Thursday Watch

Late-Night Headlines
Bloomberg:
- Hezbollah’s expanded arsenal of guided missiles and rockets is drawing Israeli forces into an increasingly deadly ground war in southern Lebanon as they attempt to locate and destroy the hidden weapons.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are +.25% to +1.0% on average.
S&P 500 indicated +.05%.
NASDAQ 100 indicated +.02%.

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Earnings of Note
Company/EPS Estimate
- (AET)/.63
- (AYE)/.17
- (AEP)/.54
- (APCC)/.17
- (APC)/1.27
- (APA)/1.99
- (BZH)/2.35
- (AN)/.43
- (BSX)/.17
- (BMY)/.32
- (CA)/.13
- (CELG)/.10
- (CEN)/.22
- (CHK)/.72
- (CMCSA)/.20
- (CNX)/.63
- (CMI)/3.48
- (DECK)/.05
- (DRIV)/.37
- (DOW)/1.13
- (XOM)/1.64
- (FFIV)/.51
- (FO)/1.50
- (GRMN)/.94
- (GNW)/.68
- (HET)/1.02
- (K)/.65
- (KMG)/1.11
- (KLAC)/.58
- (LLL)/1.21
- (MEE)/.45
- (MBI)/1.43
- (MFE)/.31
- (MCK)/.62
- (NEM)/.46
- (NOC)/1.08
- (OMX)/.13
- (RTN)/.62
- (RCL)/.53
- (SOHU)/.18
- (STA)/1.29
- (HOT)/.59
- (TLAB)/.14
- (THQI)/-.20
- (TDW)/1.10
- (WEN)/.53
- (XMSR)/-.67

Upcoming Splits
- (MON) 2-for-1

Economic Releases
8:30 am EST
- Durable Goods Orders for June are estimated to rise 2.0% versus a .2% decline in May.
- Durables Ex Transportation for June are estimated to rise .7% versus a .8% increase in May.
- Initial Jobless Claims for last week are estimated to rise to 310K versus 304K the prior week.
- Continuing Claims are estimated to fall to 2458K versus 2505K prior.

10:00 am EST
- New Home Sales for June are estimated to fall to 1150K versus 1234K in May.

BOTTOM LINE: Asian indices are higher, boosted by exporting stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Finish Slightly Lower on Afternoon Rebound

Indices
S&P 500 1,268.40 -.04%
DJIA 11,102.51 -.01%
NASDAQ 2,070.46 -.17%
Russell 2000 694.45 -.43%
Wilshire 5000 12,697.41 -.05%
S&P Barra Growth 584.62 -.09%
S&P Barra Value 682.36 +.02%
Morgan Stanley Consumer 617.03 -.43%
Morgan Stanley Cyclical 774.47 -.89%
Morgan Stanley Technology 460.00 -.37%
Transports 4,364.72 -2.75%
Utilities 435.85 +.49%
Put/Call 1.06 +58.21%
NYSE Arms 1.07 +36.48%
Volatility(VIX) 14.62 -1.55%
ISE Sentiment 167.00 +25.56%
US Dollar 85.89 -.87%
CRB 341.95 +.36%

Futures Spot Prices
Crude Oil 73.98 +.05%
Unleaded Gasoline 229.50 -.05%
Natural Gas 6.90 +.26%
Heating Oil 196.25 +.14%
Gold 636.00 +.20%
Base Metals 219.27 -1.23%
Copper 343.50 -.42%
10-year US Treasury Yield 5.02% -.68%

Leading Sectors
Oil Service +2.74%
Energy +1.88%
Telecom +1.46%

Lagging Sectors
Restaurants -1.74%
Retail -1.94%
Gaming -2.79%

Evening Review
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In Play

Afternoon Recommendations
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Economic growth slowed across the US in the past month, while consumer-price and wage increases were “modest” on balance, the Beige Book showed.
- Lawmakers will finish work on legislation overhauling the private US pension system this afternoon, Senate Majority Leader Frist said.
- Treasuries rose for the first time in four days after the Beige Book showed economic growth slowed in the past month, prompting traders to reduce bets for another interest rate increase next month.

