Friday Watch

Earnings of Note
Company/Estimate
None of note.

Splits
None of note.

Economic Data
Unemployment Rate for November estimated at 5.4% versus 5.5% in October.
Average Hourly Earnings for November estimated up .3% versus a .3% increase in October.
Change in Non-farm Payrolls for November estimated at 200K versus 337K in October.
Change in Manufacturing Payrolls for November estimated at 0K versus a loss of 5K in October.
Average Weekly Hours for November estimated at 33.8 versus 33.8 in October.
ISM Non-Manufacturing for November estimated at 58.5 versus 59.8 in October.

Recommendations
Goldman Sachs reiterated Outperform on AMGN, BSX, GE and INTC. Goldman reiterated Underperform on ALA and TLAB. Colgate-Palmolive(CL), whose shares have dropped 14% since Sept. 20 when the company said 2004 profits wouldn't meet forecasts, is again attracting investors, Business Week reported. Given Imaging(GIVN) shares may rise on sales of its diagnostic camera in a pill, Business Week reported. Curis(CRIS), a maker of drugs to fighter cancer and kidney disease, may become the target of a takeover because it has three big pharmaceutical companies as partners, Business Week reported.

Late-Night News
Asian indices are mostly higher on optimism for technology shares in the region after Intel's mid-quarter update. Nigeria wants to boost its oil exports to the U.S., President Obasanjo said in an interview with CNN. China faces a bigger influx of foreign currencies as investors bet the government will let the yuan appreciate, the state-run Xinhua News said. Credit-card issuers are losing business because consumers are shifting their debt to low-rate home-equity loans, Business Week reported. The number of blogs on the Internet has risen to about 4.8 million, from 100,000 two years ago, Business Week said. Dongfeng Motor of China and Cummins of the U.S. agreed to establish a $20 million research and development center for truck engines in Wuhan, central China, Chinanews agency reported. Citigroup CEO Charles Prince is considering taking steps to address investor worries that the company is too large to manage and grow, the NY Times said. President Bush will use a mid-December economic summit to begin a push for his plan to allow younger workers to invest part of their Social Security taxes, Bloomberg reported. The US dollar headed for its first weekly gain in eight against the euro in Asia on expectations a report today will show U.S. employers added enough workers to fuel consumer spending and economic growth, Bloomberg reported. Shares of NEC Electronics, Toshiba Corp. and other computer-related companies rose in Asia after Intel said fourth-quarter sales will exceed its previous forecast because of higher demand for processors used to power laptop, desktop and server computers, Bloomberg reported. Verizon raised $1.88 billion from the sale of its 20.5% stake in Canada's Telus Corp., Bloomberg reported. IBM wants to sell its pc business for between $1 billion to $2 billion, Bloomberg said.

Late-Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated +.39%.
NASDAQ 100 indicated +.81%

BOTTOM LINE: I expect U.S. equities to open higher in the morning on optimism over Intel's mid-quarter update and a better-than-expected employment report. Interest rates will likely rise on this news which could lead to profit-taking later in the day, resulting in a modest daily gain for stocks. The Portfolio is 125% net long heading into tomorrow.

Thursday Close

S&P 500 1,190.33 -.09%
NASDAQ 2,143.57 +.25%

Leading Sectors
Airlines +3.57%
Disk Drives +2.37%
Biotech +1.81%

Lagging Sectors
Commodity -2.42%
Energy -2.65%
Iron/Steel -3.09%

Other
Crude Oil 43.45 +.46%
Natural Gas 6.83 +.35%
Gold 451.30 -.22%
Base Metals 1117.87 -2.42%
U.S. Dollar 81.95 +.48%
10-Yr. T-note Yield 4.40% +.90%
VIX 12.98 +.08%
Put/Call .83 +3.75%
NYSE Arms .87 +42.62%

After-hours Movers
INTC +7.2% after boosting 4Q outlook and reducing inventories.
*Semiconductors and Equipment stocks up across the board on INTC report.

