Today's Headlines

Bloomberg:
- OPEC will keep production at current levels to meet global demand regardless of how much prices fall, the group’s president said.
- French President Chirac’s popularity plunged 9 points to 38%, the lowest since at least April 2002, a week before a referendum on the European Union constitution, according to a survey by polling company BVA.
- The US military began an investigation after photos of Saddam Hussein appeared in a British tabloid newspaper, including one image of the ousted Iraqi dictator in his underpants in jail.
- Time Warner, having pared its debt by $11 billion in three years, plans to start paying the company’s first dividend since the AOL acquisition.
- Toyota, Nissan and Honda said they will further increase production of cars and trucks outside of Japan as they win market share in the US and Europe.
- Microsoft must make it easier for developers of free programs to work with Windows by June 1 or face new European antitrust charges.
- Businesses and consumers are already changing investment and purchasing plans to adapt to higher energy prices, eventually reducing the energy dependence of the US economy, Fed Chairman Greenspan said.
- The US Justice Department is creating a Web site that will offer the public a single location for information from state and city registries of convicted sex offenders.

Wall Street Journal:
- Pfizer, Merck and other drugmakers are in no rush to test whether statins can be used to ward off cancer, because preventing the disease has only limited profit potential.
- Tiffany & Co., Zale and other jewelry chains are vying for bigger outlets and better space to keep pace with fast-growing sales.
- Sales of National Basketball Association apparel have slumped amid a lackluster season.
- Shanghai GM sold more cars in China in April than any other automaker, and its two-month total was double that in the two previous months.

NY Times:
- Iraq acknowledged it was the aggressor in the war with Iran that began in 1980, citing a joint statement in Baghdad from the Iraqi government and Iran’s foreign minister.
- European Union countries are split into fast-growing and lagging economies, creating a challenge for the European Central Bank to devise an appropriate monetary policy for all.
- GM said only its Chevrolet and Cadillac brands will continue to field a full line-up of vehicles, while the other six brands sold in the US will offer few choices.

NY Post:
- Some ad agencies want to be paid based on the success of their campaigns instead of fees tied to labor and other costs.

Dow Jones Newswires:
The US Treasury wants to amend a bill aimed at strengthening regulation of Fannie Mae and Freddie Mac that would require the government-chartered companies to reduce their portfolios.

London-based Times:
- S&P, a unit of McGraw-Hill, may start the first private equity fund index to increase transparency in the industry.
- A human embryo was cloned for the first time in the UK by a group of British scientists.

Economic Releases

None of note

Links of Interest

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Real-time Intraday Chart/Quote

Friday Watch

Late-Night Headlines
Bloomberg:
- America West Holdings and US Airways Group agreed to merge to create a national low-fare carrier, with $1.5 billion in funding from new investors, vendors and others.
- Crude oil prices may fall for a third week as rising OPEC output boosts inventories and on signs of slowing global economic growth, a Bloomberg survey showed.
- China said it plans to increase export tariffs on textiles and enlarge the list to include single-ply linen yearn.

Wall Street Journal:
- US appliance maker Maytag Corp. agreed to be acquired by buyout firm Ripplewood Holdings LLC for about $1.13 billion.

China Business News:
- Citigroup agreed to buy a stake in China Construction Bank and Bank of America will invest in Bank of China.

Kyodo News Agency:
- Japan yesterday warned North Korea against conducting a nuclear test.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on AAP and LIZ.
- Reiterated Underperform on PSS.

Business Week:
- Exelon Corp.(EXC), a producer of nuclear power, may benefit from coming shortages of fossil fuel and generating capacity.
- Shares of Rent-Way(RWY), which owns stores that rent out merchandise such as furniture and computers, may be worth $13 in a possible acquisition by competitor Aaron Rents.
- North Fork Bancorp(NFB), a banking holding company with branches in NY, New Jersey and Connecticut, is an attractive buyout target, possibly for a big rival like Wachovia, Ryan Beck managing director Jacqueline Reeves said.

Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.07%.

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US AM Market Call
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Earnings of Note
Company/EPS Estimate
DDS/.52

Splits
None of note

Economic Releases
None of note

BOTTOM LINE: Asian indices are mixed as more optimism for exporters in the region is offsetting higher energy prices. I expect US equities to open mixed. However, stocks may rise modestly later in the day on short-covering, Fed comments and more optimism. The Portfolio is 100% net long heading into the day.

