Chart of Interest

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Japan's government said it will allow oil drilling in an area of the East China Sea claimed by China, a decision that may escalate tension between the nations amid anti-Japanese rioting in Beijing and other Chinese cities.
- Crude oil is falling to a six-week low in NY, the seventh drop in eight days, after the IEA reduced its forecast for world fuel demand.

Wall Street Journal:
- A new Goldman Sachs Group private-equity fund worth $8.5 billion that's expected to be announced today will be a challenge for the US securities firm to pursue buyouts without offending clients who rely on it for advice.

Financial Times:
- Tensions between China and Japan, sparked by new Japanese textbooks about its colonial history, may delay United Nations plans to enlarge the Security Council.

Reuters:
- SAP AG, the world's largest maker of business-management software, may increase its partnerships with small software companies to broaden its product base.

AP:
- Merck asked a judge in Alabama to dismiss the first scheduled trail over Vioxx.
- Anheuser-Busch, the world's largest beermaker and the No.1 US buyer of rice, says it will boycott rice grown in Missouri if plans go forward to plant a genetically modified version of the grain intended to be used to produce drugs.

NY Times:
- Israeli Prime Minister Ariel Sharon told President Bush on April 11 that Iran is near "a point of no return" in learning how to develop a nuclear weapon.

Washington Post:
- Insurgent attacks in Mosul, Iraq, have declined by almost half since mid-November of last year.
- The US House of Representatives probably will approve today a permanent repeal of estate taxes in response to popular demand.

Mainichi:
- Apple Computer plans to start an online music store in Japan this year.

Business Standard:
- Boeing expects India to buy planes worth $35 billion over the next 20 years.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on ACN, BC and MDT.
- Reiterated Attractive view of Lodging sector.

Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated -.07%.

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
AMD/.02
AAPL/.24
BBT/.75
CBH/.45
FAST/.49
HDI/.76
IFIN/.56
LRCX/.43
MOGN/.16

Splits
TTC 2-for-1
UCBH 2-for-1

Economic Releases
8:30 EST
- Advance Retail Sales for March are estimated to rise .8% versus a .4% increase in February.
- Retail Sales Less Autos for March are estimated to rise .5% versus a .4% gain in February.

BOTTOM LINE: Asian indices are mostly higher on optimism over the rebound in US stocks and declining energy prices. I expect US equities to open modestly higher on a continuation of today's rally and lower energy prices. The Portfolio is 100% net long heading into tomorrow.

Tuesday Close

Indices
S&P 500 1,187.76 +.55%
DJIA 10,507.97 +.57%
NASDAQ 2,005.40 +.67%
Russell 2000 613.03 +.97%
DJ Wilshire 5000 11,695.44 +.57%
S&P Barra Growth 572.88 +.48%
S&P Barra Value 610.49 +.62%
Morgan Stanley Consumer 586.51 +.62%
Morgan Stanley Cyclical 743.30 +.46%
Morgan Stanley Technology 452.77 +.28%
Transports 3,645.99 +.98%
Utilities 369.84 +.98%
Put/Call 1.18 +15.69%
NYSE Arms .96 -4.66%
Volatility(VIX) 11.30 -5.68%
ISE Sentiment 157.00 +8.28%
US Dollar 84.44 +.26%
CRB 302.63 -.51%

Futures Spot Prices
Crude Oil 51.33 -1.02%
Unleaded Gasoline 152.18 -.78%
Natural Gas 7.05 -.55%
Heating Oil 145.38 -.78%
Gold 430.30 +.23%
Base Metals 129.60 -.77%
Copper 149.70 +.07%
10-year US Treasury Yield 4.35% -1.72%

Leading Sectors
Homebuilders +2.69%
Insurance +1.52%
Gaming +1.48%

Lagging Sectors
Defense -1.23%
Energy -1.43%
Oil Service -1.92%

After-hours Movers
ELN +18.0% after two-year data for the first time, showed that treatment with TYSBARI led to significant reduction in disability progression, the rate of clinical relapses and brain lesions in patients with relapsing forms of multiple sclerosis.
FARO +5.0% after giving positive 1Q/05 outlook.
CPWR -10.4% after lowering 4Q guidance.
FDRY -7.3% after cutting 1Q estimates.
IMCL- 9.4% after saying that it would delay seeking US approval for a new use of the Erbitux cancer drug until the second half of 2005.
IMDC -9.5% after its silicone breast implants failed to win the backing of a US government advisory committee because of questions about their safety.