Recommendations
Goldman Sachs reiterated Outperform on WAG, BBY, GLW and WMT. Goldman reiterated Underperform on MAY and JDSU.

After-hours News
U.S. stocks finished quietly mixed today as investor apprehension rose in the afternoon ahead of Intel's mid-quarter update and tomorrow's employment report. Sony says 20 million European homes will have high-definition television by 2008, the Financial Times said. NY State Comptroller Hevesi, who sued Merck earlier this week over pension fund losses related to the drug Vioxx, said the company delayed its response to indications the drug caused heart trouble because it was making so much money from it, CNBC reported. A rise in steel shipments boosted traffic at the Port of Indiana-Burns Harbor to a record in October, American Metal Market reported. Crude oil's three day, 13% plunge is the steepest decline is the steepest since the U.S.-led invasion of Iraq in March 2003, Bloomberg reported. Procter & Gamble needs to conduct more research to win approval of its testosterone patch to treat sexual dysfunction in women, a FDA advisory panel said. Intel said fourth-quarter sales will exceed its previous forecasts as demand grows for laptop and desktop personal computers, Bloomberg said. President Bush said the U.S. is "very firm" that Iraq should hold elections on schedule Jan. 30, Bloomberg reported. Ukrainian opposition leader Viktor Yushchenko said the government might use force to end protests against alleged presidential election fraud, as outgoing President Kuchma reiterated his call for a new vote, Bloomberg reported.

BOTTOM LINE: The Portfolio finished lower today on losses in my Chinese ADR and steel longs. I added a few new semi equipment and wireless longs into the afternoon weakness, thus leaving the Portfolio 125% net long. One of my new longs is AMAT and I am using a $16.80 stop-loss on this new position. The tone of the market was weaker today, which was somewhat disappointing considering another substantial decline in energy prices and rise in the US dollar. However, stocks are reacting positively to Intel's report after-hours. Commodity-related stocks have likely peaked in the intermediate-term on year-end repositioning, worries over excess supply and a bounce in the US dollar. I continue to expect another push higher tomorrow on the INTC news and a better-than-expected jobs' report.

MId-day Report

S&P 500 1,191.23 -.01%
NASDAQ 2,143.09 +.23%

Leading Sectors
Airlines +3.25%
Telecom +1.82%
Biotech +1.54%

Lagging Sectors
Energy -2.68%
Commodity -2.69%
Iron/Steel -3.64%

Other
Crude Oil 43.30 -4.70%
Natural Gas 6.86 -7.19%
Gold 451.80 -.88%
Base Metals 119.78 -.84%
U.S. Dollar 81.90 +.42%
10-Yr. T-note Yield 4.38% +.45%
VIX 12.79 -1.39%
Put/Call .82 +2.50%
NYSE Arms .67 +9.84%

Market Movers

Economic Data
Initial Jobless Claims for last week were 349K versus estimates of 330K and 324K the prior week.
Continuing Claims were 2723K versus 2768K prior.
Factory Orders for October rose .5% versus estimates of a .2% gain and unch. in September.

Recommendations
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Mid-day News

Bottom Line: The Portfolio is unchanged mid-day as strength in my retail and telecom equipment longs is being offset by weakness in my steel and Chinese ADR longs. I took profits in a few base metal longs this morning, bringing the Portfolio's market exposure to 100% net long. The tone of the market is weaker today as stocks consolidate yesterday's gains. I view this as healthy. I look for the major indices to rally modestly tomorrow after Intel's mid-quarter update and the jobs report.

Thursday Watch

Earnings of Note
Company/Estimate
ABS/.33
CMN/.28
DLM/.21
MBG/.88

Splits
None of note.

Economic Data
Initial Jobless Claims for last week estimated at 330K versus 323K the prior week.
Continuing Claims estimated at 2768K versus 2755K prior.
Factory Orders for October estimated to rise .2% versus a .4% decline in September.

Recommendations
Goldman Sachs reiterated Underperform on DE, EW, CMOS and PYX.

