Today's Headlines

Bloomberg:
- Oil-tanker rates for shipments from the Middle East to Asia fell to the lowest level in almost seven months because of a surplus of vessels available for hire.
- President Bush said Iraqi leaders are returning to negotiations to try to form a government that can unite Shiite, Sunni and Kurdish factions.
- Israelis are voting in an election that has turned into a referendum on acting Prime Minister Ehud Olmert’s plan to abandon talks with the Palestinians and for the country to fix borders by itself.
- French students and labor unionists marched through Paris today, leading a fourth nationwide day of violent protests against a new youth labor law.
- Oil rose to a seven-week high on speculation that a government report will show US gas inventories fell for a fourth straight week.
- The Federal Reserve, beginning a new era under Chairman Bernanke, raised the main US interest rate to 4.75% and held out the prospect of further increases.
- US Treasuries declined, driving the two-year yield to almost a five-year high, after the Fed raised rates for the 15th straight time.

Wall Street Journal:
- Hewlett-Packard’s(HPQ) shares, which have been on a hot streak since the company named Mark Hurd as chief executive officer almost a year ago, may be cooling.
- The American Stock Exchange expects a fund that tracks crude-oil prices to start trading on Monday.
- Hartford Financial Services Group(HIG) said it will sell life insurance at its regular rates immediately after surgery to men with moderate levels of prostate cancer.
- France’s nuclear energy program is drawing international attention because of its success in reducing dependence on foreign energy supplies and cutting greenhouse gases.
- General Motors’(GM) Buick minivan is the car of choice among China’s business elite.
- Capitol Reader, an Internet-based readers’ service, provides booklovers with condensed versions of the political and public-affairs books they’re interested in but lack time to read.
- Southern Co.(SO), Wal-Mart Stores(WMT) and other US companies are drafting proposals to curb emissions of carbon dioxide and other so-called greenhouse gases.
- Cablevision Systems(CVC) will test a digital-video recorder that lets customers store programs on the company’s network rather than on a box in their homes.

NY Post:
- Jajah Inc., an Internet telephone startup, has the backing of Sequoia Capital Ltd., a venture capital firm that was an early supporter of Google(GOOG) and Yahoo!(YHOO).

NY Times:
- The number of US households with a net worth of $1 million or more, excluding main residences, rose to an all-time record 8.9 million last year, citing researcher TNS Financial Services.
- Google Inc.(GOOG) is boosting its lobbying and legislative operations as it seeks to catch up with competitors such as Yahoo!(YHOO) and Microsoft(MSFT) in Washington.
- US Helicopter Corp. began hourly shuttle service yesterday between Manhattan and John F. Kennedy International Airport for $139 each way, cutting the travel time to less than 10 minutes.
- The Arab League agreed on a plan to boost their diplomatic presence in Iraq.

Financial Times:
- The Bond Market Association will publish guidelines today to increase flexibility in the US market for borrowed bonds.

Gulf News:
- Lehman Brothers(LEH) plans to open offices in Dubai and Qatar to tap oil-driven wealth in the Middle East.
- Nasdaq Stock Market(NDAQ) is discussing listing opportunities with companies in the Persian Gulf.

Chronicle of Higher Education
- Public universities in Canada cost more to attend than those in the US, citing a study.

Consumer Confidence Highest Since April 2002

- Consumer Confidence for March rose to 107.2 versus estimates of 102.0 and a reading of 102.7 in February.

BOTTOM LINE: Consumer Confidence in the US economy jumped in March to the highest level in almost four years, driven by a strengthening labor market that’s lifting incomes and giving Americans means to spend, Bloomberg reported. The March reading beat even the highest estimate of 64 economists. The number of people saying that jobs are plentiful rose to the highest level since before the Sept. 11, 2001 terrorist attacks. Optimism about consumers’ present situation rose to 133.3, the highest since August 2001. The expectations component of the index rose to 89.9 from 84.2 the prior month. In my opinion, this component remains depressed due to the record number of leaders in the US, both political and financial, that perceive they benefit from spinning all news in a negative light. I continue to expect confidence to rise from current levels as irrational pessimism lifts further, energy prices fall, the labor market remains solid, stock prices rise further, housing stabilizes at more healthy levels and long-term rates remain relatively low.

Links of Interest

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Tuesday Watch

Late-Night Headlines
Bloomberg:
- UBS AG, the world’s largest money manager, is shunning stocks in Japan, while favoring US shares.
- France will deploy 4,000 policeman in the streets of Paris today to help ensure a protest march against a new labor law doesn’t turn violent again.
- An anti-addiction drug might help smokers keep pounds off while they try to quit, said researchers led by Stephanie O’Malley, psychiatry researcher at Yale Univ.

Wall Street Journal:
- Citigroup Inc.(C) may bid as much as $5 billion for Turkey’s Finansbank AS.

Economic Times:
- India’s Oil & Natural Gas cut production at its plants in Uran and Hazira because its customers including Indian Oil Corp. have surplus gas and have not been taking it from the company.

