Today's Headlines

Bloomberg:
- H&R Block(HRB) duped clients into investing tax refunds in retirement accounts that usually cost more in fees than they generate in interest, NY Attorney General Spitzer said.
- The US economy expanded at a “moderate” pace across most parts of the country in January and February, while higher costs of raw materials and energy persisted, the Fed’s Beige Book said.
- Crude oil fell after the EIA reported that US inventories rose for a fifth straight week.

Wall Street Journal:
- Nasdaq Stock Market(NDAQ) executives may hold meetings as early as this week with large shareholders of London Stock Exchange Plc to discuss Nasdaq’s informal $16.46/share offer for the London exchange.
- Johnson & Johnson(JNJ) revealed that federal investigations into the company’s sales of its Risperdal antipsychotic treatment are widening.
- A group led by Kohlberg Kravis Roberts and some banks offered as much as $13 billion to buy a majority stake in GMAC.
- The generic drug amantadine is being considered as a possible alternative to Tamiflu if bird flu sets off a global pandemic.
- Equifax(EFX), Experian and TransUnion are marketing new services to consumers in a bid to boost revenue.
- US farm groups and environmentalists are teaming up to gain federal incentives for forms of renewable energy such as wind-generated power or fuel produced from agricultural waste.

NY Post:
- Lexar Media(LEXR) shareholders, including hedge funds controlled by billionaire Carl Icahn, are pressuring management to seek a better offer than Micron’s(MU) $680 million bid.

Denver Post:
- Colorado’s aerospace economy moved ahead of Florida’s to become the US’s third-largest, after gaining 15,000 jobs in the industry since 2004.

Daily Telegraph:
- DB Zwirn, a NY hedge fund firm, is recruiting Sandy Berger, former national security advisor during the Clinton administration. Last year, Berger was fined $50,000 and ordered to do community service for stealing classified documents on the Clinton administration’s anti-terrorism efforts from the National Archive and destroying some of them.

Import Prices Fall, NY Manufacturing Soars, International Purchase of US Securities Healthy, Builder Outlook Muted

- The Import Price Index for February fell .5% versus estimates of a .6% decline and a 1.4% rise in January.
- Empire Manufacturing for February rose to 31.2 versus estimates of 18.9 and a reading of 21.0 in January.
- Net Foreign Security Purchases for January rose to $66.0 billion versus estimates of $64.8 billion and $53.8 billion in December.
- The NAHB Housing Market Index for March fell to 55 versus estimates of 56 and a reading of 56 in February.

BOTTOM LINE: Prices of goods imported to the US fell in February, reflecting declines in costs of petroleum and chemicals and the biggest drop in imported food costs in four years, Bloomberg said. Moreover, the price of industrial supplies excluding petroleum declined 2.2%, the largest fall since April 2003. Import prices should decelerate through year-end as commodity prices weaken further.

Manufacturing in NY state unexpectedly accelerated this month to the highest level since July 2004, encouraging factories to step up the pace of hiring as the US economy strengthens, Bloomberg said. The employment component of the index rose to 21.8, the highest level since May 2004. The new orders component increased to 29.2, the best since August of last year. Finally, the prices paid component of the index fell to 40.2 and has plunged 47% from Sept. 2005 highs. I continue to believe manufacturing will add to US growth over the intermediate-term as companies gain confidence in the durability of this expansion.

International investors increased their holdings of US assets by $66 billion in January, Bloomberg reported. January’s net gain is above the five-year average of $56 billion. Caribbean banking centers, which represents many hedge funds, decreased their Treasury holdings by $13.3 billion. Foreigners’ holdings of US stocks rose by $21.2 billion. I expect international investors’ appetite for US assets to rise further over the intermediate-term as commodity prices fall, the dollar remains firm, US stocks rise and the US economy remains relatively strong versus other industrialized nations.

Optimism among US homebuilders fell in March to a three-year low in response to rising long-term mortgage rates, Bloomberg said. Readings greater than 50 indicate builders think the outlook for sales is bright. I continue to believe housing is slowing to more healthy sustainable levels.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
Today in IBD
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Wednesday Watch

Late-Night Headlines
Bloomberg:
- China’s yuan had the biggest gain since a decade-old peg to the dollar ended in July, after Premier Wen Jiabao called for the market to play a greater role in setting exchange rates.
- China, the world’s largest steelmaker, won’t accept a rise in iron ore prices in talks under way between suppliers such as BHP Billiton and Chinese steel mills and will take action to protect its interests.

Financial Times:
- The European Union’s economic growth strategy for jobs and growth, which was revamped last year and dubbed the “Lisbon 2 agenda,” is poised to fail unless it is reformed, citing a report by Bruegel, a Brussels-based think tank on international economics.