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 GCI and Underperform on PBG.

Afternoon/Evening Headlines
Bloomberg:
- Bill Gross, manager of the world’s biggest bond fund, said he expects reports to show that the US economy is slowing, which may cause bond yields to decline.
- Inamed’s silicone breast implants failed to win the backing of a US government advisory committee because of questions about their safety.
- US Senators are “very close” to bipartisan agreement on a proposed $140 billion trust fund to compensate asbestos-exposure victims, said top lawmakers on the committee considering the legislation.
- US Treasury 10-year notes had their biggest gain in more than two months after minutes of the Fed’s most recent meeting suggested policy makers see no need to increase interest rates at a faster pace.
- Fannie Mae spent $87 million for an advertising campaign that helped thwart efforts by Congress in 2003 and 2004 to create a tougher regulator for the government-charted company.
- Crude oil fell almost $2 a barrel in NY, the sixth decline in seven sessions, after the IEA lowered its forecast for world fuel demand.
- Maurice “Hank” Greenberg, the ousted CEO of AIG, transferred about $2.2 billion of his AIG shares to his wife four days before he stepped down.

Newsweek:
- US securities regulators are examining what Berkshire Hathaway Chairman Warren Buffett knew about a transaction between the company’s reinsurance unit and AIG.

Financial Times:
- China’s regulator may announce plans to begin the process of reducing the state’s shareholdings in the country’s listed companies.

BOTTOM LINE: US stocks finished higher today as long-term interest rates fell and energy prices declined. The Portfolio finished higher on gains in my Homebuilding, Retail, Gaming and Technology longs. I added a few more longs from various sectors in the afternoon, thus leaving the Portfolio 100% net long. One of my new longs is WMT and I am using a $47.75 stop-loss on this position. The tone of the market strengthened meaningfully into the afternoon as the advance/decline finished higher, most sectors rose and volume accelerated. Measures of investor anxiety were mostly lower into the afternoon. Overall, today’s market action was positive, considering the shift in psychology towards interest rates, commodity prices and inflation. The spike in the CRB Index a few weeks ago was likely the result of a “throwing in the towel” sentiment towards prices as participants began expecting future price increases from ever higher levels instead of declines. This resulted in the appearance of a spike in demand for the underlying commodities. With global demand declining, the US dollar firming and sentiment shifting, excess stockpiles and inventories will likely lead to an exaggerated effect on the downside in commodity prices as a demand vacuum materializes. Falling commodity prices and low unit labor costs should result in decelerating inflation readings and stable-to-lower long-term interest rates. Investors will likely worry over the next few months that growth is slowing too much. While a temporary pocket of unacceptably slow growth is possible, the second half of the year should see an acceleration in US economic growth as lower energy prices, improving employment prospects and low interest rates boost consumer sentiment and spending.