Late-Night News
Asian indices are higher on optimism over falling energy prices and exports to the U.S. Taiwan Semiconductor Manufacturing's customer orders will rebound in the first quarter on demand from graphics chip designers such as Nvidia Corp., the Commercial Times reported. General Motors is planning a joint venture with Yulon Motor to make vehicles in Taiwan, the Economic Daily News reported. Halliburton may win the contract to oversee construction of the U.K. Ministry of Defense's two new Royal Navy aircraft carriers due to enter service in 2012 and 2015, the Independent said. India may attract as much as $4 billion more in the next two months from overseas funds investing in local stocks and bonds as economic expansion and a stronger rupee help boost their returns, the Business Standard reported. Nissan Motor and Toyota Motor stocks are rising in Asia after a report showed Asian automakers are headed for a record share of the U.S. auto market, after gaining on GM and Ford in November, Bloomberg reported. Ukraine's parliamentary groups are negotiating to choose a successor to Prime Minister Viktor Yanukovych after he lost a confidence vote prompted by the crisis arising from disputed presidential elections, Bloomberg said. Nissan Motor said it may cut production next year because of a lack of steel, the second time a shortage of the metal has interrupted production, Bloomberg reported. The US dollar will rebound, halting its 3.5% drop in the past month versus the yen, as the strength of the U.S. economy increases the appeal of its assets, said Zembei Mizoguchi, a former top Japanese currency policy maker, Bloomberg reported. UN Secretary-General Annan will not resign over the massive corruption relating to the Iraqi/UN Oil-for-Food program as called for by a U.S. senator, Xinhua News reported. Viacom Chairman and CEO Sumner Redstone said there is a "total disconnect" between the company's performance and the value of its shares, which have declined 20% this year, Bloomberg reported. President Bush may have to move faster to present his proposals for a revision of the U.S. tax code to Congress if he wants to get them approved, the Wall Street Journal reported.

Late-Night Trading
Asian Indices are +1.0%. to +1.5% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated +.09%

BOTTOM LINE: I expect U.S. equities to open mixed in the morning on a consolidation of today's gains. However, stocks will likely rise modestly into the afternoon on continuing optimism over falling energy prices, short-covering ahead of Intel's mid-quarter update and anticipation of another good jobs report. The Portfolio is 125% net long heading into tomorrow.

Wednesday Close

S&P 500 1,191.37 +1.50%
NASDAQ 2,138.23 +1.98%

Leading Sectors
Airlines +5.60%
Disk Drives +5.08%
Semis +3.83%

Lagging Sectors
Utilities -1.28%
Energy -2.28%
Oil Service -3.85%

Other
Crude Oil 45.60 +.24%
Natural Gas 7.44 +.42%
Gold 456.50 +.13%
Base Metals 120.79 +.03%
U.S. Dollar 81.56 -.32%
10-Yr. T-note Yield 4.36% +.32%
VIX 12.97 -2.04%
Put/Call .80 -8.05%
NYSE Arms .61 -38.38%

After-hours Movers
CMOS +9.3% after beating 4Q estimates and raising 1Q guidance.
ARO +5.4% after reporting better-than-expected November same-store-sales.
SBUX +3.0% after reporting 13% November same-store-sales, the fastest in 9 months.

Recommendations
Goldman Sachs reiterated Outperform on GDT, VZ and JTX.

