Today's Headlines

Bloomberg:
- German Cardinal Joseph Ratzinger, who was considered a leading candidate to succeed Pope John Paul II and one of the most conservative voices in the Catholic Church, today was named the leader of the world’s 1 billion Roman Catholics.
- US Treasury notes surged after a measure of the Core PPI climbed less than forecast last month, easing concern about faster inflation.
- Crude oil rose more than $1 amid speculation that growing gasoline demand will erode US inventories and strain the ability of refineries to make enough of the fuel.

Wall Street Journal:
- Eastman Kodak, Atari, Microsoft and other US companies routinely paid tv commentators to recommend their products to the public.
- Exxon Mobil, BP, Royal Dutch/Shell and other big oil companies face increasing competition from smaller and more agile rivals.
- The AP will start charging an extra fee to publishers that post its stories on the Internet.
- Boeing and Lockheed Martin will be the major beneficiaries of some $6 billion in spending by the Air Force on rockets.
- Walt Disney plans to announce two gaming software deals, including the acquisition of Avalanche Software.
- GE and Eli Lilly are developing a process that will help detect Alzheimer’s disease at an earlier stage.

NY Times:
- At least 23 US states are either passing laws or considering legislation related to the obligation of pharmacists to distribute emergency contraception pills.
- Rising oil prices and nervousness in the market is working to Iran’s advantage as it cements relationships with several powerful countries in part to thwart US-imposed isolation.
- GM may soon stop making either Buick or Pontiac cars as the two brands’ sales decline.
- AOL has agreed to buy licenses from Universal Music Group to provide music videos to subscribers.

Washington Post:
- The US Republican National Committee raised a record $32 million in the January-March period, more than double the total collected by Democrats.

CNBC:
- Janet Yellen, president of the Federal Reserve Bank of San Francisco, said in an interview that inflation expectations remain “well contained” and the US economy is still growing.

Economic Releases

- The Producer Price Index for March rose .7% versus estimates of a .6% increase and a .4% gain in February.
- The PPI Ex Food & Energy for March rose .1% versus estimates of a .2% gain and a .1% increase in February.
- Housing Starts for March fell to 1837K versus estimates of 2090K and an upwardly revised 2229K in February.
- Building Permits for March fell to 2023K versus estimates of 2090K and an upwardly revised 2107K in February.

Links of Interest

Market Internals
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NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
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DJIA Quick Charts
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Option Dragon
Real-time Intraday Chart/Quote

Tuesday Watch

Late-Night Headlines
Bloomberg:
- News Corp. Chairman Rupert Murdoch said his company is in "very friendly" talks to acquire voting shares held by John Malone's Liberty Media Corp.
- The Federal Reserve may raise its interest-rate target just two or three more times because of a "soft patch" that is emerging in the global economy, according to Paul McCulley, a managing director at PIMCO.

NY Times:
- Iran is arranging oil and gas deals with fast-growing countries amid threats of sanctions from the US and Europe.

London-based Times:
- The UK ruling Labour party has increased its lead over the opposition Conservative party as 71% of voters forecast Prime Minister Tony Blair's government to win a third term in office in the May 5 election.

Economic Daily News:
- A Taiwan cabinet fund, a private bank and the Alaskan state government of the US will set up a $200 million venture to jointly invest in energy companies in the Asia-Pacific region.

Australian Financial Review:
- General Re Corp. and National Indemnity Co., units of Warren Buffett's Berkshire Hathaway, are among defendants in a $307 million Australian suit by the liquidator of failed HIH Insurance Ltd.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on GE, RE, ACN, DIS, NSM and PKG.

Night Trading
Asian Indices are +.75% to +1.25% on average.
S&P 500 indicated +.18%.
NASDAQ 100 indicated +.53%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
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Asian Indices
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Rasmussen Consumer/Investor Daily Indices
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Earnings of Note
Company/EPS Estimate
ASO/.48
AV/.17
BOL/.51
BSX/.51
CDWC/.71
CD/.24
CKFR/.36
CAKE/.24
KO/.43
DHI/.80
EMC/.11
FRX/.40
FCX/.55
GM/-1.49
ITW/1.06
INTC/.31
JCI/.85
JNJ/.92
JNPR/.15
LLTC/.32
LU/.04
MER/1.18
MGG/.75
PFE/.53
RSH/.32
STX/.37
SYK/.40
WFC/1.09
YHOO/.11

Splits
GGB 3-for-2
PIXR 2-for-1

Economic Releases
8:30 EST
- The Producer Price Index for March is estimated to rise .6% versus a .4% increase in February.
- The PPI Ex Food & Energy for March is estimated to increase .2% versus a .1% gain in February.
- Housing Starts for March are estimated to fall to 2090K versus 2195K in February.
- Building Permits for March are estimated to fall to 2090K versus 2107K in February.

BOTTOM LINE: Asian indices are higher, spurred by gains in technology stocks in the region. I expect US equities to open mixed. However, stocks may rally later in the day on short-covering and bargain-hunting after the PPI report. The Portfolio is 75% net long heading into tomorrow.