Commerical Times:
- Taiwan Semiconductor Manufacturing’s second-quarter orders may rise 10% compared with the previous three-month period. The company is the world’s largest made-to-order chip supplier.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.06%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (AES)/.19
- (ANT)/.55
- (BEV)/.27
- (CHRS)/.14
- (CMVT)/.18
- (DISH)/.35
- (GYMB)/.53
- (LEAP)/.05
- (LEH)/3.16
- (MRX)/.27
- (NAV)/3.06
- (ROST)/.49
- (SHLD)/3.62

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Import Price Index for February is estimated to fall .6% versus a 1.3% rise in January.
- Empire Manufacturing for March is estimated to fall to 18.9 versus a reading of 20.3 in February.

9:00 am EST
- Net Foreign Security Purchases for January are estimated to rise to $62.4 billion versus $56.6 billion in December.

10:00 am EST
- Bloomberg consensus estimates call for a weekly crude build of 2,500,000 barrels. Gasoline inventories are estimated to fall 1,200,000 barrels, and distillate supplies are expected to decrease by 1,800,000 barrels. Refinery utilization is expected to rise .18%. I expect crude prices to weaken on this report.

1:00 pm EST
- The NAHB Housing Market Index for March is estimated to fall to 56 versus a reading of 57 in February.

2:00 pm EST
- The Fed’s Beige Book

BOTTOM LINE: Asian indices are higher, boosted by technology shares in the region. I expect US equities to open modestly higher and to build on gains into the afternoon. The Portfolio is 100% net long heading into the day.

Stocks Finish at Session Highs on Decline in Long-term Rates and Earnings Optimism

Indices
S&P 500 1,297.48 +1.04%
DJIA 11,151.34 +.68%
NASDAQ 2,295.90 +1.27%
Russell 2000 736.10 +1.11%
Wilshire 5000 13,047.74 +1.03%
S&P Barra Growth 612.51 +.94%
S&P Barra Value 681.57 +1.14%
Morgan Stanley Consumer 613.62 +.32%
Morgan Stanley Cyclical 793.32 +1.58%
Morgan Stanley Technology 538.22 +1.58%
Transports 4,494.70 +.91%
Utilities 405.60 +1.20%
Put/Call .72 -15.29%
NYSE Arms .59 -21.35%
Volatility(VIX) 10.74 -5.54%
ISE Sentiment 136.00 +15.25%
US Dollar 90.02 -.59%
CRB 326.97 +1.23%

Futures Spot Prices
Crude Oil 62.89 -.33%
Unleaded Gasoline 185.00 -.86%
Natural Gas 7.13 -.45%
Heating Oil 181.05 -.59%
Gold 552.60 -.07%
Base Metals 167.75 +1.21%
Copper 225.10 -.13%
10-year US Treasury Yield 4.68% -1.69%

Leading Sectors
+3.58%
Airlines +2.87%
I-Banks +2.41%

Lagging Sectors
Hospitals +.16%
Gaming -.16%
Broadcasting -.44%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
CSFB:
- Rated LRCX Outperform.
- Rated FEIC Underperform.

Afternoon/Evening Headlines
Bloomberg:
- Acquicor Technology, led by Apple Computer’s(AAPL) former CEO Gilbert Amelio and co-founder Steve Wozniak, raised $150 million today to shop for a technology company.
- A rally in US Treasuries drove 10-year notes to their biggest gain since December.
- Google(GOOG) may be forced to help the Dept. of Justice crack down on child pornography, a federal judge said.
- Crude oil surged on forecasts that US inventories of gasoline fell as refiners prepare for the summer driving season.
- CBS Sports and Apple Computer(AAPL) announced they will bring the 2006 NCAA men’s basketball championship to the iTunes Music Store.

NY Times:
- Mike Wallace, a “60 Minutes” correspondent since 1968, will retire at the end of the current television season.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Computer longs, Semi longs, Retail longs, Biotech longs and Networking longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished higher, almost every sector rose and volume was about average. Measures of investor anxiety were lower into the close. Overall, today's market performance was bullish. I would like to see higher volume on a confirmation move higher in the next few days. Decelerating inflation readings or lower energy prices should provide the catalysts.

Stocks Sharply Higher into Final Hour on Fall in Long-term Rates and Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Computer longs, Retail longs, Biotech longs and Networking longs. I covered the remainder of my (IWM) and (QQQQ) shorts, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, almost every sector is positive and volume is about average. Based on Google's (GOOG) reaction to the preliminary ruling in the Department of Justice case, it appears to me that much of the uncertainty regarding this issue is lifting. This is a big positive for the stock. I am still long Google. I expect US stocks to trade modestly higher into the close from current levels on short-covering and bargain-hunting.