Job Market Still Healthy, Leading Indicators Rise Slightly

- Initial Jobless Claims for last week fell to 339K versus estimates of 320K and 343K the prior week.
- Continuing Claims rose to 2531K versus estimates of 2510K and 2525K prior.
- Leading Indicators for March rose .1% versus estimates of a .1% gain and a -.6% decline in February.

BOTTOM LINE: The number of US workers filing applications for jobless benefits fell less than forecast last week, Bloomberg reported. The four-week moving-average of jobless claims rose to 328,750 from 323,500 the prior week. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, held steady at a low 1.9%. The Fed’s Plosser recently said he expects income growth and low unemployment to propel spending this year. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

A measure of the US economy’s future course rose in March for the first time in three months, as the labor market expanded and factories received more orders, Bloomberg reported. I continue to believe US economic growth came in substantially below trend in 1Q on significant inventory de-stocking. I still expect US growth to begin bouncing back to more average levels this quarter.

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Thursday Watch

Late-Night Headlines
Bloomberg:
- F5 Networks(FFIV) shares rose 5.3% after a Pacific Crest Securities analyst said the maker of high-speed computer-networking technology won a “large” contract.
- The yen strengthened for a third day against the dollar after a report showed demand for services in Japan unexpectedly rose to a record in February.
- Brazil’s central bank lowered the benchmark lending rate to a record low today as consumer prices rise at the slowest pace in eight years.
- EBay Inc.(EBAY) said first-quarter profit climbed 52% as it raised fees and held more auctions overseas. The company boosted its earnings and sales forecast for the year. The stock rose $1.20 to $35.65 in after-hours trading.
- Gilead Sciences(GILD) said first quarter profit jumped 55% as the biotech company raised prices and sold more of its simpler-to-take HIV drugs. The shares rose $.80 to $79.20 in after-hours trading.
- Convicted drunken drivers should be required to install a device that would keep them from starting a vehicle if they’re intoxicated, the top US highway safety official said.
- Dow Jones(DJ) named Marcus W. Brauchli as managing editor of The Wall Street Journal, replacing Paul E. Steiger.
- NBC attracted one of its smallest average prime-time audiences on record last week after the network aired reruns in many time slots.
- Labor Ready(LRW), the provider of temporary workers for industrial and construction companies said in a statement that it expects to earn as much as .35/share in the second quarter versus analysts’ estimates of $.31/share. The stock soared 28% in after-hours trading.
- Most hedge funds don’t deserve investment-grade credit ratings, according to Fitch Ratings.

Financial Times:
- Chinese individual investors are opening new share trading accounts at a record rate. More than 1 million new accounts were opened last week. That took the number of accounts opened by individual investors to more than 10 million in the past four months, surpassing the total for the previous four years.

Xinhua News Agency:
- Beijing’s transport authorities will buy 2,810 buses that run on cleaner-burning natural gas and diesel this year and put them on the roads before the Olympics.

Commercial Times:
- Four private equity firms have expressed interest in acquiring Taiwan’s Advanced Semiconductor Engineering, the world’s largest chip packager and tester.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (GILD), raised target to $94.

ThinkEquity Partners:
- Rated (ZUMZ) Accumulate, target $43.
- Rated (ZQK) Accumulate, target $14.

American Technology:
- Raised (INTC) to Buy, target $26.

AG Edwards:
- Rated (ATHR) and (IDC) Buy.

Night Trading
Asian Indices are -1.5% to -.75% on average.
S&P 500 indicated -.35%.
NASDAQ 100 indicated -.45%.

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Earnings of Note
Company/EPS Estimate
- (AMD)/-.47
- (MO)/1.04
- (AXP).79
- (ASD)/.49
- (AH)/1.10
- (BAC)/1.15
- (BAX)/.55
- (BBT)/.77
- (BLK)/1.63
- (COF)/1.99
- (CAL)/.14
- (DHR)/.77
- (DHI)/.26
- (FCS)/.15
- (FDC)/.23
- (GCI)/.89
- (GPC)/.72
- (GOOG)/3.27
- (HDI)/.73
- (HSY)/.51
- (IGT)/.36
- (ISRG)/.56
- (LEG)/.34
- (MAR)/.38
- (MDC)/-.22
- (MRK)/.72
- (MER)/1.97
- (MHK)/1.05
- (NDAQ)/.23
- (NE)/1.79
- (BTU)/.40
- (PPG)/1.09
- (DGX)/.69
- (RHI)/.46
- (SGP)/.29
- (SHW)/.83
- (SIRF)/.21
- (LUV)/.04
- (STJ)/.40
- (TXT)/1.26
- (TMA)/.57
- (TSS)/.27
- (TRB)/.30
- (UNP)/1.28
- (UB)/1.04
- (UNH)/.71
- (WYE)/.87

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to fall to 320K versus 342K the prior week.
- Continuing Claims are estimated to fall to 2510K versus 2527K prior.

10:00 am EST
- Leading Indicators for March are estimated to rise .1% versus a -.5% gain in February.

12:00 am EST
- The Philly Fed Index for April is estimated to rise to 2.0 versus a reading of .2 in March.

