Today's Headlines

Bloomberg:
- Goldman Sachs’s financial rewards for arranging the NYSE’s purchase of Archipelago exceed $100 million.
- Crude oil is falling after the EIA reported supplies rose to a 35-month high.
- US T-notes are rising after the government reported durable goods orders fell in March by the most in two years.
- President Bush will propose using closed military bases as sites for oil refineries and speed up licensing of nuclear power plants.
- European surveys showing deteriorating confidence suggest the European Central Bank may lower its benchmark interest rates this year, hurting demand for the euro, according to Goldman Sachs.

Wall Street Journal:
- Three men seem to be the front-running candidates to succeed US Fed Chairman Greenspan, who’s due to step down in January. They are Martin Feldstein, Ben Bernanke and Glen Hubbard.
- The House and Senate are close to agreeing on a budget for 2006 that includes $40 billion in savings over five years and would close some tax-loopholes to compensate for $106 billion in tax cuts.
- XM Satellite Radio and Sirius Satellite Radio are introducing receivers for listening to satellite radio outside their normal habitat, the car.
- 3Com executives have bought shares of the company for the first time in four years.

NY Times:
- More than three-quarters of small US businesses polled last month plan to increase spending on technology tools such as computer software and Web sites by 20% in the next two to three years, citing a survey to be released by Hewlett-Packard.

San Francisco Chronicle:
- Oakland became the first large US shipping port to automatically scan cargo containers for radioactive material.

La Tribune:
- Lazard Ltd., the investment bank headed by Bruce Wasserstein, plans to have its shares trading on the NYSE on May 5:

Die Welt:
- Almost one third of Europeans suffer from mental illnesses such as panic attacks, depression, the effects of stroke and migraine, citing a study by the European Brain Council.

Durables Not That Bad, Crude Inventories Surging

- Durable Goods Orders for March fell 2.8% versus estimates of a .3% increase and a downwardly revised .2% decline in February.
- Durables Ex Transports for March fell 1.0% versus estimates of a .5% increase and a .2% fall in February.
- Summary of Weekly Petroleum Data for the Week Ending April 22, 2005. Crude oil inventories rose 5.5M barrels versus estimates of a 650K rise, distillate fuel inventories fell 1.4M barrels versus estimates of a 100K rise and gasoline inventories fell 300K barrels versus estimates of a 1M barrel fall.

Bottom Line: Durable goods orders for March fell 2.8% vs. estimates of a .3% increase and a downwardly revised .2% decline in February. Durables excluding transports for March fell 1.0% vs. estimates of a .5% increase and a .2% fall in February. This "very bearish" number, as some pundits are calling it, doesn't appear to me to be that worrisome. Orders for transportation equipment fell 7.8%, mainly due to a 23% decline in the very volatile aircraft component. Boeing received orders for only 11 planes last month, compared with 34 in February. Moreover, the report was skewed by the loss of working days around Easter, which was in March rather than April. The only economist to correctly forecast March's decline was Ian Shepherdson of High Frequency Economics. He is saying "these data are unreliable" and that "he expects a hefty April rebound." I believe analyst estimates of 3.5% GDP growth are at risk for 1Q as a result of a weaker-than-expected March and a higher-than-expected deflator. However, I continue to believe that U.S. growth will temporarily slow to around 2% before rebounding in the second half. I do not think a recession is likely. I also continue to believe the "contango" in crude is resulting in a temporary artificial boost to current demand. As perceptions shift over the next couple of months, a demand vacuum will send crude prices lower than most currently expect.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
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NASDAQ 100 Heatmap
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Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Wednesday Watch

Late-Night Headlines
Bloomberg:
- The South Korean government has yet to see any signs that North Korea is preparing for an imminent nuclear weapons test.
- Australian consumer prices rose less than economists expected in the first quarter, signaling the central bank may refrain from raising interest rates again this year.
- The US dollar rose against the yen and traded near an eight-day high versus the euro in Asia on speculation US growth will outpace that of Japan and Europe, heightening the appeal of US assets.
- STMicroelectronics NV, Europe's No.2 maker of semiconductors, forecast second-quarter sales that may miss analysts' estimates as memory-chip prices fall.

Financial Times:
- The European Union may broaden its investigation into Chinese textile exports.

Tex Report:
- World nickel supply will meet demand of 1.31 million tons this year.

South China Morning Post:
- Property prices in Shanghai, China's most expensive city, have begun to fall after the government introduced lending curbs and a capital gains tax. Average prices fell 15% to $914 per square meter last week.

Xinhua News Agency:
- China's government is working on several plans, including improving the quality of listed companies and developing institutional investors, to bolster stock markets.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on AIG, AMGN, DD, SLB, COH, FDC, HMA and X.
- Reiterated Underperform on SLG, AVB, CR, AKS and AAI.

Night Trading
Asian Indices are -1.0% to -.50% on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.10%.

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
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Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
AGN/.67
AHC/2.09
BUD/.63
APPB/.35
BHI/.50
BDX/.67
BIIB/.37
BA/.55
CDN/.14
CTX/2.50
CHIR/.17
CLF/1.05
CL/.61
COP/3.27
DO/.18
DRIV/.50
JDSU/-.02
JNY/.70
KMG/2.20
MCHP/.25
NEM/.30
PFCB/.39
PD/3.35
PHM/1.43
SWK/.74
SBUX/.24
STN/.66
TDW/.35
RIG/.17
VZ/.60
WLP/1.83
XMSR/-.70

Splits
None of note

Economic Releases
8:30 EST:
- Durable Goods Orders for March are estimated to rise .3% versus a .5% increase in February.
- Durables Ex Transportation for March are estimated to rise .5% versus no change in February.

