prices.

Mid-day Report

Indices
S&P 500 1,191.66 +.19%
Dow 10,580..68 +.27%
NASDAQ 2,071.03 +.11%
Russell 2000 628.91 +.12%
DJ Wilshire 5000 11,731.26 +.19%
S&P Barra Growth 573.27 +.31%
S&P Barra Value 614.08 +.08%
Morgan Stanley Consumer 587.36 +.35%
Morgan Stanley Cyclical 761.43 +.15%
Morgan Stanley Technology 474.16 -.23%
Transports 3,600.96 -.13%
Utilities 348.27 +.83%
Put/Call .87 -3.33%
NYSE Arms .81 -15.62%
Volatility(VIX) 11.66 -3.08%
ISE Sentiment 124.00 -31.49%
US Dollar 83.68 +.28%
CRB 282.89 -.37%

Futures Spot Prices
Crude Oil 46.92 -.36%
Unleaded Gasoline 129.50 -1.48%
Natural Gas 6.39 +1.33%
Heating Oil 130.00 -1.06%
Gold 422.00 -.21%
Base Metals 120.92 -.49%
Copper 139.00 -1.84%
10-year US Treasury Yield 4.15% +.42%

Leading Sectors
Airlines +1.59%
Oil Service +1.30%
Gaming +1.20%

Lagging Sectors
I-Banks -.64%
Restaurants -.71%
HMOs -1.02%

Market Movers
GOOG +11.4% after substantially beating 4Q estimates and multiple upgrades.
THQI +21.1% after substantially beating 3Q estimates, reiterating 4Q outlook and raising 05 guidance.
CFC -4.44% after missing 4Q estimates, reiterating 05 outlook and boosting dividend.
MFLX +16.98% after beating 1Q estimates, raising 2Q outlook and Needham Buy rating.
PACR +13.61% after beating 4Q estimates and Morgan Keegan upgrade to Outperform.
GHCI +10.68% after beating 1Q estimates and FBR upgrade to Outperform.
VLO +5.26% on continuing optimism over 4Q report.
HYDL +5.1% after beating 4Q estimates.
ROH +6.81% after beating 4Q estimates raising 05 guidance and Fulcrum upgrade to Buy.
ATMI +11.2% after beating 4Q estimates and raising 1Q guidance.
BBOX -12.1% after missing 3Q estimates.
TEX -8.9% after making cautious comments at Lehman dinner.

Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon

Economic Data
None of note.

Recommendations
-Goldman Sachs: Reiterated Outperform on WAG, ROH, HOT, BBG, EMC, GOOG, DKS, TYC and BSX.
-Citi SmithBarney: Reiterated Buy on CMCSK, target $34. Reiterated Buy on MXIM, target $52. Downgraded TIVO to Sell, target $3.50. Reiterated Buy on NT, target $5. Reiterated Buy on EXTR, target $11. Reiterated Buy on BJS, target $62. Reiterated Buy on TYC, target $40. Reiterated Buy on ASD, target $50.
-UBS: Raised TICC to Buy, target $17.
-Deutsche Bank: Raised KRC to Buy, target $45. Rated SINA Buy, target $40. Rated NTES Buy, target $66.
-Banc of America: Raised ALNY to Buy, target $9.50. Raised LAD to Buy, target $32.
-Prudential: Raised UPCS to Buy, target $9. Rated APCS Overweight, target $16. Rated UNWR Overweight, target $6.
-Merrill Lynch: Raised FDO to Buy, target $39.

