Mid-day Scoreboard

Indices
S&P 500 1,187.23 -.33%
DJIA 10,509.08 -.36%
NASDAQ 2,009.25 -.47%
Russell 2000 614.72 -.81%
DJ Wilshire 5000 11,694.16 -.38%
S&P Barra Growth 573.16 -.31%
S&P Barra Value 609.60 -.36%
Morgan Stanley Consumer 586.31 -.20%
Morgan Stanley Cyclical 747.28 -.58%
Morgan Stanley Technology 456.47 -.41%
Transports 3,618.54 -2.70%
Utilities 364.20 -.33%
Put/Call .75 +8.70%
NYSE Arms 1.02 +35.11%
Volatility(VIX) 11.66 -5.52%
ISE Sentiment 175.00 +29.63%
US Dollar 84.52 -.41%
CRB 303.98 -.75%

Futures Spot Prices
Crude Oil 53.05 -1.77%
Unleaded Gasoline 152.20 -3.06%
Natural Gas 7.27 -1.24%
Heating Oil 149.00 -2.51%
Gold 428.80 +.09%
Base Metals 129.69 +.47%
Copper 150.60 -.03%
10-year US Treasury Yield 4.47% -.08%

Leading Sectors
Semis +.16%
Broadcasting +.10%
Foods +.06%

Lagging Sectors
HMOs -1.28%
Oil Service -1.33%
Transports -2.61%

BOTTOM LINE: US stocks are lower mid-day on a consolidation of recent gains and worries over slowing growth. The Portfolio is slightly lower on losses in my Internet and Retail longs. I added to a few Internet longs this morning and added a new short, thus leaving the Portfolio’s market exposure 50% net long. One of my new shorts is ATI and I am using a $26.5 stop-loss on this position. The tone of the market is negative as the advance/decline line is lower, almost every sector is lower and volume is very light. Small-caps are underperforming, while measures of investor anxiety are mixed. Today’s overall market action is modestly negative, considering the decline in energy prices, the market’s oversold state and stabilizing long-term interest rates. The fact that commodity prices are falling again, even with a decline in the US dollar, is a big positive. One more bout of inflation worries is likely over the coming weeks, however I believe inflation fears will peak for the year during this period. While I think the odds that oil has peaked for the year have risen substantially, the fact that trader sentiment towards crude is bearish likely means a test of recent highs over the coming weeks. I expect US stocks to rise modestly into the close as optimism over falling energy prices and stabilizing long-term rates more than offsets worries over slowing global growth.

Today's Headlines

Bloomberg:
- The US dollar will rise this year and next after three years of losses against the euro and the yen, a JP Morgan survey of corporate customers shows.
- Growth in demand for oil tankers will slow in 2005 for a second straight year as near-record prices curb oil consumption.
- Rising energy prices and higher interest rates will take a larger bite out of consumer spending and cause the US economy to slow later this year, a Bloomberg News survey of economists found.
- China will use 380,000 metric tons of steel, or .1% of its output last year, to build stadiums and gymnasiums for the 2008 Olympic Games in Beijing, the China Iron and Steel Association said.
- Crude oil is falling for a fifth day in NY, the longest decline since August, on signs that US inventories will be sufficient to meet increased demand by refiners making gasoline.
- ShopKo Stores, a discounter with 360 stores, agreed to be acquired by a private equity firm for $715.2 million, the second buyout of a retail company in two months.

Wall Street Journal:
- Oil prices are unlikely to stay at their present high level, according to Lee Raymond, Exxon Mobil Corp.’s chief executive officer.
- Transactions between Delphi Corp. and BBK Ltd. are being investigated by the SEC as part of an inquiry into Delphi’s accounting.
- The private investors who own Warner Music Group stand to make $329.4 million in cash after an IPO next month.
- A bill tightening supervision of Fannie Mae and Freddie Mac may pass this year after the administration said it will be flexible over restrictions on the two biggest buyers of US home mortgages.
- The FDA has been asked by medical and environmental groups to curtail use of antibiotics in animal feed because of possible dangers to human health.
- A bill tightening supervision of Fannie Mae and Freddie Mac may pass this year after the administration said it will be flexible over restrictions on the two biggest buyers of US home mortgages.

NY Times:
- Documents for an agreement between AIG International Group and a unit of Berkshire Hathaway were altered two months after the accord was reached.

TradeWinds:
- The global container shipping fleet’s carrying capacity is set to grow by 60% through 2008 and may create an oversupply of shipping space, citing shipbrokers.

Les Echos:
- STMicroelectronics NV, Europe’s largest semiconductor maker, will be ready to deliver the first chips for high-definition television decoders using the MPEG-4 standard in September.

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
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote

Economic Releases

None of note

Morning Buy/Sell Recommendations

Goldman Sachs:
- Downgraded Life Insurance group to Cautious.
- Downgraded PFG to Underperform.
- Reiterated Outperform on AVP.

Smith Barney:
- Reiterated Buy on RSG, target $39.
- Reiterated Buy on FFIV, target $65.
- Reiterated Buy on RDWR, target $32.
- Reiterated Buy on EXTR, target $11.
- Reiterated Buy on FDRY, target $14.
- Reiterated Buy on NTGR, target $20.
- Reiterated Buy on PKTR, target $22.
- Reiterated Buy on JNPR, target $36.
- Reiterated Buy on ELX, target $23.50.
- Reiterated Buy on RSG, target $39.
- Rated RRD Buy, target $36.
- Rated AMTD Buy, target $13.25.
- Reiterated Buy on CHE, target $93.
- Reiterated Buy on FCS, target $19.
- Reiterated Buy on SSI, target $70.

Morgan Stanley:
- Cut State Street to Underweight.

JP Morgan:
- Raised GOL, STZ to Overweight.
- Downgraded MESA to Underweight.
- Downgraded SKYW to Underweight.
- Downgraded XJT to Underweight.
- Reiterated Overweight on DG, target $28.

Merrill Lynch:
- Raised ARBX to Buy.

CIBC:
- Raised MGA to Sector Outperform.
- Cut X to Sector Underperform.

Prudential:
- Reiterated Overweight on BWA, target $57.

Raymond James:
- Raised LUFK to Strong Buy, target $60.

Piper Jaffray:
- Reiterated Outperform on DELL, target $48.

Deutsche Bank:
- Downgraded GM to Sell, target $24.

Thomas Weisel:
- Reiterated Outperform on CHS, target $33.
- Reiterated Outperform on CACH, target $18.