Friday Watch

Late-Night Headlines
Bloomberg:
- William Poole, president of the Federal Bank of St. Louis, said central bankers will need to be more "vigorous" in raising interest rates when inflation pressures begin appearing in labor costs.
- Crude oil futures in New York will probably fall next week as increasing production by members of OPEC boosts US inventories.
- Bank of America said revenue from its debt, treasury and trading operations in Asia may rise as much as 15% this year as it makes more fees selling corporate loans and bonds.

Wall Street Journal:
- Time Warner and Comcast agreed to buy Adelphia Communications for about $17.6 billion in cash and stock.

Financial Times:
- German companies are decreasing their investments in Russia on doubts that the country's government will follow through with market reforms.
- Qwest Communications is close to arranging a $2 billion equity infusion in its effort to buy MCI Inc.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on DELL.

Business Week:
- Shares of Barrier Therapeutics(BTRX), a maker of dermatological treatments, are expected to rise as the company awaits approval from the FDA.

Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated +.03%.

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
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
CKR/.10

Splits
None of note

Economic Releases
None of note

BOTTOM LINE: Asian indices are higher, led gains in exporters on another decline in energy prices. I expect US equities to open modestly higher on another decline in commodity prices and strength in the US dollar. The Portfolio is 50% net long heading into tomorrow.

Thursday Close

Indices
S&P 500 1,191.14 +.60%
DJIA 10,546.32 +.58%
NASDAQ 2,018.79 +.98%
Russell 2000 619.76 +.58%
DJ Wilshire 5000 11,739.03 +.58%
S&P Barra Growth 574.94 +.72%
S&P Barra Value 611.78 +.47%
Morgan Stanley Consumer 587.47 +.98%
Morgan Stanley Cyclical 751.67 +.80%
Morgan Stanley Technology 458.34 +1.02%
Transports 3,719.00 +.14%
Utilities 365.40 +.84%
Put/Call .69 -29.59%
NYSE Arms .76 -32.24%
Volatility(VIX) -6.24%
ISE Sentiment 135.00 -8.78%
US Dollar 84.87 +.22%
CRB 306.28 -.58%

Futures Spot Prices
Crude Oil 53.92 -.35%
Unleaded Gasoline 156.34 -.29%
Natural Gas 7.33 -.50%
Heating Oil 152.20 -.41%
Gold 427.70 -.16%
Base Metals 129.69 +.47%
Copper 149.95 -.46%
10-year US Treasury Yield 4.48% +1.28%

Leading Sectors
Gaming +2.44%
Semis +1.97%
Airlines +1.85%

Lagging Sectors
Restaurants -.58%
Energy -.58%
Oil Service -1.16%

After-hours Movers
STZ +4.6% after beating 4Q estimates and reiterating 1Q guidance.
ELX +5.3% after boosting 3Q forecast.
BCSI -15.4% after saying the SEC is conducting a formal investigation of the company.
USFC -4.4% after lowering 1Q estimates substantially.
ARBA -8.1% after lowering 2Q estimates.
BORL -9.6% after lowering 1Q and 2Q forecasts.
LAVA -17.1% after cutting 4Q and 06 forecasts substantially.

Evening Review
Detailed Market Summary
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
Futures Recap
S&P 500 Gallery View
Timely Economic Charts
PM Market Call
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on PFE and Underperform on DRI.

Business Week:
- Tootsie Roll Industries(TR) might be valued at $35-$37 a share in a possible buyout, citing LJR Great Lakes Review analyst Elliott Schlang.
- Doral Financial Corp., Puerto Rico’s largest mortgage lender, may see its shares rise to $49 in a year as Puerto Rico’s housing shortage will keep mortgage demand strong.

Afternoon/Evening Headlines
Bloomberg:
- Growth in US consumer installment credit slowed in February on waning demand for auto and other personal loans.
- Moody’s Investors Service said it put Pfizer’s Aaa long-term debt ratings on review for possible downgrade after today’s suspension of the Bextra painkiller.
- Marshall Carter, former chief executive officer of State Street, succeeded John Reed as chairman of the NYSE, 18 months after the world’s biggest stock market ousted Richard Grasso.
- Crude oil in NY fell for a fifth day amid speculation rising US refinery output will boost gasoline supplies for the peak summer motoring season.
- AmerisourceBergen Corp. said one of its units received a subpoena April 6 from Democratic NY Attorney General Spitzer’s office.

Financial Times:
- Morgan Stanley CEO Purcell said the firm’s board is “moving on” after resisting pressure from retired executives for his ouster.
- US imports from China rose 37% in January and February, while exports to the Asian country fell 10%.

Reuters:
- Morgan Stanley CEO Purcell, under pressure from retired executives calling for his ouster, denied speculation the firm may be bought by HSBC Holdings Plc.

Business Week:
- IBM CEO Palmisano projects the company will generate as much as $50 billion in revenue in 10 years from business consulting and outsourcing.

BOTTOM LINE: US stocks finished higher today on optimism over falling energy prices. The Portfolio finished higher on gains in my Internet, Computer and Gaming longs. I added a few new longs in the afternoon, thus leaving the Portfolio 50% net long. One of my new longs is QCOM and I am using a stop-loss of $34.75 on this position. The tone of the market strengthened into the afternoon as the advance/decline finished near its daily highs, almost every sector rose and volume was light. Energy-related stocks underperformed into the afternoon, while Tech and Gaming shares outperformed and measures of investor anxiety were mostly lower. Overall, today’s market action was positive, considering the rise in long-term interest rates, negative news from PFE/WMT/SBUX and Fed comments. I am not ruling out the possibility that stocks have seen there lows for the year. However, I would have liked to see heavier volume and a better advance/decline line. I expect stocks will test recent lows over the coming weeks on growth jitters.