Mid-day Scoreboard

Indices
S&P 500 1,177.65 -.30%
DJIA 10,414.79 -.33%
NASDAQ 1,980.10 -.60%
Russell 2000 604.96 -.36%
DJ Wilshire 5000 11,586.81 -.37%
S&P Barra Growth 567.75 -.36%
S&P Barra Value 606.90 +.03%
Morgan Stanley Consumer 584.03 +.22%
Morgan Stanley Cyclical 737.69 -.29%
Morgan Stanley Technology 449.08 -.54%
Transports 3,609.42%
Utilities 368.36 +.56%
Put/Call 1.32 +29.41%
NYSE Arms 1.10 +8.96%
Volatility(VIX) 12.16 +1.50%
ISE Sentiment 155.00 +6.90%
US Dollar 84.58 +.44%
CRB 303.15 -.34%

Futures Spot Prices
Crude Oil 52.53 -2.35%
Unleaded Gasoline 154.00 -.63%
Natural Gas 7.14 -2.24%
Heating Oil 147.25 -.98%
Gold 429.30 -.26%
Base Metals 129.60 -.77%
Copper 149.30 -2.10%
10-year US Treasury Yield 4.44% +.28%

Leading Sectors
Insurance +.16%
Homebuilding -.10%
Foods -.24%

Lagging Sectors
Steel -2.30%
Airlines -2.59%
Oil Service -2.69%

BOTTOM LINE: US stocks are higher mid-day on declining long-term interest rates and falling energy prices. The Portfolio is slightly lower on losses in my Base Metal and Chinese ADR shorts. I exited a number of shorts today and added some Homebuilding, Tech and Retail longs, thus leaving the Portfolio 75% net long. The tone of the market is modestly positive as the advance/decline line is slightly higher, sector performance is mixed and volume is modest. Tech and Energy-related stocks are underperforming, while measures of investor anxiety are mostly higher. Today’s overall market action is positive, considering the shift in psychology. I believe now that it is very possible the market has seen its lows for the year as I sense a definite shift with respect to the direction of commodity prices, inflation and interest rates. I expect US stocks to rise into the close on falling long-term interest rates and lower energy prices.

Today's Headlines

Bloomberg:
- The International Energy Agency said slowing growth in Chinese oil demand, rising inventories and increasing production in the Middle East should help lower oil prices from near record highs.
- US gasoline supplies will be sufficient during the summer driving season because of increased output from refineries and “ample” amounts of stocks available from Europe.
- Fifteen current and former NYSE specialists were indicted on criminal charges of fraudulent and improper trading.
- Crude oil is falling for the sixth day in seven after the IEA lowered its forecast for world oil demand for the first time in four months.
- The recording industry said it plans to sue more than 400 unidentified people associated with US universities tomorrow for using a closed computer network to illegally send movies and music over the Internet.
- The US dollar is rising versus the euro and the yen on speculation minutes from the Fed’s March 22 meeting to be released today will suggest the central bank will keep raising interest rates.
- Estee Lauder signed fashion designer Tom Ford, who turned Gucci Group NV into a global luxury brand, to develop beauty products that appeal to younger shoppers.

Wall Street Journal:
- The governors of 33 US states are urging the expansion of a directive on use of ethanol as a fuel additive.
- The US District Court in Manhattan will probably approve arrangements to compensate investors who bought shares lauded by analysts during the dot-com bubble by the end of the week.
- Raytheon is developing “gesture” technology for the US military that moves information and images on a computer screen with the flick of the finger.
- Several US companies, including Becton Dickinson and Johnson & Johnson, will soon step into a politically charged arena as they pursue plans to study stem cells drawn from early-stage human embryos.
- Ameritrade, E*Trade and Charles Schwab are trying to offer more banking services, to attract customers interested in one-stop shopping for financial services.

Washington Post:
- Berkshire Hathaway Chairman Warren Buffett told federal and NY state investigators that he was briefed on an illegal transaction between Berkshire unit General Re and AIG.

WNBC-TV New York:
- Three men have been charged in connection with last August’s purported plot to attack financial centers in New York and New Jersey.

Reuters:
- Intel said yesterday it’s started shipping the first of a new line of dual-core semiconductors, which improve desktop computer performance with separate processing units.

Interfax:
- Russia and NATO will jointly develop an anti-missile system to deploy in Europe.

El Watan:
- Algeria, the second largest oil producer in North Africa, plans to boost output at its largest oilfield by 50% as it seeks to meet the soaring demand for crude.