Mid-day News
US stocks are slightly higher mid-day on gains in commodity-related stocks and strong earnings reports. The SEC has adopted a more aggressive approach to potential stock fraud, stopping trading of shares where it suspects manipulation, the Wall Street Journal reported. The worlds needs new tools to fight a growing nuclear black market and stop countries developing nuclear weapons technology, said Mohamed ElBaradei, director-general of the IAEA. Cuba signed an agreement with China Petrochemical, also known as Sinopec Group, to develop potential oil deposits surrounding the island nation, AP reported. US companies may have been defrauded by thousands of people who sued over claims that they were sickened by exposure to asbestos or silica or both, the NY Times reported. The NFL and Shanghai Media Group may announce today a five-year agreement to air live broadcasts of the Super Bowl on China’s Dragon TV and 12 local networks, the Wall Street Journal reported. The Reverend Al Sharpton today will begin working with PETA to promote a boycott against Yum! Brands’ KFC so the restaurant chain will make its chicken suppliers adopt tougher treatment standards, the NY Times said. Tower Automotive, the world’s largest maker of vehicle frames, will seek Chapter 11 bankruptcy protection as soon as today, the Wall Street Journal reported. The US Social Security system’s problems are a small part of the larger challenge of coping with an aging population, as programs for the elderly such as health care, housing and heating assistance have proliferated, the Washington Post reported. The US Coast Guard is developing a new soar device and underwater weapons in order to protect American ports from an underwater attack, the NY Times said. US Customs and Border Protection Commissioner Bonner proposed using wireless sensors inside cargo containers, which would monitor for tampering and speed processing, the LA Times reported. Global travel may increase as much as 32% in five years, with Asian nations as the most popular destinations, Bloomberg reported. Egyptian President Mubarak has invited Israeli Prime Minister Sharon and Palestinian leader Abbas to hold talks in Egypt next week, Bloomberg reported. Russia’s economy grew 7.1% last year because of rising oil, gas and metals prices, Bloomberg said. Crude oil is falling modestly for a second day after an Energy Dept. report showed an unexpected rise in US gasoline stockpiles, Bloomberg said. The German adjusted unemployment rate jumped to 11.4%, a seven-year high, and the unadjusted rated surged to the highest level since World War II, Bloomberg reported.

BOTTOM LINE: The Portfolio is higher mid-day on gains in my internet, steel and computer longs. I have not traded today and the Portfolio remains 100% net long. The tone of the market is weaker, notwithstanding gains in the major indices. The advance/decline line is slightly negative, sector performance in mixed and volume is light. Measures of investor anxiety are mostly lower, however the ISE Sentiment Index is falling significantly today. I would like to see this index fall below 100. I expect US stocks to rise modestly into the close on more optimism for US reforms, low long-term interest rates, more dovish Fed comments, strong earnings reports, short-covering and bargain-hunting.

Wednesday Watch

Late-Night News
Asian indices are mostly higher on gains in technology and commodity-related shares in the region. Delta Air Lines aims to get "within 10%" of the cost structure of low-cost carriers by 2006, the Financial Times said. Venezuelan President Chavez said he intends to sell the country's interests in eight US oil refineries owned through Citgo Petroleum, the Wall Street Journal reported. North Korea most likely sold the processed uranium, used in atomic weapons, to Libya that was confiscated nine months ago, the NY Times said. Nissan Motor and Hyundai Motor sold more cars and trucks in the US in January, giving Asian automakers a record share of the world's largest vehicle market, Bloomberg said. Aluminum and zinc prices will probably rise the most among base metals this year because of a lack of raw material and disruptions at refineries in China, Citigroup analysts said. Howard Dean, former Vermont governor and presidential candidate, appears to be on the verge of becoming the new leader of the Democratic National Committee after one of his opponents dropped out of the race, the NY Times said. President Bush's 40-minute state of the union address Wednesday night will equally focus on domestic and foreign issues, Bloomberg reported.

Late Recommendations
Goldman Sachs: Reiterated Outperform on DKS, AIG and UDR. Reiterated Underperform on OMI and UCL. Reiterated Outperform on GOOG, raised estimates 25% and increased implied value to $265.

Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated +.12%.
NASDAQ 100 indicated +.23%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
CNBC Guest Schedule

Earnings of Note
Company/Estimate
ATK/1.16
AMZN/.40
ALL/1.40
BUD/.39
BA/.05
CMI/2.08
DUK/.24
CVS/.55
HET/.66
LIN/.97
MERQ/.38
NOC/.81
PHM/3.05

Splits
MCRS 2-for-1
WWW 3-for-2

Economic Data
FOMC expected to raise the Fed Funds Rate 25 basis points to 2.50%.