After-hours News
U.S. stocks finished sharply higher today on a substantial decline in energy prices, strong economic reports and short-covering. After the close, the Massachusetts economy grew at an annual rate of 4.6% in October, the highest since February 2000, the Boston Globe reported. The chief executives of Esmark LLC and Olympic Steel, both of which process and distribute the metal, said they expect demand for steel will keep prices rising into next year, American Metal Market reported. Japan and officials from countries that share the euro have discussed possible joint action in the currency market if the yen and the euro continue to strengthen against the dollar, the Financial Times said. Eric Topol, the chairman of cardiology at the Cleveland Clinic, served on a board of a hedge fund that was short-selling Merck shares while he was criticizing the company's Vioxx drug, Fortune magazine reported. Crude oil tumbles more than $3, its biggest decline in three years, after a government report showing an increase in U.S. heating oil inventories spurred expectations of adequate supplies this winter, Bloomberg said. Disney said its board of directors raised the annual cash dividend by 14%, Bloomberg reported. Sales at U.S. Internet retailers jumped 36% last week as people used faster online connections to shop for holiday items on Thanksgiving Day, Bloomberg reported. Neiman Marcus said first-quarter earnings rose 14%, boosted by demand for designer handbag and lizard-skin shoes, Bloomberg said. Alliant Techsystems got an Army contract worth as much as $140 billion to develop a laser-guided mortar, defeating a protest by Lockheed Martin, Bloomberg reported. A John Singer Sargent painting sold today for $23.5 million, setting a record for the U.S. artist at auction, Bloomberg said.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my internet, telecom equipment, semi, Chinese ADR and retail longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The tone of the market was exceptional today as volume rose substantially, most sectors posted significant gains and the major US indices finished at their highs for the day. Moreover, the outsized decline in energy prices, combined with a slight drop in interest rates is also a big positive for equities. Shorts are likely seeing their substantial gains for the year wiped out in a very short period of time, which should lead to further short covering. As well, further declines in energy prices and better job prospects should boost consumer sentiment and spending into year-end which should also help propel shares higher.

Mid-day Report

S&P 500 1,187.39 +1.16%
NASDAQ 2,129.67 +1.57%

Leading Sectors
Disk Drives +3.99%
Airlines +3.74%
Semis +3.01%

Lagging Sectors
Utilities -1.20%
Energy -1.53%
Oil Service -3.30%

Other
Crude Oil 46.50 -5.35%
Natural Gas 7.48 -1.97%
Gold 456.50 +.71%
Base Metals 120.79 +.03%
U.S. Dollar 81.61 -.26%
10-Yr. T-note Yield 4.36% +.23%
VIX 12.89 -2.64%
Put/Call .80 -8.05%
NYSE Arms .66 -33.33%

Market Movers
OVTI +9.9% after beating 3Q estimates and raising 4Q outlook.
UCO -4.79% after Weatherford Intl. sold 4 million of its shares for $141.8 million.
CHS +13.2% after beating 3Q estimates.
GORX +102.7% after the FDA approved its Mucotrol medicine for the treatment of a side effect of chemotherapy and radiation.
CPRT +18.0% after better-than-expected 1Q estimates.
CI +8.5% after raising 04 and 05 guidance.
CTRP +11.7% after saying it signed a distribution agreement with Pegasus Solutions(PEGS) providing CTRP with direct access to inventory at nearly 60,000 hotels worldwide.
SYNA -7.1% after saying it intends to offer $100 million of Convertible Senior Subordinated Notes.
*Oil Services down across the board on falling energy prices.

Economic Data
Personal Income for October rose .6% versus estimates of a .5% rise and a .2% gain in September.
Personal Spending for October rose .7% versus estimates of a .4% gain and a .6% increase in September.
PCE Deflator(YoY) for October rose 2.4% versus estimates of a 2.4% increase and a 2.0% gain in September.
PCE Core(YoY) for October rose 1.5% versus estimates of a 1.4% increase and a rise of 1.5% in September.
Construction Spending for October came in unch. versus estimates of a .7% rise and a .1% gain in September.
ISM Manufacturing for November came in at 57.8 versus estimates of 57.0 and a reading of 56.8 in October.
ISM Prices Paid for November came in at 74.0 versus estimates of 75.3 and a reading of 78.5 in October.