BOTTOM LINE: Asian indices are lower, weighed down by technology and commodity stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Evening Review

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In Play

DJIA at Record High into Final Hour, Boosted by Financials, Homebuilders and Semis

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, I-banking longs and Internet longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mildly negative as the advance/decline line is mildly lower, sector performance is mixed and volume is above average. While the bears would have you believe that today's action is negative, I see a number of sectors (seven) with meaningful gains ranging from 1.4% to 5.5%, notwithstanding the market's near-term overbought state. Also, the Value Line Geometric Index is up a very strong 6.5% year-to-date, and the environment remains excellent for stockpickers. Google (GOOG) has surged 5 points over the last 2 hours on volume. So far, I haven't seen any new news to account for the move. I have always wondered why the knee-jerk reaction is always to sell Google every time its chief competition stumbles. Google is still my largest long position. This also bodes well for tech. The tech sector is now flat on the day. While tech has some near-term issues, I expect the sector to ignite in the second-half of the year. This is likely one of the reasons for the muted reaction to recent "poor" earnings reports. I expect US stocks to trade mixed-to-higher into the close on rising earnings optimism, lower long-term rates and short-covering.

Today's Headlines

Bloomberg:
- The US Supreme Court upheld a law that makes it a crime to perform “partial birth” abortions, allowing the first nationwide ban on the procedure.
- Freddie Mac(FRE), the second-largest source of money for US home loans, is offering to buy as much as $20 billion of mortgages in an effort to maintain the financing available for subprime borrowers.
- A National Collegiate Athletic Association committee approved a ban on coaches using text messaging to contract potential recruits.
- President Bush threatened Sudan with greater economic and diplomatic sanctions unless President Umar al-Bashir’s government fulfills its commitments under agreements aimed at ending the bloodshed in Darfur.
- College officials in the US are considering measures including better surveillance cameras and passes to improve security following the shooting at Virginia Tech that left 33 people dead.
- Iraq could double its crude oil output to 4 million barrels a day in as little as five years with enough security to allow for basic oilfield work, according to consulting firm IHS Inc.
- VersSun Energy(VSE), the second-largest US ethanol producer, plans to build an ethanol refinery in Reynolds, Indiana.
- Russia plans to build the world’s longest tunnel, a transport and pipeline link under the Bering Strait to Alaska, as part of a $65 billion project to supply the US with oil, natural gas and electricity from Siberia.
- As part of a borrowers’ assistance program designed to help WaMu homeowners with subprime mortgage loans stabilize their finances and avoid foreclosure, Washington Mutual(WM) today announced a commitment to refinance up to $2 billion in subprime loans at discounted interest rates.
- Bank of America(BAC) CEO Lewis said the problems in the US subprime market won’t spill into the prime market.
- CSX Corp.(CSX), the third largest US railroad, said UK hedge fund TCI Fund Management LLP holds a “significant” stake in the company and filed to buy more than $500 million of its stock. The shares surged 6.7% to a record.

Wall Street Journal:
- The US government is seeking to help American companies gain business in Asia helping reduce carbon-dioxide emissions. General Electric(GE), DuPont co. and others are attending a trade mission starting today in Chennai, India selling solar power, more-efficient building material and alternative-energy sources.
- Countrywide Financial Corp.(CFC), CIT Group(CIT) and iStar Financial(SFI) might be among financial-service companies being considered for takeovers following the $25 billion purchase of SLM Corp.(SLM) by a group led by JC Flowers.
- The US Congress and President Bush have moved closer to a compromise over immigration legislation that may give priority to border security.
- IAC/InteractiveCorp(IAC) plans to start a Web site for African-Americans and other ethnic minorities.

NY Times:
- Bain Capital LLC and Thomas H. Lee Partners LP raised their bid for Clear Channel Communications(CCU) by more than $1.5 billion to about $27.6 billion.

CNBC:
- MedImmune Inc.(MEDI), maker of FluMist flu vaccine, may announce it has accepted a buyout offer as early as April 23.

NY Post:
- Ellington Management Group LLC plans to buy Fremont General Corp.’s(FMT) real estate business and $2.9 billion of subprime loans.

USA Today:
- The US military is scheduled later this year to open the largest solar power plant in North America as a way to provide electricity to an Air Force base in the Nevada desert.
- The Defense Department has announced plans to offer more health screening, improve record-keeping and improve a disability claims system for injured soldiers.

AP:
- The World Trade Center Memorial Foundation has raised more than $300 million in private donations, citing NY Mayor Michael Bloomberg.

Washington Post:
- Nissan Motor will introduce its first diesel vehicles in North America in the next few years, citing an interview with CEO Ghosn.
- Saudi Arabia has agreed to cancel 80% of Iraq’s more than $15 billion in debt to the country, citing Iraqi and Saudi officials. However, Russia still has not agreed to forgive debt to the country accumulated under former Iraqi dictator Saddam Hussein.

London Times:
- Frontier Airlines Holdings, a Denver-based carrier, asked US regulators for permission to fly to any country with an open-skies agreement with the US, joining the list of low-fare airlines considering cheap transatlantic flights.

Finanz und Wirtschaft:
- Dow Chemical(DOW) has between $5 billion and $10 billion to spend on acquisitions and share buybacks over the next five years.

Milliyet:
- Iran is seeking talks on its nuclear program with the five permanent members of the United Nations Security Council and German, citing meetings between Iranian Foreign Minister Manouchehr Mottaki and Turkish officials.