BOTTOM LINE: I expect US equities to open modestly higher in the morning on strength in technology stocks and lower energy prices. Stocks may add to gains later in the day on optimism over the possibility of meaningful US reforms, short-covering, declining long-term interest rates, less hawkish Fed comments and strong earnings reports. The Portfolio is 100% net long heading into tomorrow.

Tuesday Close

Indices
S&P 500 1,189.41 +.69%
Dow 10,551.94 +.59%
NASDAQ 2,068.70 +.30%
Russell 2000 628.14 +.66%
DJ Wilshire 5000 11,709.38 +.71%
S&P Barra Growth 571.52 +.70%
S&P Barra Value 613.61 +.67%
Morgan Stanley Consumer 585.33 +.33%
Morgan Stanley Cyclical 760.30 +.85%
Morgan Stanley Technology 475.25 +.34%
Transports 3,605.73 +.20%
Utilities 345.40 +.56%
Put/Call .90 +32.35%
NYSE Arms .96 +9.09%
Volatility(VIX) 12.03 -6.16%
ISE Sentiment 181.00 +16.77%
US Dollar 83.45 -.14%
CRB 283.91 -.30%

Futures Spot Prices
Crude Oil 47.11 -.02%
Unleaded Gasoline 131.65 +.08%
Natural Gas 6.33 +.22%
Heating Oil 131.35 -.03%
Gold 422.80 -.02%
Base Metals 121.52 -1.09%
Copper 141.50 -.07%
10-year US Treasury Yield 4.13% +.24%

Leading Sectors
HMOs +2.50%
Gaming +2.22%
Energy +1.64%

Lagging Sectors
Computer Services -.03%
Restaurants -.28%
Internet -.64%

After-hours Movers
GOOG +9.61% after substantially beating 4Q estimates.
PACR +19.24% after beating 4Q estimates.
NWRE +14.35% after beating 2Q estimates and giving positive 05 guidance.
MFLX +7.94% after beating 1Q estimates and raising 2Q outlook.
ASKJ +4.83% on GOOG report.
NVDA +4.28% after boosting 4Q estimates substantially.
MNST -9.05% after beating 4Q estimates, lowering 1Q outlook and maintaining 05 guidance.
SFNT -5.03% after meeting 4Q estimates, lowering 1Q guidance and maintaining 05 outlook.
CLZR -17.36% after missing 2Q estimates and lowering 3Q guidance.

Detailed Market Summary
Market Wrap CNBC Video(bottom right)
Futures Recap
NASDAQ 100 After-hours Indicator
Real-time/After-hours Stock Quote

Afternoon Recommendations
-Goldman Sachs: Reiterated Outperform on RE, AGN, GOOG and IR. Reiterated Underperform on AG, DE and CNH.

After-hours News
US stocks finished modestly higher today on good earnings reports, mixed economic data and lower energy prices. After the close, the Medicare prescription-drug program will pay for Pfizer’s Viagra and other pharmaceuticals designed to improve sexual performance, the LA Times reported. Iraqi Kurds hold the balance of power in Iraq and “will be the arbiters of many key” political decisions, the Financial Times said. Techfaith Wireless Communication Technology, a mobile-phone design house founded by a group of former Motorola engineers, is planning a NASDAQ listing to raise $175 million in April, the South China Morning Post reported. Google said fourth-quarter profit rose sevenfold as it sold more advertising and attracted greater numbers of Web surfers to its sites, Bloomberg reported. The US disputed the central finding of a UN report yesterday that wouldn’t call the mass killings in Darfur, Sudan, genocide, Bloomberg said.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my internet, telecom and networking longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market improved modestly into the afternoon, however today’s overall performance was a bit disappointing for the bulls as volume was again light and the advance/decline line remained relatively weak. However, the market, and specifically internet stocks, is responding well to Google’s report after the close. I expect US stocks to continue heading modestly higher in the near-term on increased optimism, more dovish Fed comments, lower energy prices, increasing fund inflows, low long-term interest rates and strong earnings reports.