BOTTOM LINE: Asian indices are lower on weakness in exporters after declines in the US. I expect US equities to open modestly lower on tech earnings worries and continuing concerns over slowing global growth. The Portfolio is 75% net long heading into tomorrow.

Tuesday Close

Indices
S&P 500 1,151.74 -.89%
DJIA 10,151.13 -.89%
NASDAQ 1,927.44 -1.20%
Russell 2000 587.66 -1.47%
DJ Wilshire 5000 11,349.22 -.90%
S&P Barra Growth 557.33 -.88%
S&P Barra Value 590.06 -.91%
Morgan Stanley Consumer 571.95 -.91%
Morgan Stanley Cyclical 701.80 -1.58%
Morgan Stanley Technology 438.66 -1.15%
Transports 3,404.55 -1.91%
Utilities 365.61 -1.07%
Put/Call .75 -5.06%
NYSE Arms 1.78 +169.42%
Volatility(VIX) 14.91 +1.98%
ISE Sentiment 161.00 +25.78%
US Dollar 83.93 +.13%
CRB 309.78 +.36%

Futures Spot Prices
Crude Oil 54.36 -.38%
Unleaded Gasoline 162.70 -1.45%
Natural Gas 7.15 -.04%
Heating Oil 151.38 -.28%
Gold 438.60 +.64%
Base Metals 124.60 -.42%
Copper 145.70 -1.82%
10-year US Treasury Yield 4.26% +.42%

Leading Sectors
Gaming +2.57%
Broadcasting -.18%
Retail -.29%

Lagging Sectors
Tobacco -3.34%
Computer Hardware -3.64%
Steel -4.53%

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

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on GILD and LVS.

Afternoon/Evening Headlines
Bloomberg:
- Amazon.com reported first-quarter net income fell to $78 million, hurt by new discounts on shipping and increased development costs.

Financial Times:
- The benefits of countries opening their borders to foreign service-providers will exceed any reduction in jobs, citing the OECD.

BOTTOM LINE: US stocks finished lower today on continuing worries over slowing global growth. The Portfolio finished slightly lower on losses in my Internet and Networking longs. I did not trade in the afternoon, thus leaving the Portfolio 75% net long. The tone of the market deteriorated into the afternoon as the advance/decline finished at its daily lows, almost every sector fell and volume was average. Measures of investor anxiety were mixed. Overall, today’s market action was negative, considering strong home sales, a rising US dollar, falling energy prices, good earnings reports and stable interest rates. Choppiness will likely continue until oil breaks below $50/bbl. or the Fed makes less hawkish comments. The fact that the Homebuilders declined today even with home sales substantially exceeding expectations, building costs declining, mortgage rates dropping and weather improving is a negative and illustrates the overly pessimistic environment that still dominates trading.

Mid-day Scoreboard

Indices
S&P 500 1,160.41 -.15%
DJIA 10,225.88 -.17%
NASDAQ 1,942.01 -.45%
Russell 2000 591.81 -.78%
DJ Wilshire 5000 11,433.60 -.17%
S&P Barra Growth 561.79 -.10%
S&P Barra Value 594.41 -.18%
Morgan Stanley Consumer 575.45 -.30%
Morgan Stanley Cyclical 708.29 -.67%
Morgan Stanley Technology 442.31 -.34%
Transports 3,440.77 -.87%
Utilities 368.76 -.21%
Put/Call .68 -13.92%
NYSE Arms .93 +40.02%
Volatility(VIX) 14.59 -.21%
ISE Sentiment 161.00 +25.78%
US Dollar 84.02 +.24%
CRB 309.59 +.29%

Futures Spot Prices
Crude Oil 54.15 -.77%
Unleaded Gasoline 162.00 -1.88%
Natural Gas 7.08 -1.02%
Heating Oil 151.00 -.53%
Gold 438.90 +.71%
Base Metals 124.63 -.42%
Copper 145.70 -1.82%
10-year US Treasury Yield 4.27% +.61%

Leading Sectors
Gaming +3.06%
Homebuilders +.92%
Broadcasting +.52%

Lagging Sectors
Computer Hardware -2.61%
Tobacco -2.89%
Steel -3.84%

BOTTOM LINE: US stocks are modestly lower mid-day, spurred by declines in commodity-related stocks. The Portfolio is slightly lower on losses in my Internet and Networking longs. I added a few new shorts and longs this morning, thus leaving the Portfolio 75% net long. One of my new shorts is PD and I am using a $93 stop-loss on this position. The tone of the market is negative as the advance/decline line is lower, sector performance is mixed and volume is average. Measures of investor anxiety are mostly lower. Today’s overall market action is modestly negative, considering lower energy prices, a rising US dollar and strong home sales. The recent home sales data should quell fears that US growth is slowing too much. As well, I continue to see data that points to lower commodity prices in the future, which bodes well for a decline in inflation readings. I expect US stocks to trade modestly higher into the close on short-covering, lower energy prices and bargain-hunting.