Financial Times:
- The growth in UK expenditure on advertising this year is estimated at $972 million and almost a third of that will be spent on the Internet, citing Zenith Optimedia.
- The value of mergers and acquisitions in the oil and gas industry tripled last year to $160 billion, the most since 1998.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on CFC, target $45.

Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated -.07%.
NASDAQ 100 indicated -.06%.

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Earnings of Note
Company/EPS Estimate
- (FUL)/.27
- (LEN)/1.55
- (PAYX)/.31
- (RHAT)/.12
- (TIF)/.84

Upcoming Splits
- (JLG) 2-for-1
- (NTES) 4-for-1
- (UTIW) 3-for-1

Economic Releases
10:00 am EST
- Consumer Confidence for March is estimated to rise to 102.0 versus 101.7 in February.

2:00 pm EST
- The FOMC is expected to raise the Fed Funds Rate 25 basis points to 4.75%.

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

Stocks Finish Mixed ahead of Tomorrow's Fed Rate Announcement

Indices
S&P 500 1,301.61 -.10%
DJIA 11,250.11 -.26%
NASDAQ 2,315.18 +.12%
Russell 2000 754.03 +.03%
Wilshire 5000 13,131.37 -.08%
S&P Barra Growth 612.96 -.22%
S&P Barra Value 685.43 +.01%
Morgan Stanley Consumer 615.12 -.09%
Morgan Stanley Cyclical 814.43 +.19%
Morgan Stanley Technology 540.06 +.08%
Transports 4,557.95 +.67%
Utilities 396.19 -.89%
Put/Call .84 +6.33%
NYSE Arms .91 +20.70%
Volatility(VIX) 11.46 +2.41%
ISE Sentiment 142.00 -17.44%
US Dollar 90.07 unch.
CRB 327.71 +.22%

Futures Spot Prices
Crude Oil 64.34 +.28%
Unleaded Gasoline 183.55 +.37%
Natural Gas 7.08 +.18%
Heating Oil 178.11 -.63%
Gold 567.20 -.04%
Base Metals 178.71 +.82%
Copper 242.70 -.12%
10-year US Treasury Yield 4.70% +.73%

Leading Sectors
Gold & Silver +2.89%
Steel +1.46%
Papers +1.0%

Lagging Sectors
Utilities -.89%
REITs -.93%
Drugs -.95%

Evening Review
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In Play

Afternoon Recommendations
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Shares of Time Warner Telecom(TWTC), which provides communications services over fiber networks connecting 44 US cities, were raised to “overweight” by Morgan Stanley analyst Vance Edelson, citing increased demand.
- General Motors(GM) said better-than-expected sales of new models such as the redesigned Chevrolet Tahoe are helping stem market-share declines as the automaker tries to cut its reliance on incentives and low-profit sales to rental agencies.
- Zacarias Moussaoui testified that he and would-be shoe bomber Richard Reid planned to hijack a jetliner and fly it into the White House on the day of the Sept.11 attacks.
- Brazil’s currency weakened after President Luiz Inacio Lula da Silva’s top economic policy maker submitted his resignation amid allegations of corruption.
- Corn and soybean prices rose in Chicago on speculation the spread of bird flu will be contained and demand for grain-based poultry feed won’t decline.
- Delphi has offered UAW union members a payment of $50,000 each in exchange for a 35% pay cut.
- The Chicago Mercantile Exchange, the largest US futures market, said it plans to offer energy contracts in June after a non-compete with the NY Merc expires.
- A Senate panel approved hiring up to 14,000 more Border Patrol agents to increase border enforcement as part of an overhaul of immigration laws.
- Copper and zinc prices rose to records on speculation that metals demand, driven by worldwide economic growth, will reduce inventories and trigger supply shortfalls.

Financial Times:
- Lucent Technologies’(LU) Bell Labs research unit may be separated and put under control of a new board if the company is taken over by Alcatel SA(ALA).

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Networking longs and Medical longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was slightly negative today as the advance/decline line finished near even, sector performance was mixed and volume was about average. Measures of investor anxiety were higher into the close. Overall, today's market performance was neutral. However, a number of market-leading stocks traded very well throughout the day. Investors appear as though they are becoming increasingly confident in the durability of the current economic expansion. I continue to believe U.S. growth will slow to average levels later this year, which will likely have a greater negative impact on some economically sensitive stocks than most expect.

Stocks Mixed into Final Hour ahead of Fed Rate Announcement Tomorrow

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Medical longs and Networking longs. I added (UARM) long and exited a retail long today, thus leaving the Portfolio 100% net long. The tone of the market is mixed as the advance/decline line is slightly lower, most sectors are gaining and volume is about average. According to theFlyontheWall.com, Deutsche Bank is saying that the Society of Gynecologic Oncologists conference over the weekend gave them increased confidence that gynecology will be a "blockbuster market for da Vinci." I agree and continue to believe that Intuitive Surgical (ISRG) has the potential to be one of the greatest growth stories this decade. The stock has rallied almost 40% since lows seen earlier in the month. So far, my conviction for the stock has paid off. I am still long (ISRG). I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering ahead of the Fed’s rate decision tomorrow.