Recommendations
-Goldman Sachs reiterated Outperform on BBY, SAP, BNS, JTX, PFE, NUE, X, AGN and IP. Goldman reiterated Underperform on CI and SAY.
-Banc of America cut PEG to Sell. BofA raised RKY to Buy, target $82.
-Citi SmithBarney sees near-term 10%+ trade in QLGC and ELX. Citi reiterated Buy on ATH, target $147. Citi reiterated Buy on MAN, target $56.
-Thomas Weisel rated IMCL Buy.
-Legg Mason rated TR Buy, target $36.
-JP Morgan rated MMR Overweight.
-Merrill Lynch downgraded IFX to Sell.

Mid-day News
U.S. stocks are sharply higher mid-day on optimism over strong economic reports and falling energy prices. EchoStar Communications and Vivendi Universal's Music Group are in talks to start a 24-hour music channel to rival MTV, the NY Post reported. Pfizer's benefit from increased sales of Celebrex and Bextra after the recall of Merck's Vioxx may be temporary because doctors are increasingly prescribing older drugs considered safer, the NY Times said. Whole Foods Market and other gourmet supermarkets plan to expand in NY City and nationwide as the market for specialty foods increases, the NY Times reported. Procter & Gamble's testosterone patch, meant to bolster post-menopausal women's sex drive, will be studied by a FDA panel tomorrow for approval amidst concerns about its clinical trial results and possible side effects, the Philadelphia Inquirer reported. Harvard Law School said yesterday it would reinstate a policy that bans military recruiters from the campus, the Boston Globe reported. Vought Aircraft Industries plans to open a $500 million plant in Charlston, SC, to build components for Boeing's new 7E7 jetliner, the Fort Worth Star-Telegram reported. Gilead Sciences' tenofovir drug, sold as Viread to treat HIV-infected adults, will be tested as a preventative treatment for AIDS in an international study later this month, the San Francisco Chronicle reported. 89% of the biggest U.S. law firms plans to raise their hourly billing rates next year, according to a new survey by the American Lawyer. IBM said it won more than $1 billion in new contracts as it completed the acquisition of two Danish businesses, Bloomberg said. Disney's ESPN network plans to branch into the mobile-phone business through the use of Sprint's network, Bloomberg reported. Nokia gained mobile-phone market share for a second straight quarter, helped by price cuts and new models, and Samsung overtook Motorola as the second-largest handset maker for the first time, Bloomberg said. Raytheon will increase its annual dividend by 10% to 88 cents and buy back as much as $700 million in stock, Bloomberg reported. Ukrainian Prime Minister Yanukovych lost a confidence vote in parliament and President Kuchma opened the door to new presidential candidates by demanding new elections after the disputed Nov. 21 vote, Bloomberg reported. U.S. home prices increased at the fastest pace in 25 years during the third quarter as the economy improved and low mortgage rates made financing more affordable, Bloomberg said. Crude oil fell more than $2/bbl. on a report showing that inventories of heating oil and other fuels rose more than expected as refineries operated at the highest rate since a hurricane hit the U.S. in September, Bloomberg reported. U.S. manufacturing strengthened in November, with growth accelerating for the first time in four months, as orders and employment picked up, the ISM survey found. U.S. consumer spending rose in October and a surge in hiring led to the biggest rise in incomes in five months, Bloomberg reported. Ford Motor said U.S. sale of cars and trucks fell 7.3% in November from a year earlier, while DaimlerChrysler said sales rose 4.4% and Nissan's sales soared 26%, Bloomberg said.

Bottom Line: The Portfolio is substantially higher mid-day on strength in my Internet, Chinese ADR, semi and telecom equipment longs. I added a few new longs this morning, bringing the Portfolio's market exposure to 125% net long. One of my new longs is MNST and I am using a $27.25 stop-loss on this position. The tone of the market is very good today on a strong advance/decline line and good volume. The next up-leg of the rally has likely begun. Falling energy prices and better employment prospects should propel the major indices through year-end. I continue to expect oil to fall to the $35-$40/bbl. range over the next few months. Intel's mid-quarter update after the close Thur. and Fri.'s jobs report should provide the catalysts for further strength to end the week. I expect U.S. stocks to trade mixed into the close on a consolidation of today's gains.