Today's Headlines

Bloomberg:
- Siemens AG, Europe’s largest engineering company, agreed to buy Diagnostics Products(DP) for about $1.86 billion in cash to bolster its medical division, the manufacturer’s most profitable unit.
- China’s central bank unexpectedly raised its benchmark interest rate for the first time since October 2004 to cool the world’s fastest-growing major economy.
- Zinc and copper tumbled and oil extended declines after China raised its key interest rate, prompting speculation increased borrowing costs will curb demand for commodities in the world’s fastest-growing economy.
- Fed Chairman Bernanke gave his strongest signal yet that the central bank may pause in its cycle of interest rate increases.
- Exxon Mobil(XOM) said first-quarter profit rose 6.9% to $1.37/share, .10 lower than analyst estimates.
- Treasuries due in five years or less jumped after Fed Chairman Bernanke said the central bank may slow the pace of interest-rate increases.

Wall Street Journal:
- IBM(IBM) will offer a smaller version of its mainframe computers, designed for small-to medium-sized businesses.
- Toyota Motor(TM), Honda Motor and Nissan Motor are giving US executives more influence over decision-making in Japan.
- Time Warner(TWX) plans to start television production of reality shows and less costly cable programs at Warner Bros.
- Fiber optic spare capacity is being gradually filled as a result of the growth in Internet traffic though there is still too much excess capacity around.
- Google’s(GOOG) new Web-based shareable calendar is easy to use and avoids the need to reload or switch to a new page every time a change is needed or an appointment has to be added.
- Verizon Wireless(VZ) has adopted strict decency standards for the music, video and games that can be downloaded onto its cell phones.

Legal Week:
- The US’s 50 biggest law firms generated combined revenue of $36 billion last year, an increase of 12% on the previous year, according to a survey.

NY Times:
- Some US companies’ shareholders for the first time are organizing as they seek more say in executive pay practices and director elections.
- Walt Disney(DIS) and CBS Corp.(CBS) have met with Univision Communications(UVN) over a possible buyout offer.
- General Electric(GE) plans to invest $75 million to build the world’s largest solar energy plant with PowerLight Corp. in Serpa, Portugal.

San Francisco Chronicle:
- California’s income tax collections for April are $1.5 billion higher than Republican Governor Schwarzenegger and independent analysts expected, and lawmakers are debating how to use the surplus.

EE Times:
- Samsung Electronics won orders to supply media processors for Apple Computer’s(AAPL) next line of iPod music players at the expense of PortalPlayer(PLAY).

Arab News:
- Saudi Arabian Mining Co. plans to increase its gold production by 20% as prices for the precious metal soar, citing the CEO.

Il Sole 24 Ore:
- UniCredit SpA’s Pioneer division will make more acquisitions in the US after the purchase of Vanderbilt Capital Advisors LLC.

Job Market Remains Healthy

BOTTOM LINE: First-time claims for unemployment benefits in the US rose last week while staying at a level that points to job growth, Bloomberg reported. The four-week moving-average of continuing claims fell to 2.43 million, the lowest in more than five years. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, held steady at 1.9%. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases, which comprises two-thirds of inflation.

Links of Interest

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Real-time Intraday Chart/Quote

Thursday Watch

Late-Night Headlines
Bloomberg:
- McDonald’s(MCD) plans to sell about 5 million shares in Chipotle Mexican Grill, the fast-food chain that went public in January.

Maeil Business:
- Shares of Reigncom Co., a South Korean maker of portable music players, rose on a report the company is in talks to team up with Microsoft(MSFT) to take on iPod maker Apple Computer(AAPL).

AP:
- A US Senate panel will say tomorrow that the Federal Emergency Management Agency(FEMA) can’t be repaired and should be shut down.

Late Buy/Sell Recommendations
Citigroup:
- Removed (EBAY) from Focus List.

Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.09%.

Morning Preview
US AM Market Call
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Global Commentary
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Earnings of Note
Company/EPS Estimate
- (AET)/.63
- (ACS)/.86
- (ALTR)/.20
- (APCC)/.12
- (APC)/2.92
- (APA)/2.13
- (BZH)/2.27
- (BEBE)/.14
- (BDK)/1.39
- (BWA)/1.05
- (BMY)/.32
- (CAH)/.86
- (CELG)/.07
- (CHIR)/.31
- (CMCSA)/.14
- (CNX)/1.19
- (CAM)/.41
- (DECK)/.24
- (DPZ)/.37
- (DOW)/1.17
- (XOM)/1.46
- (FII)/.49
- (BEN)/1.20
- (GNW)/.65
- (HET)/.92
- (HIG)/2.11
- (ISRG)/.20
- (K)/.63
- (KLAC)/.56
- (LIZ)/.59
- (MRO)/2.35
- (MBI)/1.39
- (MFE)/.29
- (MGM)/.52
- (MSFT)/.33
- (OMX)/.33
- (PD)/2.58
- (RTN)/.53
- (RAI)/1.87
- (ROK)/.75
- (SPF)/1.28
- (HOT)/.34
- (WEN)/.46
- (WDC)/.38
- (XEL)/.31
- (XMSR)/-.55

Upcoming Splits
- (PDX) 2-for-1
- (BAM) 3-for-2

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 305K versus 303K the prior week.
- Continuing Claims are estimated to rise to 2441K versus 2439K prior.