Mid-day Scoreboard

Indices
S&P 500 1,186.22 +.18%
DJIA 10,516.32 +.29%
NASDAQ 2,009.69 +.53%
Russell 2000 617.68 +.24%
DJ Wilshire 5000 11,694.81 +.20%
S&P Barra Growth 572.26 +.25%
S&P Barra Value 609.75 +.14%
Morgan Stanley Consumer 585.27 +.60%
Morgan Stanley Cyclical 748.61 +.38%
Morgan Stanley Technology 456.30 +.57%
Transports 3,699.19 -.38%
Utilities 363.98 +.46%
Put/Call .78 -20.41%
NYSE Arms .99 -14.21%
Volatility(VIX) 12.60 -4.18%
ISE Sentiment 144.00 -2.70%
US Dollar 84.77 +.12%
CRB 305.89 -.71%

Futures Spot Prices
Crude Oil 54.25 -2.86%
Unleaded Gasoline 156.25 -5.83%
Natural Gas 7.36 -2.62%
Heating Oil 152.50 -3.95%
Gold 428.10 -.26%
Base Metals 129.69 +.47%
Copper 150.40 -.30%
10-year US Treasury Yield 4.47% +1.10%

Leading Sectors
Gaming +1.87%
Broadcasting +1.24%
Semis +1.24%

Lagging Sectors
Restaurants -.94%
Energy -1.04%
Oil Service -1.53%

BOTTOM LINE: US stocks are higher mid-day on optimism over falling energy prices. The Portfolio is unchanged as gains in my Software and Internet longs are offsetting losses in my Retail longs and Base Metal shorts. I exited a few trading shorts and added a couple of longs this morning, thus leaving the Portfolio’s market exposure at 25% net long. One of my new longs is OSTK and I am using a $43 stop-loss on this position. The tone of the market is modestly positive as the advance/decline line is higher, most sectors are higher and volume is light. Consumer stocks and Tech are outperforming, while Energy-related shares are underperforming and measures of investor anxiety are mostly higher. Today’s overall market action is modestly positive, considering the decline in energy prices, the market’s oversold state and the rise in long-term interest rates. Wal-Mart’s lowered earnings outlook may actually prove to be a positive as consumers finally begin to retrench a bit, thus resulting in lower long-term interest rates. I expect US stocks to rise modestly into the close on optimism over falling energy prices and stabilizing long-term rates.

Today's Headlines

Bloomberg:
- Wal-Mart Stores said profit this quarter will be at the low end of it previous estimates of 56 cents to 58 cents a share.
- Computer Associates said it will acquire Concond Communications for $330 million.
- US motorists will spend an inflation-unadjusted record $2.28 a gallon on gas this summer because of surging crude oil costs and rising demand.
- Iraq’s new president Jalal Talabani and his deputies Adel Abdel Mahdi and Sheikh Ghazi al-Yawar swore oaths of allegiance as they took up their posts in the country’s first democratically elected government in more than 50 years.
- Pfizer agreed to suspend sales of its Bextra painkiller because of heart risks.
- US auto regulators today set new tire safety standards requiring that cars and light trucks be equipped with devices that warn motorists when tires are more than 25% under-inflated.
- Merck’s Vioxx painkiller probably won’t be sold in the US again.
- Crude oil is falling for a fourth day on speculation that US gas inventories will rise as refineries increase operating rates.

The Wall Street Journal:
- Saudi Arabia, worried that the recent rise in oil prices may depress global economic growth, is telling petroleum buyers that it will pump crude to the limit of its capacity.
- General Motors is encouraging employees to adopt healthier lifestyles to reduce spiraling medical insurance costs.
- The US Senate Appropriations Committee has approved $200 million in aid for Gaza and the West Bank without most of the restrictions set by the House.
- The US Secret Service found an increase in large criminal groups that steal financial data from individuals and trade or sell it on underground Web sites.
- Patent applications filed with the World Intellectual Property Organization by Chinese firms have increased by 38% to 1,782 in 2004.
- The FASB may tighten rules governing the way companies account for their transactions with insurance companies.

NY Times:
- As much as 93% of silicone breast implants ruptured within 10 years, citing health regulators.
- The FBI has detained two immigrant girls from NYC since March 24 on suspicion that the teenagers were planning to be suicide bombers.

Washington Post:
- Howard Dean’s failed US presidential campaign left a cadre of liberal political activists who want the Democratic Party to move left as it rebounds from Senator John F. Kerry’s defeat in 2004.

Tex Report:
- Japan’s iron ore imports from BHP Billiton have halved since March as steelmakers have refused to pay a levy on top of the 71.5% increase won by the world’s biggest mining company on iron ore price.

Ma’ ariv:
- Impax Labs, a US generic drugmaker, may be bought for as much as $1.5 billion to bidders that may include Teva Pharmaceutical Industries, the world’s biggest maker of generic drugs.

Links of Interest

Market Internals
Movers & Shakers
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
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Option Dragon
Real-time Intraday Chart/Quote