Stocks Finish at Session Highs

Indices
S&P 500 1,191.08 +.47%
DJIA 10,493.19 +.27%
NASDAQ 2,042.58 +.59%
Russell 2000 610.46 +.42%
DJ Wilshire 5000 11,741.81 +.49%
S&P Barra Growth 576.60 +.48%
S&P Barra Value 609.98 +.45%
Morgan Stanley Consumer 590.71 +.22%
Morgan Stanley Cyclical 719.49 -.11%
Morgan Stanley Technology 474.51 +.52%
Transports 3,621.03 +.44%
Utilities 364.55 +.58%
Put/Call .78 -2.50%
NYSE Arms .76 +.80%
Volatility(VIX) 13.32 -2.27%
ISE Sentiment 178.00 +54.78%
US Dollar 86.14 +.43%
CRB 293.54 -.44%

Futures Spot Prices
Crude Oil 46.90 -.63%
Unleaded Gasoline 143.75 +1.63%
Natural Gas 6.37 -.27%
Heating Oil 139.00 +2.34%
Gold 420.70 -.02%
Base Metals 120.03 -.05%
Copper 136.10 -.15%
10-year US Treasury Yield 4.11% +.52%

Leading Sectors
Oil Service +1.85%
Energy +1.67%
Gaming +1.23%

Lagging Sectors
Gold & Silver -.62%
Steel -1.11%
Oil Tankers -1.60%

Evening Review
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Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on BLS.

Afternoon/Evening Headlines
Bloomberg:
- DuPont said it received a subpoena in a grand jury probe related to an ingredient used to make Teflon non-stick coatings that has been found to cause cancer in animals.
- US regulators voted to require Internet-calling companies such as Vonage Holdings to improve the way they connect customers to emergency services.
- Michael Price, whose mutual funds were among the industry’s best performers during the 1980s and 1990s, bought shares of AIG for the first time and said Morgan Stanley is worth $75/share.
- Crude oil in NY fell to a three-month low on speculation that US inventories will be sufficient to meet peak demand during the summer driving season.

BOTTOM LINE: The Portfolio finished higher today on gains in my Software, Computer, Wireless and Internet longs and Oil Tanker, Base Metal shorts. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market strengthened into the afternoon as the advance/decline finished modestly higher, almost every sector rose and volume was average. Measures of investor anxiety were lower into the close. Overall, today’s market action was positive considering recent gains and weaker economic reports. The fact that the dollar rose today on weaker economic reports suggests further gains for the currency near-term.

Stocks Mixed Mid-day on Lower Volume

Indices
S&P 500 1,186.55 +.08%
DJIA 10,452.25 -.11%
NASDAQ 2,035.56 +.25%
Russell 2000 607.82 -.01%
DJ Wilshire 5000 11,698.11 +.11%
S&P Barra Growth 574.46 +.07%
S&P Barra Value 607.34 +.01%
Morgan Stanley Consumer 588.48 -.16%
Morgan Stanley Cyclical 715.76 -.63%
Morgan Stanley Technology 473.26 +.25%
Transports 3,595.46 -.27%
Utilities 363.12 +.18%
Put/Call .80 unch.
NYSE Arms .90 +18.98%
Volatility(VIX) 13.74 +.81%
ISE Sentiment 194.00 +68.70%
US Dollar 86.09 +.37%
CRB 294.03 -.28%

Futures Spot Prices
Crude Oil 47.25 unch.
Unleaded Gasoline 143.10 +1.17%
Natural Gas 6.34 -.81%
Heating Oil 139.30 +2.56%
Gold 421.10 -.21%
Base Metals 120.03 -.05%
Copper 136.30 -.94%
10-year US Treasury Yield 4.09% +.28%

Leading Sectors
Nanotechnology +1.38%
Gaming -1.03%
Internet +.98%

Lagging Sectors
Drugs -.69%
Oil Tankers -1.48%
Steel -1.94%

BOTTOM LINE: The Portfolio is higher mid-day on gains in my Internet, Wireless and Computer longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is modestly positive as the advance/decline line is slightly higher, most sectors are higher and volume is average. Measures of investor anxiety are mostly lower. Today’s overall market action is positive, given the weaker economic reports and yesterday’s sharp gains. I expect US stocks to trade modestly higher into the close on short-covering and bargain hunting.