BOTTOM LINE: Asian indices are mostly higher, boosted by auto stocks in the region. I expect US equities to open modestly higher and to fade into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Finish Higher on Energy Price Decline, Strong Economic Data and Surging Corporate Profits

Indices
S&P 500 1,305.41 +.28%
DJIA 11,354.49 +.63%
NASDAQ 2,333.63 +.14%
Russell 2000 765.23 +.05%
Wilshire 5000 13,205.88 +.20%
S&P Barra Growth 609.76 +.21%
S&P Barra Value 693.09 +.35%
Morgan Stanley Consumer 606.04 +.61%
Morgan Stanley Cyclical 853.14 +.95%
Morgan Stanley Technology 545.26 +.18%
Transports 4,700.68 -.14%
Utilities 392.39 -1.11%
Put/Call 1.08 +13.68%
NYSE Arms .91 -3.49%
Volatility(VIX) 11.76 +.09
ISE Sentiment 199.00 +2.05%
US Dollar 87.26 -.07%
CRB 352.57 -.10%

Futures Spot Prices
Crude Oil 71.64 -.40%
Unleaded Gasoline 211.60 -.82%
Natural Gas 7.22 -.63%
Heating Oil 202.29 -1.71%
Gold 639.00 +1.24%
Base Metals 224.14 +.81%
Copper 338.00 -.44%
10-year US Treasury Yield 5.10% +.71%

Leading Sectors
Gold & Silver +1.72%
Networking +1.49%
Disk Drives +1.20%

Lagging Sectors
HMOs -1.13%
Energy -1.50%
Gaming -1.83%

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
Oppenheimer:
- Reiterated Buy on AAP.

Afternoon/Evening Headlines
Bloomberg:
- The US Senate voted to use $1.9 billion from an emergency spending measure to buy more patrol boats, aircraft and other equipment to secure the US borders.
- MediaNews Group, publisher of the Denver Post, agreed to buy four newspapers from McClatchy for $1 billion, including three in California.
- The US Senate is seeking tax returns from the 15 largest US oil and gas companies to ensure they are paying the full amount due on record profits.
- House Republican leaders plan to introduce measures next week to reduce energy costs.
- Chevron(CVX) plans to boost natural-gas production in Colombia by as much as 50%.
- Crude oil prices fell $1.40 from session highs to $71.60/barrel as speculation over a summer gas shortage waned.

Reuters:
- Walt Disney(DIS) will introduce new interactive advertising when it begins showing television programs from ABC’s prime-time lineup on the network’s Web site.

IDG News Service:
- Symantec(SYMC) will announce on May 1 the reintroduction of a project aimed at curbing online identity theft attacks, called phishing.

Canadian Broadcasting Corp.:
- The US has agreed to return almost $4 billion of lumber duties under a preliminary agreement that would give Canada access to about 34% of the US softwood lumber market.

BOTTOM LINE: The Portfolio finished about unchanged as losses in my Semi longs and Biotech longs were offset by gains in my Energy-related shorts, Retail longs and Computer longs. I did not trade in the final hour, thus leaving the Portfolio 50% net long. The tone of the market was neutral today as the advance/decline line finished about even, sector performance was mixed and volume was above average. Measures of investor anxiety were mixed into the close. Overall, today's market performance was only mildly bearish considering the rise in long-term rates and recent stock gains. The frenzy for cyclicals continued, however energy stocks came under pressure into the afternoon, finishing at session lows. A number of market-leading stocks finished lower on the day. However, given today's news, the fact that the major averages were mostly higher was a big positive. I am surprised by the bond market's muted reaction to such positive economic data.

Stocks Mixed into Final Hour as Lower Energy Prices Offset Higher Long-term Rates

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Internet longs, Biotech longs and Semi longs. I covered some of my (IWM) and (QQQQ) shorts today, thus leaving the Portfolio 50% net long. The tone of the market is slightly negative as the advance/decline line is modestly lower, sector performance is mixed and volume is above average. Here are the top 10 Nasdaq stocks with the largest percentage increase in short interest relative to their float:

1. (OLAB) +57.8%
2. (NRPH) +20.54%
3. (CROX) +19.5%
4. (RHEO) +14.7%
5. (XING) +13.8%
6. (CONN) +11.9%
7. (WPSC) +11.3%
8. (MFLX) +10.6%
9. (MNTA) +9.7%
10. (TWPG) +9.3%

I expect US stocks to trade mixed-to-lower into the close from current levels on higher long-term rates and profit-taking.