Monday Close

Indices
S&P 500 1,145.98 +.29%
DJIA 10,071.25 -.16%
NASDAQ 1,912.92 +.25%
Russell 2000 585.33 +.78%
DJ Wilshire 5000 11,281.60 +.33%
S&P Barra Growth 554.25 +.12%
S&P Barra Value 587.43 +.47%
Morgan Stanley Consumer 575.56 -.59%
Morgan Stanley Cyclical 698.34 +.79%
Morgan Stanley Technology 426.15 +.29%
Transports 3,405.31 +.66%
Utilities 358.81 +.61%
Put/Call .96 -36.42%
NYSE Arms .94 -42.87%
Volatility(VIX) 16.56 -6.56%
ISE Sentiment 133.00 -6.34%
US Dollar 84.00 -.66%
CRB 297.69 -.38%

Futures Spot Prices
Crude Oil 50.49 +.26%
Unleaded Gasoline 150.20 +.51%
Natural Gas 6.94 -.14%
Heating Oil 144.76 +.37%
Gold 429.00 unch.
Base Metals 124.64 +.07%
Copper 144.50 unch.
10-year US Treasury Yield 4.27% +.70%

Leading Sectors
Steel +3.0%
Gold & Silver +1.92%
Energy +1.71%

Lagging Sectors
Drugs -.74%
Hospitals -1.19%
HMOs -1.76%

After-hours Movers
TXN +5.67% after beating 1Q estimates and raising 2Q outlook.

Evening Review
Detailed Market Summary
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Market Wrap CNBC Video(bottom right)
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In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on MMM, MDT and BAC.

Merrill Lynch:
- Raised RRD to Buy, target $38.

Afternoon/Evening Headlines
Bloomberg:
- Iran ordered Al-Jazeera to suspend operations at its Tehran bureau for an unspecified period, following its reporting on civil unrest along the Iraq border.
- AstraZeneca’s Iressa doesn’t improve survival for lung-caner patients, according to US government researchers who decided to halt a study of the company’s medicine.

Wall Street Journal:
- Walt Disney plans to move “Monday Night Football” from its ABC television network to ESPN in 2006.

Financial Times:
- The US Treasury Department may name China as a currency manipulator for the first time since 1994.

BOTTOM LINE: US stocks finished mixed today as continuing worries over slowing growth offset bargain-hunting. The Portfolio finished slightly lower on losses in my Oil Tanker shorts and Retail longs. I did not trade in the afternoon, thus leaving the Portfolio 75% net long. The tone of the market was mixed into the afternoon as the advance/decline finished almost unchanged, most sectors were higher and volume was about average. Measures of investor anxiety were mostly lower into the afternoon. Overall, today’s market action was mixed, considering another decline in the CRB Index, the market’s oversold state and Asia’s losses. Investor anxiety over the upcoming PPI/CPI reports is high. I believe a larger-than-expected increase in these measures of inflation is already factored in at this point. Given the market’s positive reaction to the TXN report after the close, I would expect US stocks to rise tomorrow after the PPI report.

Mid-day Scoreboard

Indices
S&P 500 1,146.47 +.34%
DJIA 10,084.55 -.03%
NASDAQ 1,916.12 +.42%
Russell 2000 585.23 +.77%
DJ Wilshire 5000 11,286.05 +.37%
S&P Barra Growth 555.31 +.31%
S&P Barra Value 588.58 +.66%
Morgan Stanley Consumer 576.39 -.44%
Morgan Stanley Cyclical 699.22 +.92%
Morgan Stanley Technology 427.49 +.61%
Transports 3,428.14 +1.31%
Utilities 359.51 +.80%
Put/Call .94 -37.75%
NYSE Arms .91 -44.60%
Volatility(VIX) 16.68 -5.98%
ISE Sentiment 122.00 -14.08%
US Dollar 83.97 -.70%
CRB 297.80 -.34%

Futures Spot Prices
Crude Oil 50.15 -.67%
Unleaded Gasoline 148.40 +.01%
Natural Gas 6.91 -1.24%
Heating Oil 143.70 -1.57%
Gold 429.00 +.59%
Base Metals 124.64 +.07%
Copper 144.50 unch.
10-year US Treasury Yield 4.25% +.33%

Leading Sectors
Steel +3.26%
Gold & Silver +1.76%
Banks +1.27%

Lagging Sectors
Drugs -.81%
Hospitals -1.25%
HMOs -1.87%

BOTTOM LINE: US stocks are mixed mid-day as continuing worries over slowing growth are offsetting bargain-hunting. The Portfolio is slightly lower on losses in my Gaming and Retail longs. I took profits in a few shorts this morning and added a few new longs from various sectors, thus leaving the Portfolio 75% net long. One of my new longs is PIXR and I am using a stop-loss of $92 on this position. The tone of the market is modestly positive as the advance/decline line is slightly higher, most sectors are higher and volume is above average. Measures of investor anxiety are mostly lower. Today’s overall market action is neutral, considering the continuing decline in commodity prices, the market’s oversold state and Asia’s steep losses. The fact that commodities are unable to rally after recent losses and today’s fall in the US dollar is a positive. Energy-related stocks are in a precarious position as gains in oil prices will spur further talk of an impending recession, which would likely result in substantially lower oil prices. As well, a clear break below $50/bbl. in crude futures would increase speculation that the stocks are too expensive given deteriorating fundamentals. I expect US stocks to trade mixed-to-higher into the close on short-covering, lower commodity prices and bargain-hunting.