CNBC:
- Raymond James Financial(RJF) CEO James said that money management offers more opportunities for acquisitions.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Medical longs, Semi longs and Commodity shorts. I added (SII), (IWM) and (QQQQ) shorts in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was slightly negative today as the advance/decline line finished modestly lower, sector performance was mixed and volume was above average. Measures of investor anxiety were mixed into the close. Overall, today's market performance was bullish. The Nasdaq reversed 17 points from the morning lows, despite Fed commentary suggesting weaker economic growth. Energy prices reversed all of today's gains into the afternoon. I want to see the market’s reaction to tomorrow’s economic data before further shifting market exposure.

Stocks High into Final Hour on Dovish Fed Beige Book Commentary

BOTTOM LINE: The Portfolio is unchanged into the final hour as gains in my Computer longs, Networking longs and Biotech longs are offsetting losses in my Semi longs and Commodity shorts. I added to my (CYMI) and (UARM) longs and took profits in a trading long 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 gaining and volume is above average. The Fed's Beige Book report was dovish. I still believe the Fed is done for this cycle. The 10-year is rallying on the report with the yield falling 4 basis points to 5.02%. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting, dovish Fed commentary, lower long-term rates and positive earnings reports.

Today's Headlines

Bloomberg:
- Blackstone Group LP is exploring a bid for HCA Inc., the US hospital chain that agreed two days ago to be acquired for $21.3 billion.
- GlaxoSmithKline(GSK) may submit its pandemic flu vaccine to regulators within months after a low-dose treatment protected most people who received it in tests.
- The House of Representatives will vote this week on legislation that combines a reduced estate tax with a measure renewing two-dozen expired breaks for business including a research credit.
- Google(GOOG) will disclose to advertisers the number of clicks on ads that it deems are invalid to assuage concerns over “click fraud.”
- NYC ended fiscal 2006 on June 30 with a record $6.1 billion surplus as Wall Street profits and surging real estate values boosted tax revenue, State Comptroller Hevesi said.
- The SEC will require companies to disclose the timing and price of options awarded to executives to end abuses.

Wall Street Journal:
- Hundreds of US soldiers in Iraq and Afghanistan, along with veterans of service in those countries, have started Blogs because they say mainstream media are out of touch with events. JP Borda, who started a Web log during his National Guard deployment in Afghanistan in 2004, organized a Web site, http://Milblogging.com, to classify blogs by country, military branch and subject matter.
- US dock workers are thriving, with average salaries of as much as $120,000 a year as trade through US ports surges.
- Google(GOOG) and other US companies are struggling to find technical talent, prompting renewed debate about restrictions on visas and the need to direct students to careers in math and science.
- Wells Fargo(WFC) and other insurance and financial services companies are driving a commercial real estate and job boom in Des Moines, Iowa.
- The US government plans to pay $1.75 billion in grants so disabled people receiving Medicaid can be cared for at home rather than in institutions.

NY Post:
- Akin Gump Strauss Hauer & Feld has agreed to pay more than $100 a square foot to lease 203,000 square fee in New York, the highest rent ever paid in the city for such a large space.

AP:
- A bill to create a national Internet database to alert law enforcement and community officials where convicted sex offenders live and work passed the House of Representatives and was sent to President Bush for his signature.
- An Israeli general said his country’s military operation in Lebanon will go on several more weeks.

NY Times:
- Goldman Sachs’(GS) private equity business earned $675 million before taxes last year, more than half of which was from investment banking fees on its own transactions, citing Sanford C Bernstein.
- TiVo Inc.(TIVO) is starting a research service that will sell data to advertisers describing how its 4.4 million customers use digital video recorders to skip commercials.

Washington Post:
- Some US aviation trade bodies and manufacturers have started recruiting programs for pilots, because pilot-numbers have fallen by a quarter in the past 25 years.

London-based Times:
- Novation LLC, a Texas-based hospital purchasing group, is negotiating a $7.4 billion buying contract for Britain’s National Health Service as the UK government moves to greater privatization.

CCTV:
- China should take more measures to slow economic growth in the second half as land supply, credit and fixed-asset investment continue to grow too quickly, Premier Wen Jiabao said.

Economic Releases

- None of note

Links of Interest

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